Brock University Associate Professor of Operations Research Michael Armstrong wrote a piece recently published in Policy Options about the need for the Ontario government to either put profits from legalized cannabis sales to work or stop taking them from struggling cannabis firms.

He writes:

“The Ontario Cannabis Store (OCS) is now the most lucrative provincial cannabis agency in Canada, thanks to four consecutive profitable years selling recreational cannabis. Yet throughout that time, it puzzlingly paid no dividends to Ontario’s government.

OCS ended the last fiscal year with $459 million of accumulated profit in the bank. That makes no sense. The province should either spend the money on public services or stop extracting it from the industry’s pockets.

The strangeness of this situation has become increasingly apparent as finance ministers and government agencies across the country have slowly released their 2022-23 financial results. Quebec’s cannabis agency published its annual report on June 5, for example, but Prince Edward Island didn’t post its statements until Nov. 6.

Taxes

Let’s start by talking about taxes. With cannabis, governments collect excise taxes from producers and sales taxes from retailers.

For example, the federal government’s share of excise taxes and estimated sales tax from cannabis sales across the country totaled $455 million during 2022-23. That equates to about $11.50 per capita or eight per cent of every dollar that Canadians spent on recreational cannabis.

But the top tax collector in total dollar terms was Ontario. It hauled in $310 million in excise tax and an estimated $148 million of sales tax that fiscal year, for a total of $458 million. That’s roughly $29.80 per Ontario resident or 22 per cent of consumers’ spending.”

Continue reading the full article on the Policy Options website.