Government Governs Carefully

According to this article by the Vancouver Sun, the first excise-taxes from cannabis revenues for the province of BC will be $68m from now up to the next 3 years, which falls 66% short of the $200m they originally predicted.

Although the reason for the shortfall in tax revenues is up for debate, one thing is clear: not enough cannabis dispensaries are being licensed since legalization started on October 17.

With just 14 cannabis retail locations approved in the province to date, the average tax revenue for cannabis is nearly $5m. At that rate, another 26 more retail locations would need to be opened until the province can hit its mark of $200m in tax revenues.

So what’s the big deal? Skeptics are quick to highlight the industry as flawed and that revenues are typically under-reported or hidden. However, upon closer inspection the 1/3 revenues aligns with the 2/3 growth rate needed to hit the estimate. This means the industry is on the right track to meet expectations, but the timing and execution could’ve been a little faster.

But we shouldn’t be too quick to criticize the government for slowly and careful industry roll out.

For one, it’s not very often that we legalize something big like when Alcohol Prohibition ended in the early 1900’s. This is not something the government does on a continual basis, and understandably it’d be unfair to assume it can be done quickly and efficiently. This is a first time for everyone dealing with the roll out behind the scenes, involving different bodies and levels of government coordinating with each other for the first time.

And let’s not forget what happens when the government moves too hastily.

Back in 2015 Health Canada was sued in a class action lawsuit after 40,000 medical marijuana patients received letters marked with the “Marijuana” name in the return address. The patients alleged that Health Canada violated their rights to privacy by including the word “Marijuana Program” on the letter return address, which could be read by community postal workers, neighbors, roommates, and family members, exposing their health conditions, risking their jobs, and potential home invasions.

Rolling out a big project without care can result in more expensive lessons, and although we’d like to see the tax revenues coming and everyone making money, it’s no surprise our government doing what they do best: slowly and methodically making progress happen. One thing’s for sure at the very least, it’s nice to see the promises are being kept, and that progress is being made.

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