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

Whitehorse and Carcross will be among seven northern communities to have unlimited internet options beginning Dec. 1. (Yukon News file)
Unlimited internet for some available Dec. 1

Whitehorse and Carcross will be among seven northern communities to have unlimited… Continue reading

Willow Brewster, a paramedic helping in the COVID-19 drive-thru testing centre, holds a swab used for the COVID-19 test moments before conducting a test with it on Nov. 24. (Crystal Schick/Yukon News)
An inside look at the COVID-19 drive-thru testing centre

As the active COVID-19 case count grew last week, so too did… Continue reading

Conservation officers search for a black bear in the Riverdale area in Whitehorse on Sept. 17. The Department of Environment intends to purchase 20 semi-automatic AR-10 rifles, despite the inclusion of the weapons in a recently released ban introduced by the federal government, for peace officers, such as conservation officers. (Crystal Schick/Yukon News file)
Environment Minister defends purchase of AR-10 rifles for conservation officers

The federal list of banned firearms includes an exception for peace officers

Yukonomist Keith Halliday
Yukonomist: The K-shaped economic recovery and what Yukoners can do about it

It looks like COVID-19 will play the role of Grinch this holiday… Continue reading

Fossil finds at Mt. Stephen. (Photo: Sarah Fuller/Parks Canada)
Extreme hiking, time travel and science converge in the Burgess Shale

Climb high in the alpine and trace your family tree back millions of years – to our ocean ancestors

Black Press Media and BraveFace have come together to support children facing life-threatening conditions. Net proceeds from these washable, reusable, three-layer masks go to Make-A-Wish Foundation BC & Yukon.
Put on a BraveFace: Mask fundraiser helps make children’s wishes come true

From Black Press Media + BraveFace – adult, youth and kid masks support Make-A-Wish Foundation

Colin McDowell, the director of land management for the Yukon government, pulls lottery tickets at random during a Whistle Bend property lottery in Whitehorse on Sept. 9, 2019. A large amount of lots are becoming available via lottery in Whistle Bend as the neighbourhood enters phase five of development. (Crystal Schick/Yukon News file)
Lottery for more than 250 new Whistle Bend lots planned for January 2021

Eight commercial lots are being tendered in additional to residential plots

The Government of Yukon Main Administration Building in Whitehorse on Aug. 21. The Canada Border Services Agency announced Nov. 26 that they have laid charges against six people, including one Government of Yukon employee, connected to immigration fraud that involved forged Yukon government documents. (Crystal Schick/Yukon News file)
Charges laid in immigration fraud scheme, warrant out for former Yukon government employee

Permanent residency applications were submitted with fake Yukon government documents

Whitehorse City Hall. (Joel Krahn/Yukon News file)
City hall, briefly

A look at decisions made by Whitehorse city council this week

Karen Wenkebach has been appointed as a judge for the Yukon Supreme Court. (Yukon News file)
New justice appointed

Karen Wenckebach has been appointed as a judge for the Supreme Court… Continue reading

Catherine Constable, the city’s manager of legislative services, speaks at a council and senior management (CASM) meeting about CASM policy in Whitehorse on June 13, 2019. Constable highlighted research showing many municipalities require a lengthy notice period before a delegate can be added to the agenda of a council meeting. Under the current Whitehorse procedures bylaw, residents wanting to register as delegates are asked to do so by 11 a.m. on the Friday ahead of the council meeting. (Crystal Schick/Yukon News file)
Changes continue to be contemplated for procedures bylaw

Registration deadline may be altered for delegates

Cody Pederson of the CA Storm walks around LJ’s Sabres player Clay Plume during the ‘A’ division final of the 2019 Yukon Native Hockey Tournament. The 2021 Yukon Native Hockey Tournament, scheduled for March 25 to 28 in Whitehorse next year, was officially cancelled on Nov. 24 in a press release from organizers. (John Hopkins-Hill/Yukon News file)
2021 Yukon Native Hockey Tournament cancelled

The 2021 Yukon Native Hockey Tournament, scheduled for March 25 to 28… Continue reading

Most Read