Alberta has announced that it will increase its excise tax on cannabis vape products to 44.3% this spring in a move that Alberta Cannabis Council Executive Director John Carle said will likely drive consumers back to an already thriving illicit market.
The Alberta Cannabis Council, an industry association dedicated to ensuring the safe consumption of properly regulated cannabis products in the province, is speaking out against the new tax, which is an additional 20% tax on all vaping products in addition to the 24.3% excise tax that Alberta has already levied on adult-use cannabis sales.
Most provinces have established a 7.5% excise tax on cannabis products, Carle said, but Alberta chose to impose a 24.3% excise tax. This is in addition to the federal government’s 2.5% tax. With the additional 20% tax on vape products, Alberta is effectively imposing a 46.8% tax on those items.
"Alberta has the highest excise tax in the country of the provinces, and this additional 20% just drives it to the point of being unbelievable,” Carle told Cannabis Business Times.
The Alberta Gaming, Liquor and Cannabis Control Board (AGLC), which regulates the province’s cannabis market, has indicated that the increased tax is aimed at discouraging minors from purchasing vape products in the wake of last year’s outbreak of vape-related lung illness, Carle said.
“They’re hoping to raise it to the point that youth can’t purchase it,” he said. “The problem we have with that mindset is that cannabis vape products are already age gated in cannabis retail outlets where minors aren’t allowed in the store. How are they going to buy it at any price if they’re not allowed in the store?”
For Carle, it seems the tax will only keep the illicit market thriving, which will allow youth to easily access vape products from illicit sources.
“We really are disappointed that the Minister of Finance in Alberta made this decision,” he said. “We don’t believe that it is in the public good [or] that it is going to protect consumers. We strongly believe—and there’s a lot of evidence supporting this belief—that he’s going to achieve the polar opposite of what he’s trying to achieve. By making legal, Health Canada-approved vape products cost-prohibitive, consumers will continue to purchase from the entrenched black market, which has an 80-year head start on the legal market. That’s dangerous, to put it bluntly. That’s how you get Popcorn Lung. They use vitamin E acetate as a thinning agent. That sort of stuff isn’t allowed in Health Canada-approved products. If you’re on a tight budget and you’re going to be vaping something, people are going to buy the black-market products that have dangerous additives in it, are unregulated and are sold by people who have no problem selling to teens.”
This, in turn, will take market share away from Alberta’s licensed producers and retailers, which support the local economy.
“Unfortunately, the minister is going to get 44% of nothing because he’s strangling the cannabis market,” Carle said.
The Alberta Cannabis Council is made up of cannabis cultivators, dispensaries and ancillary businesses that want to see the industry succeed and employ local Albertans, he added. The organization works to get messaging in the hands of regulators and the public to change the stigma surrounding cannabis and to create a strong, healthy industry that can displace the illicit market.
Carle advises legal cannabis businesses to carefully consider their product lines in case the government cracks down on another area of the market with increased taxation.
“And if you’re a retailer, take good care of your customers, because you’re not going to get them on price,” he said. “You’re only going to get them on loyalty and service."