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Manitoba Retailers’ New Tax Concerns

It’s no secret that the taxes placed on cannabis products has been of great concern to advocacy groups, licensed producers, and retailers. Many make the argument that excessive tax requirements and the resulting price markups don’t help the goal of eliminating the illicit cannabis market when the consumer ultimately pays for what the federal government wants from sales.

A Possible New Tax Framework for Manitoba Retailers

Now, the Province of Manitoba may be eliminating the 6% levy tax on retailers (the “social responsibility fee”) and replacing those revenues by placing a higher tax on products. The social responsibility fee was to help the province manage associated costs with legalization, including social services, addiction support, and education around cannabis use.

Announced on November 28, Bill 10, The Liquor, Gaming and Cannabis Control Amendment Act (Social Responsibility Fee Repealed), was introduced by the Minister of Finance, Cameron Friesen. Yet, it is unknown what the new tax framework will be. It was indicated that it could piggyback off the existing excise tax collected by the federal government, which Manitoba originally opted out of. Friesen says that this step will help the province eliminate the illicit market.

Fear of Increased Competition from Large Retailers

Manitoba has a well-saturated market due to no restrictions on the number of cannabis retailers or the proximity between stores, with 170 stores at present. Until now, retailers accounted for the 6% social responsibility fee in their pricing and would pay their fees in a lump sum.

With no provincial minimum margins for sales, retailers worry that larger companies will be able to absorb a proposed new tax than smaller, independent retailers more easily. If the province were to adapt the federal excise tax model, taxes on one gram of cannabis would go from $0.25 to $1. This could result in many retail businesses closing if the price of cannabis goes up for consumers, but larger businesses can offer lower prices.

Bill 10 will go through a second and third reading before becoming law, so now is the time for cannabis retailers to lobby government and advocate for their interests.

Tags: Cannabis Retail (394), cannabis tax (5), excessive excise tax (3), illicit cannabis market (8), Manitoba cannabis retailers (2)