Tax revenues from marijuana sales aren’t enough to justify legalizing the drug, but a “closed loop” system with proper rules can help keep pot out the hands of minors and criminals, according to a Colorado official who oversees cannabis.
Michael Hartman, the executive director of the Colorado Department of Revenue, sat down with a committee of MPs in Ottawa on Tuesday to discuss how his state has struck a balance between sales and taxation while enforcing strict regulations.
Colorado became the first state to legalize pot in 2014 and has brought in slightly more than $500 million since then -- a figure Hartman says doesn’t come close to alcohol sales.
“One of the things that we spoke with the ministers today about was the fact that, candidly, the tax revenues that come in with it aren’t necessarily the justification for doing it,” he told CTV’s Power Play on Tuesday.
The Liberal government plans to have marijuana legalized by July 2018. Last week, Ontario became the first province to outline its sales system, which includes 150 stand-alone stores opened by 2020 and a minimum age of 19.
Colorado has a 15 per cent tax on recreational marijuana, but local jurisdictions can add up to another 5 per cent to help offset costs such as law enforcement. Medicinal marijuana is treated differently, with a 2.9 sales tax tacked on at the state level.
Hartman said his department handles about $12 billion of revenue through four businesses, including marijuana. This year, pot is expected to account for just $200 million -- or 1.6 per cent -- of that figure.
“It’s just a pittance of the $12 billion in revenue that I touch,” Hartman said.
Those funds are earmarked for specific public services, such as Colorado’s highway transportation fund and school improvements. The state also puts money back into law enforcement to ensure that police have enough resources to enforce rules.
Colorado has divided marijuana sales into two markets: home growers, who are allotted a certain number of plants per home, and the regulated sale of recreational and medicinal marijuana through licensed dispensaries.
Hartman refused to weigh in on what he thinks Canada’s system should look like, saying it’s “not his place to comment,” but he did endorse the idea of limiting home growers.
“I did provide some level of kudos to the ministers today in terms of what they’re looking to do to limit the ability to grow it in homes, because that’s the marketplace where we see the most diversion,” he said.
Colorado and Canada share one of the biggest priorities in regulating pot -- keeping it out of the hands of criminals and cracking down on the so-called “black market.” Hartman says his state employs strict rules for anyone looking to sell marijuana.
“Anybody that comes in for a license, whether it’s on the medicinal side or the recreational side, is required to get a complete FBI background check, a complete check of all of the financial history to make sure that they don’t have any ties to illegal crime, that they don’t have ties to cartels overseas or anything along those lines,” he said.
The House Health Committee is meeting this week to study Bill C-45, otherwise known as the Cannabis Act, before Parliament is back is session on Monday.
The committee is expected to hear from dozens of witnesses from Monday to Friday on issues such as public safety, policing and the responsibilities of the federal and provincial counterparts.
