Pubdate: Sun, 16 Apr 2017 Source: Edmonton Sun (CN AB) Copyright: 2017 Canoe Limited Partnership. Contact: http://www.edmontonsun.com/letter-to-editor Website: http://www.edmontonsun.com Details: http://www.mapinc.org/media/135 Author: Mark Bonokoski Page: 14 LEGIT WEED'S PRICE POINT Buy low, sell high, and other dope on legalized pot In the bull-bear world of stock-market traders, the smell of fear ultimately tightens sphincter muscles and triggers sell-offs. Within minutes of Justin Trudeau's Liberals tabling their pot legislation, for example, the TSX began dumping some of its publicly traded marijuana stocks. The lack of clarity in the Liberals' spanking-new Cannabis Act got speculative investors nervous, which led to a feeling of financial uncertainty, which led to an unloading of stock. Whether pot or pork bellies, a commodity is a commodity. While the Liberals would love to say that the legalization of recreational marijuana has everything to do with it being 2017, and finally time to light up and lighten up, the reality is that it comes down to what most decisions come down to. And that's money. Big money. But the government cannot get greedy. Now dollars-for-doughnuts betting would likely have former Toronto Police chief Bill Blair loathing being called the Trudeau's government's "marijuana czar." But, as an MP and parliamentary secretary to the justice minister, the ex-top cop who spent a career hauling druggies off to court, including "gangsters in a stairwell," providence now has him in charge of untying the criminal tether of dope smokers. A few days before the pot bill was tabled, the C.D. Howe Institute wrote a memo to Blair outlining its concerns that the government must choose either revenue or regulation. It had to be one or the other. At first blush, it would appear the Liberals' legislation is heavy on regulation -- with age limits, stiff penalties for selling pot to minors, restrictions on packaging, and heavy fines for non-compliance. Details on cost and taxation, however, thus far don't exist. So there is yet no price point. According to C. D. Howe policy adviser Rosalie Wyonch, projections for 2018 will see 4.6 million Canadians consuming 655 metric tonnes of marijuana. "That's a lot of marijuana for both federal and provincial governments to tax to generate a windfall of tax revenue," wrote Wyonch. "Due to the existence of a prolific black market, however, there has to be a trade-off. "This means that governments much choose a regulated market or large revenue generation -- but not both." Heavy taxation, of course, will play into the black market that currently has total dibs on marijuana sales, and will undermine the government's efforts to take control. Wyonch estimates that applying only HST -- the combined federal and provincial sales tax -- to marijuana priced close to present street levels will result in the government's control of 90% of the market and approximately $675 million in annual tax revenues. But, if the government wants bigger money, and pushes taxation to bring in, say, $1 billion, it would lose half the market and approximately 300 metric tonnes of consumption to organized crime. It's all about price point, which is why governments are grappling with a burgeoning contraband tobacco business where 200 cigarettes can be purchased for as little as $20 instead of $110-plus for the same number of smokes legally purchased at a convenience store. "(Even) a one-dollar premium between legal and illegal weed will result in about 35% of the market being unregulated," says Wyonch. "This gives all the more reason for the government to be cautious about levels and types of taxation." In other words, if the Trudeau Liberals primary concern is squeezing out organized crime from the marijuana market, they had better be smart about pricing and taxation. They must also realize organized crime is not stupid. It undoubtedly already has a game plan -- as in cheaper, better, with creative packaging, and with no ID ever required. And all tax free. - --- MAP posted-by: Matt