Premier Sandy Silver said he’s happy with the deal the provinces and territories negotiated with the federal government over how taxes on cannabis can be split. (Crystal Schick/Yukon News)

Yukon government not expecting to make an early profit from pot

Finance department estimates YG will sell 700,000 grams of cannabis per year

Yukon’s premier says he doesn’t expect the territory to make a profit on cannabis sales, at least in the early going.

“Based upon our estimates and the numbers that we’ve gathered we think that we’re not going to be making a profit in the first, if not the second, year,” Sandy Silver said following the finance ministers meeting this weekend.

Still, the premier said he’s happy with the deal the provinces and territories negotiated with the federal government over how taxes on cannabis can be split.

“We’re happy. We think we negotiated as much as we possibly could,” he said.

The federal government agreed to give the provinces and territories a 75-per-cent share of the tax revenues from the sale of legalized marijuana when that starts in July. Ottawa will retain the remaining 25 per cent to a maximum of $100 million a year, according to the two-year deal. Any cash above that limit will go to the provinces and territories.

The 75/25 split is higher than the original deal proposed by Ottawa which would have seen the money split 50/50. That option was widely criticized by multiple premiers, including Silver.

Ottawa originally bumped its offer to 70/30. According to Silver, when federal Finance Minister Bill Morneau realized the premiers were “standing together as much as possible on this,” the deal was increased to 75/25.

Earlier this year Prime Minister Justin Trudeau announced a proposed excise tax of $1 per gram of cannabis for sales up to $10 and 10 per cent of the total price for cannabis selling at a higher price point.

Yukon’s Department of Finance is estimating the territory will sell 700,000 grams of cannabis a year, said assistant deputy minister Clarke LaPrairie.

Based on that number, the Yukon is expected to bring in at least $525,000 annually from its portion of the federal tax.

Canada’s finance ministers have agreed to try and keep the price of cannabis at at approximately $10 a gram.

Silver said the territorial government won’t be adding any new taxes on top of what the federal government is implementing. He said it’s too soon to say exactly what the territory’s profit margins will be when it starts selling.

“You need to take a look at wholesaler costs margins, retailer cost margins — all that money is going to the provinces and territories. There’s flexibility in those numbers to make sure that we at least break even and then moving forward it would be good to make a slight profit,” he said.

Earlier this year the Yukon government released its proposed framework for cannabis legalization.

The territory is planning on having at least one brick-and-mortar location up and running in Whitehorse in time for nationwide legalization as well as an online retail store for Yukoners in the communities.

For now, the Yukon government is planning to have the sole authority to import, warehouse, transport and distribute recreational cannabis within the territory. The government has said it needs more time to develop regulations including a licencing system for private retailers.

“We’re still waiting for craft legislation, we’re waiting for the private sector ability to sell and so that will affect things as well as we go,” Silver said.

The Yukon government is accepting public feedback on its plans until Dec. 20.

It will be up to the provinces and territories to decide how much of the tax money ends up going to municipalities.

Municipalities, including the City of Whitehorse, have said they expect extra costs when cannabis is legalized.

The Federation of Canadian Municipalities has said it wants a third of the revenues earmarked to help municipal governments handle administrative and policing costs.

The Yukon government isn’t saying how much it would be willing to give to municipalities.

“This is something that we will speak with municipalities about,” cabinet spokesperson Sunny Patch said in an email. “Any decision on this would have to be based on cost incurred by the community.”

With files from the Canadian Press

Contact Ashley Joannou at ashleyj@yukon-news.com

Federal PoliticsLegalized MarijuanaYukon government

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Liberal leader Sandy Silver speaks outside his campaign headquarters in Dawson City following early poll results on April 12. (Robin Sharp/Yukon News)
BREAKING: Minority government results will wait on tie vote in Vuntut Gwitchin

The Yukon Party and the Liberal Party currently have secured the same amount of seats

Yukonomist Keith Halliday
YUKONOMIST: The Neapolitan election

Do you remember those old bricks of Neapolitan ice cream from birthday… Continue reading

Chief Medical Officer of Health Dr. Brendan Hanley. (Crystal Schick/Yukon News)
Exposure notice issued for April 3 Air North flight

Yukon Chief Medical Officer of Health Dr. Brendan Hanley has issued another… Continue reading

Crystal Schick/Yukon News file
Runners in the Yukon Arctic Ultra marathon race down the Yukon River near the Marwell industrial area in Whitehorse on Feb. 3, 2019.
Cold-weather exercise hard on the lungs

Amy Kenny Special to the Yukon News It might make you feel… Continue reading

Whitehorse City Hall (Joel Krahn/Yukon News file)
This week at city hall

A look at issues discussed by Whitehorse city council at its April 6 meeting.

lwtters
Today’s Mailbox: Rent freezes and the youth vote

Dear Editor, I read the article regarding the recommendations by the Yukon… Continue reading

Point-in-Time homeless count planned this month

Volunteers will count those in shelters, short-term housing and without shelter in a 24-hour period.

The Yukon’s new ATIPP Act came into effect on April 1. Yukoners can submit ATIPP requests online or at the Legislative Assembly building. (Gabrielle Plonka/Yukon News file)
New ATIPP Act in effect as of April 1

The changes promise increased government transparency

A new conservancy in northern B.C. is adjacent to Mount Edziza Provincial Park. (Courtesy BC Parks)
Ice Mountain Lands near Telegraph Creek, B.C., granted conservancy protection

The conservancy is the first step in a multi-year Tahltan Stewardship Initiative

Yukon RCMP reported a child pornography-related arrest on April 1. (Phil McLachlan/Black Press file)
Whitehorse man arrested on child pornography charges

The 43-year-old was charged with possession of child pornography and making child pornography

Team Yukon athletes wave flags at the 2012 Arctic Winter Games opening ceremony in Whitehorse. The postponed 2022 event in Wood Buffalo, Alta., has been rescheduled for Jan. 29 to Feb. 4, 2023. (Justin Kennedy/Yukon News file)
New dates set for Arctic Winter Games

Wood Buffalo, Alta. will host event Jan. 29 to Feb. 4, 2023

Victoria Gold Corp. has contributed $1 million to the First Nation of Na-cho Nyak Dun after six months of production at the Eagle Gold Mine. (Submitted/Victoria Gold Corp.)
Victoria Gold contributes $1 million to First Nation of Na-cho Nyak Dun

Victoria Gold signed a Comprehensive Cooperation and Benefits Agreement in 2011

Most Read