Using a price of C$9 ($6.96) a gram, near the federal government’s target price of C$10, governments would miss out on about C$774 million in revenue from excise and sales taxes, and provincial levies due to the supply gap, the researchers calculated. In last year’s budget, the federal government estimated it would raise about C$220 million annually by 2022-23 from taxes on legal pot.
(Bloomberg) Pot producers have been scrambling to ramp up supply amid a slow roll-out of regulations from the provincial governments that will co-ordinate retail sales when recreational pot is legalized on Oct. 17. Canadians meanwhile, may not be so quick to give up their illegal dealers with online sales already rampant.
While warning that estimating supply was challenging, the researchers used data on the medical market from Canada’s health agency, including production, inventory and sales along with estimates for growing times, licensing, and capacity to project recreational supply.
For demand, the analysts incorporated estimates from the federal government and took into account the experiences in the U.S. states of Washington and Colorado, where pot is legal.
To boost legal supply, Health Canada could further streamline the application and approval process for production and sales licenses and quickly make cannabis edibles and other derivatives legal to draw customers away from the black market, the authors suggest.
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