A new study pegs B.C. users' marijuana consumption at a value of $500 million per year.

A new study pegs B.C. users' marijuana consumption at a value of $500 million per year.

Marijuana tax estimates based on doubling price of pot

Chasing too much of a government weed windfall may keep black market alive, observers say

Taxing B.C. bud could generate hundreds of millions of dollars in provincial government revenue each year, but likely not billions, a new study suggests.

The study, prepared by UBC and SFU researchers and published in the International Journal of Drug Policy, estimates B.C. marijuana users spend roughly $500 million a year on pot.

The Stop The Violence BC campaign to legalize marijuana has used that figure to infer B.C. could reap $2.5 billion in revenue over five years by heavily taxing the drug.

That would mean at least doubling the current price of weed to generate the same amount in tax if it were sold legally in the province – a scenario some observers have warned could keep the gang-controlled black market alive and well.

Washington State, with a similar sized pot-smoking population, has come up with its own estimate of nearly $2 billion in government revenue over five years from taxing marijuana. Voters there approved legalization in a referendum earlier this month.

Its planned 25-per-cent tax would be levied not just once but on each wholesale and retail sale, and other state and local taxes and licensing fees would also apply.

Kevin Hollett, a spokesman for Stop The Violence, defended the idea of tax levels that sharply drive up the price, noting taxes make up 81 per cent of the retail price of tobacco.

But SFU criminology professor Neil Boyd said governments hungry to plunder the pot market should be careful how much money they try to extract.

“The current price on the black market of marijuana is $200 to 300 an ounce,” he said. “If people who are going to tax and regulate it were going to sell it for $600, you’re still going to have a black market.”

Another criminologist, Daryl Plecas, has argued high taxes just keep the door open for organized crime.

He said the main market for gangs would go up in smoke if pot was made legal for anyone to grow and possess and government made no attempt to tax or regulate it, but added that only works if consistent laws are applied across North America.

Boyd said he believes governments could tap a major flow of revenue under legalization without driving too much trade underground.

Alcohol is heavily taxed, he noted, but there’s no significant black market.

He agreed illegal trade will remain a factor as long as there’s a big export market.

A North America-wide scheme would be best, he said, but predicts there’d be “a really significant change” if even half the U.S. states taxed and regulated pot.

The new study’s estimates were based on an average price paid in B.C. of $7.50 per gram, although it cautioned most pot smokers may pay more than that.

Washington’s estimates assumed a $12-per-gram retail price, four times the estimated $3-per-gram cost of licensed marijuana producers.

Past studies suggest B.C. grown marijuana is worth $7 billion a year, with at least 85 per cent going to export.

The number of pot grow-ops in B.C. is thought to have nearly doubled between 2003 and 2010.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Abbotsford’s Tradex has been transformed into a volleyball and basketball facility with Open Court. (Instagram photo)
Abbotsford’s Tradex transforms into sports facility

Open Court program hosting volleyball and basketball teams for practices and possibly games

Abbotsford’s Skully White (left), who donated his kidney in December, has started a campaign to find other recipients and donors. The first candidate is retired police officer Gavin Quon. White owns and operates a hotdog stand, Lullys Food Experience, out of the Abbotsford Canadian Tire parking lot. (Facebook photo)
Abbotsford hotdog-stand owner starts campaign to find kidney donors and recipients

Skully White donated his kidney to customer Tim Hiscock in December

The Harrison Hot Springs Resort. Visitors to the resort currently pay a three per cent “hotel tax,” which is brought back to the district to help fund tourism initiatives. (Grace Kennedy/The Observer)
Harrison hoping to expand hotel tax to Kent, parts of Fraser Valley

The expanded area would bring in more money for Tourism Harrison marketing

Dallas Lajimodiere is wanted by the Abbotsford Police Department.
Man wanted by Abbotsford Police domestic violence unit

Dallas Lajimodiere has three arrest warrants, including for assault with a weapon

Businesses continue to struggle under COVID-19 restrictions as the pandemic reaches the one-year mark. (B.C. government)
Another 564 COVID-19 cases, mass vaccine plan coming Friday

15 more deaths, community cluster declared in Williams Lake

Darlene Curylo scratched a $3M ticket, BCLC’s largest ever scratch and win prize. (BCLC)
Kelowna woman in shock after winning BCLC’s largest-ever instant-ticket prize

Darlene Curylo couldn’t believe her eyes when she saw the amount of money she’d won from a scratch ticket

While each person has different reasons for becoming homeless, a UBCO study shows they learn through their interactions with different services to perform ‘as homeless’ based on the expectations of service providers. (Contributed)
Kelowna homeless forced to ‘perform’ for resources, says UBCO study

One participant in the study said ‘It is about looking homeless, but not too homeless’

Gov. Gen. Julie Payette takes the royal salute from the Guard of Honour as she makes her way deliver the the throne speech, Wednesday, September 23, 2020 in Ottawa. THE CANADIAN PRESS/Fred Chartrand
Gov. Gen. Julie Payette resigns, apologizes for ‘tensions’ at Rideau Hall

Payette, who is the Queen’s representative in Canada, has been the governor general since 2017

Grounded WestJet Boeing 737 Max aircraft are shown at the airline’s facilities in Calgary, Alta., Tuesday, May 7, 2019. WestJet will operate the first commercial Boeing 737 Max flight in Canada today since the aircraft was grounded in 2019 following two deadly crashes. THE CANADIAN PRESS/Jeff McIntosh
Passengers unfazed as WestJet returns Boeing 737 Max to service on Vancouver flight

After a lengthy review process, Transport Canada cleared the plane to return to Canadian airspace

The top part of the fossil burrow, seen from the side, with feathery lines from the disturbance of the soil – thought to be caused by the worm pulling prey into the burrow. (Paleoenvironntal Sediment Laboratory/National Taiwan University)
PHOTOS: SFU researchers find evidence of ‘giant’ predatory worms on ocean floor

Fossils found the prove the existence of an ancient Taiwanese worm as long as two metres

RCMP officers provide policing for 63 B.C. municipalities under a provincial formula based on population. (Black Press file photo)
B.C. communities warned of upcoming RCMP unionization costs

Starting salaries for city police officers are 30% higher

Brandon Nathan Teixeira, charged in connection with a fatal 2017 shooting in South Surrey, is to return to court Feb. 2, 2021. (File photos)
Pre-trial conference set for accused in 2017 South Surrey killing

Brandon Nathan Teixeira set to return to Vancouver court Feb. 2

(Pxhere)
B.C. nurse suspended after using Tensor bandage to trap long-term care patient in room

Susan Malloch voluntarily agreed to a three-day suspension of her certificate of registration

Most Read