Cannabis taxes not bringing the cash government expected

This year the government expected it would bring in $100 million from cannabis revenues, but now estimates it will see only $66 million

Growing flowers of cannabis intended for the medical marijuana market are shown at OrganiGram in Moncton, N.B., on April 14, 2016.THE CANADIAN PRESS/Ron Ward

OTTAWA — Marijuana hasn’t proven to be the cash crop the government expected, with cannabis excise tax revenues coming in at roughly half the original estimates.

In the first fiscal year that marijuana was legalized, 2018 – 2019, the government took in $18 million in cannabis revenues, but had expected to take in $35 million. This year the government expected it would bring in $100 million, but now estimates it will see only $66 million.

The government believes that number will continue to rise to $135 million next year and a steady increase until $220 million in 2023, according to a response to a question on the House of Commons’ order paper.

Those numbers represent only the federal taxes, with provincial taxes also being added to the purchase price. Before cannabis was legalized, the federal and provincial governments worked out a deal to split revenue from marijuana taxes, with 75 per cent of the money going to the provinces.

The excise tax is roughly $1 per gram and comes on top of GST and HST.

The government believes that number will continue to rise to $135 million next year and a steady increase until $220 million in 2023

As part of the agreement with the provinces, the amount of money that goes to Ottawa was also capped at $100 million for the first two years.

Finance Minister Bill Morneau’s press secretary, Pierre-Olivier Herbert, said the entire regulatory regime is about ensuring there is a safe legal market.

“We implemented a strict legal framework to regulate and restrict access to cannabis keeping it out of the hands of youth, and profits out of the pockets of criminals and organized crime,” he said in an email.

The government initially intended cannabis to be legalized by Sept. 1, 2017, but that was pushed back until late October. Herbert said that and other factors contributed to the lower tax haul.

“Various factors contribute to excise tax revenues including the volume of sales and available supply. Provinces are responsible for distribution, licensing and overseeing the distribution and sale of cannabis.”

Ontario is the biggest market for cannabis, but the first retail stores in the province didn’t open until April last year and they began on a limited basis with just 25 stores provincewide. The province said at the time that it didn’t want to add more stores than the industry could supply.

Early on, stores in Alberta and Quebec had to limit opening days because of supply shortages.

Store numbers have since grown and Ontario has lifted restrictions, with hundreds more expected to open this year.


McMaster researchers find cannabis has antibiotic potential

Researchers from McMaster University have discovered that a chemical compound in cannabis could be used to treat a highly resistant superbug.

Microbiologist Eric Brown and his team found that mice infected with methicillin-resistant Staphylococcus aureus (MRSA), one of the most common and deadly bacteria, could be nursed back to health with a non-psychoactive element of cannabis known as cannabigerol (CBG).

“We were motivated obviously by the excitement around cannabis for medical use,” said Brown, who is a biochemistry and biomedical professor at McMaster.

Similar to the well-known cannabinoids CBD and THC, CBG is another compound produced by marijuana plants.

“One of the obstacles for the use of cannabis or cannabinoids is the lack of evidence about what these things might be good for,” said Brown, adding that he reasoned the plant was producing the substances for a purpose, possibly to protect itself against bacteria.

The Staphylococcus aureus bacterial strain is recognized as a leading cause of infections and a major perpetrator of illness and death on the World Health Organization’s list of “priority pathogens” released in 2017.

“It’s one of the superbugs which is causing considerable problems with drug resistant infections in the clinic and in the community,” he said, noting that it can cause minor irritations like pimples or boils, but can also lead to respiratory or blood infections in severe cases.

The strain has become increasingly resistant to antibiotics currently on the market, but Brown’s study, ‘Uncovering the Hidden Antibiotic Potential of Cannabis,’ highlights the possibility of alternative drug therapies.

Over a span of two years, Brown tested several different commercially available cannabis compounds in mice. He said his team worked in collaboration with Jakob Magolan, an associate professor of biochemistry and biomedical sciences at McMaster who produced synthetic CBG for the study.

Despite the preliminary findings, Brown is eager to further explore the antibiotic potential of cannabis. (Supplied by McMaster University)

Across several trials, CBG showed the strongest antibiotic potential, effectively targeting the resilient bacteria. The cannabinoid was able to penetrate the bacteria’s biofilm, a robust film-layer that the microorganism develops to protect itself, according to Brown.



Edible Cannabis: A New Report from the CMAJ

Today, the Canadian Medical Association Journal released a report on Cannabis edibles following the legalization of edibles in Canada in late 2019. Edibles are an increasingly popular form of consumption of nonmedical cannabis and includes baked goods, candies and beverages. Among the findings in the report by Jonathan S. Zipursky, Orly D. Bogler and Nathan M. Stall, were the numbers on the popularity of cannabis edibles. “More than 40% of North American nonmedical cannabis users consume edibles,” noted the report. This is a sharp increase from previous reports on edible cannabis use, but aligns closely with the legalization in Canada and in several US states.

The report also highlighted the risks with edibles as unfamiliarity with edible dosing and difficulties in dividing edibles can result in unintentional overdosing.

In Canada, regulated edibles must be sold in individual packaging containing no more than 10 mg of tetrahydrocannabinol (THC), although unregulated edibles can contain larger amounts of THC. A typical intoxicating dose of edibles contains 10–30 mg of THC. The impracticalities of dividing edibles into smaller portions (e.g., one-tenth of a 100-mg THC cookie) is a common reason for overdose.

Additionally, edibles have a long latency period and duration of action. Compared to inhaled cannabis, edibles have delayed peak effects of about 3 hours, and these effects may last up to 12 hours after ingestion. People accustomed to an instantaneous effect from inhaled cannabis may ingest excessive doses of edibles before peak effects have occurred (i.e., “dose stacking”).

Unlabeled or improperly stored edibles can also lead to unintentional exposure, which can be particularly dangerous for children. The report notes that, “Ingestion of edibles accounts for three-quarters of all cannabis-related exposures in children.” Similarities in taste and packaging between unregulated edibles and noncannabis foods and candies is a common reason for unintentional exposure. Fortunately, regulated edibles in Canada must be sold in child-resistant packaging with a standardized cannabis symbol and dose, and it is recommended that they be stored in locked locations in households with children.