Status First Nations to remain tax exempt on marijuana sales on reserve land

Saskatchewan's marijuana legislation was announced earlier this week and the province said in an email thatit hasn't madeany decision yet regarding a provincial sales taxon marijuana.

But according to both the federal and provincial governments, First Nations people with a valid certificate of Indian Status card will be tax exempt when buying marijuana from a business located on reserve land.

The federal government has confirmedthat any First Nations owned and operated business on reserve land will not have to payGST/HSTon any cannabis products.

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Although the Indian Act tax exemption will be honoured, the federal government has indicated thatdoes not extend to the excise duties which will be applied to cannabis products.

Excise duties apply to spirits, wine, beer and tobacco products. A duty amount is applied to the product at the point of packaging rather than the point of sale, so all potential First Nations-owned retailers will have to pay the excise duty regardless of status.

The amount of excise duty proposed by the federal government is 50 cents per gram of cannabis or five per cent of the producer's sale price. An additional rate would apply for an agreeing province or territory.

Here is a sample breakdown from the federal Department of Finance's websiteof how the purchase of one gram of dried cannabis looks for a non-status person who pays GST/HST.

• Pre-duty price: $8
• Excise duty (per gram): $1
• Subtotal: $9
• GST/HST: $1.17
• Total: $10.17

In this example, if the customer has a status card and is buying cannabis from a business on reserve land, they would not paythe GST/HST. The example does not indicate what amount a retailer may add to the cost.

Much like tobacco sales in Saskatchewanwhere a wholesaler provides tobacco products to permitted businesses, wholesaling of cannabis will be done by private sector businesses.

The only difference between tobacco and marijuana is that the province's Saskatchewan Liquor and Gaming Authority will be the issuer of permits to wholesalers who meet the federal and provincial criteria.

Under an agreement made in December, 75 per centof the revenue from the cannabis excise tax will go to provincial and territorial governments and25 per cent to the federal government. The federal portion of the excise tax revenue will be capped at $100 million annually, with any federal revenue in excess of that going to theprovinces and territories.

A Finance official said the government will announcefurther details about the excise duty framework and execution ofthe collection agreements with provinces and territories in the coming months.