Nunavut could pull in $1.4M a year in tax revenue from legal weed, expert says

Nunavut has the most expensive black market weed in the country, which an expert says gives the territorial government an opportunity for significant tax revenue when marijuana becomes legal.

Rosalie Wyonch is an economist and policy analyst with the C.D. Howe Institute, who specializes in tax policy. She says medical distributors in southern Canada currently sell marijuana at $9 per gram.

This rate is something she expects will stay the same after the July 1, 2018 legalization date and one that is significantly cheaper than Nunavut's black market prices.

Wyonch says a gram of illegal weed runs between $13 and $19 in the territory. She pulled the data from reports by the Parliamentary Budget Office, Public Safety Canada and an online self-reportedprice survey.

At that price, the government could tax the substance up to 25 per cent and still sell it cheaper than black market vendors.

The current illegal market in Nunavut is worth around $10.6 million annually, she says.

She estimates Nunavuthas the potential for a legal weed market worth between $4.5 million and $6 million, so at her suggested rate of taxation,the government could bring in up to $1.4 million in revenue.

"There are no economic downsides because consumers will have access to safer products, governments will raise tax revenues, it will take money away from crime," Wyonch said.

She says the government should avoid prohibitively high prices or inconvenient access to weed because those restrictions will allow the black market to continue.

"As long as a functioning black market exists, the government can't enforce any of the other policy related to the market," she said.

If Nunavut does not have a strategy in place by the federally imposed legalization date,Wyonchsays thatNunavummiutwill be able to order from the federal distribution system.

High tax rates aresomethingWyonch is not suggesting to the rest of Canada, which she says will need to keep prices in step with lower illegal rates.

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