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New cannabis deal an improvement but legal pot won't be a revenue generator, Alberta finance minister predicts

The two-year agreement, announced after the meeting between the provincial, territorial and federal finance ministers, gives the provinces 75 cents of every dollar of excise tax levied on cannabis.

Joe Ceci says provincial costs still not covered despite Ottawa agreeing to smaller share of excise taxes

Alberta Finance Minister Joe Ceci says Monday's deal with the federal government is an improvement over the 50/50 split announced last month. (CBC)

Alberta Finance Minister Joe Ceci says a deal reached Monday with the federal government gives provinces a larger share of revenue from cannabis sales but still won't cover provincial costs of legalization.

The two-year agreement, announced after a meeting between the provincial, territorial and federal finance ministers, gives the provinces 75 cents of every dollar of excise tax levied on cannabis, compared to a 50-50 split proposed by Ottawa earlier.

As well, the total amount Ottawa can collect will be capped at $100 million each year. Any amount above that must be distributed to the provinces and territories.

"We're going to have costs that need addressing and we're not sure what those are, so today's arrangement is much better than the one they proposed earlier," Ceci told reporters on a conference call from Ottawa on Monday afternoon.

Ceci said the federal government estimates about $400 million in excise taxes will be collected from the first year of cannabis sales, which means the provinces would net about $300 million.

He said Alberta doesn't have a specific estimate of how much it will take in, as officials are not sure how much people will consume.

But Ceci said he expects legal cannabis overall will cost the province money.

"Nobody is thinking about this as a revenue generator line," he said. "We're thinking of it more as a responsible treatment to a federal decision to legalize cannabis on July 1."

Retail price will include provincial tax

The retail price of cannabis will also have a provincial tax component, as well as markups for retailers and the wholesaler. The wholesaler in this province is the Alberta Liquor and Gaming Commission.

Ceci and other provincial finance ministers expressed discontent with the original 50/50 split between the federal and provincial governments announced last month. 

They argued the provinces will bear most of the costs of regulating and policing the sale of recreational cannabis when small amounts become legal on July 1, 2018.

"Make no mistake," Ceci said. "We will do the hard work to protect children and youth and our communities. What we won't do is foot the bill for the federal government's campaign promise."

Ceci said the deal will be reviewed when the two years are up. He said a working group will monitor the rollout and will provide an update at next year's ministers' meeting.