Ontario considers pricing recreational pot at $10 a gram

The government of Ontario is looking at setting retail prices for recreational marijuana in the range of $10 a gram, CBC News has learned. 

Until now, the provincial government has been reluctant to make public any specific figures about the price of pot, the expected demand or potential revenues from taxation once cannabis is legalized across Canada next July.  

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But on Wednesday, in response to questions by CBC News, Finance Minister Charles Sousa indicated ballpark numbers on both retail price and revenue.

A price point of $10 per gram is "certainly something that we're giving consideration to," Sousa said at the Legislature.  

"The intent is to have some uniformity with these prices across Canada," said Sousa. He said marijuana pricing and taxation is to be discussed at the next meeting of the federal, provincial and territorial finance ministers, this fall.

The government of New Brunswick announced deals with two suppliers on Friday for about 9,000 kilograms of marijuana (about nine million grams) in the first year. Press releases by the companies involved estimated the total retail value of the agreements at $80 million to $100 million, which suggests a retail price of about $10 per gram. 

The current street price of illicit marijuana varies across Canada and by the amount purchased, according to an analysis released last fall by the parliamentary budget officer. It revealed the current average price of weed in Ontario is $8.64 per gram. 

The price of $10 a gram is a tipping point, according to Mark Stupak, founder of SoCo Medical Cannabis Collective in Toronto. 

"If the government proposes to sell pot below $10 a gram, then yes, they will eliminate the black market," Stupak told CBC Radio's As It Happens last week. "If, on the other hand, they keep selling at above $10 a gram, then I don't believe the market will be gone." 

Sousa also indicated Ontario is looking at gross taxation revenue from marijuana in the range of $100 million a year upon legalization. 

"It is not a ridiculous number to consider, because as you've seen in other parts of north America the numbers can be actually quite higher," he said.

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Colorado, with less than half the population of Ontario, brought in $102 million US in revenue in 2014-15, the first full fiscal year of marijuana legalization in that state. That included sales tax on consumers, plus excise tax and licensing on suppliers. Tax revenue rose to $223 million in 2016-17, according to state government figures. Colorado's marijuana sales tax is currently set at 15 per cent. 

Ontario announced earlier this month its plans to sell marijuana through a government-run agency, with sales over the web and from storefronts. However, officials did not release any pricing or taxation figures.