Federal government will share 75 percent of cannabis tax revenue with provinces, territories

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      Editor's note: This story has been updated.

      Canada's federal and provincial governments have come to an agreement on how tax revenue from legalized recreational cannabis will be shared.

      In a news release, the B.C. government announced this afternoon that provinces would receive a majority of the cannabis excise tax revenue once cannabis is legalized.

      Provinces and territories will get 75 percent of the revenue from the cannabis excise tax, with the remaining 25 percent going to the federal government. 

      The federal government also agreed to a $100-million cap on its share of tax revenue, which means any revenue exceeding the cap would be funneled back into provinces.

      Initially, the federal government had proposed a 50/50 split, which many premiers said was too low.

      "This agreement is a win for our province as we made a very clear case that British Columbians will bear the majority of costs when cannabis is legalized," Finance Minister Carole James said in the release.

      "We negotiated an agreement for B.C. that means the majority of cannabis revenue will flow to the provinces so we can invest in programs to keep people safe and remove the criminal element from cannabis."

      The federal government announced last month that total federal and provincial/territorial taxes on adult-use cannabis would not exceed $1 per gram, or 10 percent of the producer's sale price of the product, whichever is higher.

      The tax will be applied to producers and is similar to the federal excise taxes on alcohol and tobacco. Cannabis products will also be taxable under GST/HST. 

      According to the release, the province will use the tax revenue from cannabis "to ensure cannabis regulation in British Columbia protects children and youth, prioritizes health and wellness, educates drivers, keeps the criminal element out of cannabis and ensures consumers get a safe product that they can trust."

      Taxable products include fresh and dried cannabis, cannabis oils, seeds, and seedlings intended for home cultivation.

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