In just half a year after Canada has fully legalized cannabis, the province of Alberta has collected C$30 million in weed taxes.
The Alberta government showed in its fiscal year-end statement that tax revenue collected from marijuana is C$4 million higher than what they had originally estimated.
These are levies that Ottawa collected as an excise tax, with 75% of it returned to the provinces.
The Alberta Treasury Board and Finance said in a statement that the cannabis excise tax was up C$4 million from their projection, thanks to higher than expected AGLC purchases of adult-use cannabis from licensed producers.
According to the financial statement, the Alberta Gaming, Liquor and Cannabis Commission, which is the body in charge of regulating recreational pot, generated almost C$77 million in marijuana sales between October 17, 2018 and March 31, 2019. This amount came mostly from online sales and sales to private retailers.
The annual report noted that the decrease in other tax revenue had been offset slightly by cannabis tax revenue, referring to slightly slumping levies from other sources such as insurance, fuel, and tobacco.
It should be noted, though, that all these numbers still pale in comparison to AGLC’s more traditional revenue streams like gambling and booze. Alcohol took in about C$887 million in the 2018-19 period, while gambling yielded an impressive C$1.736 billion.
There are currently 156 cannabis retail shops that are licensed with the AGLC. This number represents around a 10th of the number of liquor stores in the province.
However, the regulating body only netted a C$4.7-million profit, thanks to the cost of sales.
Cannabis legalization was met with unexpectedly high demand from consumers. And this led to a shortage of supply across the province, and in the rest of Canada.
Because of the supply problem, the AGLC was left with no other choice but to impose a six-month license moratorium on new pot shops in Alberta. This moratorium was lifted on May 30.
The AGLC had 700 applications from 430 businesses at the time of the moratorium. But since the pace the AGLC issues new licenses has quickened, it is not impossible to catch up with the backlog.
Those provincial revenue numbers appear small, but they will go up as the cannabis market continues to grow, Calgary Herald quoted Nick Pateras, senior strategist at industry analyst firm Lift & Co, as saying.
However, Pateras added that taxpayers and governments should not expect anything unexpectedly high from the cannabis sector, he added. “I don’t think taxes from (cannabis) is ever going to be game-changing revenue.”
Pateras further contended that very high tax revenue is a somewhat overstated benefit of cannabis legalization.
He did say that the Alberta dollar figures can be expected to improve as more stores are added and as prices fall due to higher production. This outcome is inevitable as legalization continues to erode the black market.
The Calgary Herald noted that in 2018, before recreational cannabis was officially legalized and retail sales kicked off, the AGLC provided a fact sheet to would-be retailers. It stated that profitability in the cannabis sector is a long-term goal.
In this fact sheet, the Government of Alberta acknowledged that net operating incomes from cannabis will be negative for at least the first couple of years of operation due to the initial costs involved in setting up the new business. Cannabis retailers will need to make their own determination as to whether or not their operations will be profitable.
Some retailers are saying that, generally, they are satisfied with the revenues. However, they added that things would have been better if there had been no issues with the supply in the first few months of operation.