Ottawa wants provinces to keep pot tax low

The federal finance minister will be urging his provincial counterparts to keep taxes on marijuana low, as the legalization process moves forward. Bill Morneau will be meeting with provincial finance ministers in Ottawa over the next two days to discuss a range of issues, including pot tax.

Marijuana taxation policy to be discussed at finance ministers meeting in Ottawa

Ottawa will ask the provinces to keep pot taxes low when finance ministers meet to discuss the issue on Monday. (CBC)

The federal government will be urging the provinces and territories to keep pot taxes low, according to a senior government source.

Finance Minister Bill Morneau will make the pitch to his provincial and territorial counterparts, during a series of meetings to be held in Ottawa over the next two days. 

Although the source says a price for pot is not expected to be set during these talks, provincial and territorial leaders will be urged to keep taxes low in an effort to undercut prices on the black market.

The discussions will take place at the semi-annual gathering of the country's finance ministers, and will be the first formal sit down chat about the issue at this level.

Earlier this year, the federal government introduced legislation that will make the recreational use of marijuana legal by July 1, 2018. Many of the decisions about how the drug will be sold and taxed are being left up to individual provinces. 

The source says Ottawa wants the provinces and territories to agree to three broad priorities when coming up with their marijuana strategies: a co-ordinated approach, a low taxation rate, and a commitment to ongoing collaboration and co-operation. 

The co-ordinated approach is an effort to ensure prices and policies are similar across the country. The source says Ottawa does not want to see any "divergent regimes" spiking or dropping prices. 

The low taxation rate is an effort to eliminate the black market. The Liberals have repeatedly said the purpose of making marijuana legal is to keep it out of the hands of children and criminals. By setting a low rate, the source says it will help drive drug dealers out of the market.

The federal government is also seeking a commitment of ongoing collaboration. The source says this is a new industry, and because there are many aspects yet to be determined, it is best to keep the lines of communication open. 

Provincial concerns

Since much of the pot policy is being left to the provinces, concerns about co-ordination are expected to be raised at these meetings. 

One provincial source is looking to discuss the cost of training police to detect marijuana impaired drivers, and whether the federal government will pick up the tab.

Another provincial source will be pushing to ensure there is consensus about where and how marijuana is sold — and for what price — to ensure neighbouring provinces don't try to out-compete one another.

Ontario plans on addressing several issues, said Jessica Martin, a spokesperson for Ontario's finance minister Charles Souza in a statement.

"We remain committed to developing a balanced framework that is focussed on protecting youth, maximizing public health and road safety, and reducing harm. It is important to hear from all provinces as we move forward with ground-breaking legislation for all of Canada," Martin wrote in a statement.

Also on the agenda

Marijuana policy is far from the only item on the agenda.

Financial leaders will be getting an update on the health of the Canadian economy. Stephen Poloz, Governor of the Bank of Canada, will sit down with the finance ministers to provide a 'big picture' look at jobs and growth. 

Finance Minister Bill Morneau, right, and United States Secretary of the Treasury Steven Mnuchin shake hands after holding a joint media conference on Parliament Hill in Ottawa on Friday, June 9. (Sean Kilpatrick/Canadian Press)

Morneau will also provide an update on the state of Canada-U.S. relations, and share details about the recent visit to Ottawa by U.S. Treasury Secretary Steven Mnuchin.

Several premiers have travelled to Washington in the past two weeks for high-level meetings of their own.

Morneau's meetings will also focus heavily on the re-opening of the North American Free Trade Agreement.

The source says this will be an open discussion to ensure everyone is on the same page when it comes to managing trade and Canada-US relations.

Ottawa will be also be looking to the provinces for co-operation on targeting tax evaders. Talks will centre around beneficial ownership and tax fairness.


Katie Simpson is a foreign correspondent with CBC News based in Washington. Prior to joining the team in D.C. she spent six years covering Parliament Hill in Ottawa and nearly a decade covering local and provincial issues in Toronto.