Excise tax on legalized cannabis

When legalization occurs, the government may have little fiscal space to apply tax without pushing the price of legal cannabis significantly above the illegal market price.  Even with only a sales tax, legal cannabis prices in 2018 will likely be as high as illicit market prices in 2015-16. Excise taxes will likely push the legal price above the illicit price observed in 2015-16.  

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    This report provides a forecast of the economic parameters in the cannabis market, including the number of users, aggregate consumption and product prices.  It also provides an overview of potential revenues that could arise from legal cannabis sales, based on existing and projected market data, as well as the government’s stated objectives.