Blue Diamond Ventures Inc (BLDV)

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At a Glance: Cannabis Taxation - Department of Finance of Canada

Date modified: 2017-11-10

The current approach to cannabis is not working, and the Government of Canada is committed to legalizing, regulating and restricting access to cannabis to keep it out of the hands of kids, and profits out of the hands of criminals. The Department of Finance Canada is consulting on a proposed new taxation regime on cannabis, which will help us achieve those goals, and is working with the provinces and territories to ensure a coordinated approach across the country.

Proposed Excise Duty Framework

The Government of Canada believes that the total of federal and provincial-territorial taxes on cannabis products should not exceed $1.00 per gram, or 10 per cent of the producer’s sale price of a product, and that this tax room should be shared equally between the two orders of government. The proposed federal excise duty rate would be 50 cents per gram of cannabis, or 5 per cent of the producer’s sale price of that product. An additional rate would apply for an agreeing province or territory.

The proposed duty would apply to all cannabis products available for legal sale, including fresh and dried cannabis, cannabis oils, as well as seeds and seedlings for home cultivation. The rate will also apply to the sale of medical cannabis.

It is important to note that excise duties are not paid directly by consumers. Rather, they are paid by manufacturers.

Application of Goods and Services Tax/Harmonized Sales Tax (GST/HST)

Cannabis product sales will be taxable under the Goods and Services Tax/Harmonized Sales Tax (GST/HST), as is currently the case for medical cannabis, for example.

Unlike the excise duty, GST/HST is paid directly by consumers at the point of sale.

The following example shows the final price paid by consumers at a combined rate of $1.00 per gram, or 10 per cent of the sale price:


One gram of dried cannabis

Pre-duty price: $8.00

Excise duty (per gram): $1.00

Subtotal: $9.00

GST/HST: $1.17

Total: $10.17


60 ml bottle of cannabis oil

Pre-duty price: $130.00

Excise duty (per cent): $13.00

Subtotal: $143.00

GST/HST: $18.59

Total: $161.59

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Source: http://www.fin.gc.ca/n17/data/17-114_2-eng.asp

Secondary link to Proposed Excise Duty Framework for Cannabis Products that the Government of Canada is seeking feedback on: https://www.fin.gc.ca/n17/data/17-114_1-eng.asp

- I understand that the $8.00 is presented for illustrative purposes only; however, the total of federal and provincial-territorial taxes of $1.00 per gram, or 10 per cent of the producer’s sale price of a product that the Government of Canada is proposing has what I think is an imputed $10.00 per gram ceiling price ($1.00/10%). I could be wrong, if anyone has any thoughts please share them.

- Stervc, your valuation in your post #66595 (link back) assumes 30 million grams per harvest for AMS only. Assuming they obtain the funding, I think your valuation would yield revenues that are almost 2.7 times higher if we use the illustrative $8/gram (30 million grams x $8/gram = $240 million revenue per harvest approximately) which we could assume is the price before excise duties and taxes using what I think is the imputed price presented above. Do you agree? If yes, whenever you could kindly post an updated valuation post that would be greatly appreciated. Thank you.

Go BLDV!