Canada’s federal and provincial governments earned $107.1 million by taxing the cannabis industry in the first three months of 2019.

New data from Statistics Canada shows that the federal government raked in $32.1 million and provincial governments made $75 million during Q1 2019. It represents a 35.6% increase on the $79 million in revenues from the sale of cannabis in Q4 2018.

Adult-use cannabis was legalized on Oct. 17, 2018, so the Q4 2018 data covers a shorter time period of just two-and-a-half months. Yet the data still suggests that revenues are increasing on an ongoing basis as the supply shortages that plagued the early weeks of the nascent industry are finally starting to be eradicated.

In the past month, Alberta has lifted a moratorium on new retail applications as it finally feels it can guarantee supply, and Quebec cannabis stores can now open seven days per week due to an increase in the amount of available marijuana the Société québécoise du cannabis can access.

Initially, Alberta Gaming Liquor Cannabis ordered enough cannabis to supply 250 stores for the first few months of trading, but it only received a fifth of that. It now plans to issue five new retail licenses per week after growing confident that licensed producers can start to meet demand.

The government revenue comes from a 10% excise tax on sales, plus either a 5% Goods and Services Tax or a Harmonized Sales Tax between 13% and 15% depending on which province or territory the cannabis is purchased in.

Federal excise tax has amounted to $18.8 million and federal tax on goods has come to $25.5 million from Oct. 17, 2018, to Mar. 31, 2019. Provincial excise tax stands at $79.1 million and provincial tax on goods is $52.7 million in that time.

Yet supply shortages are still preventing retailers across the country from realizing their full potential, and the situation could well be exacerbated when cannabis edibles and other extracts are legalized in October 2019. The first products will hit shelves in mid-December, and it is hoped they will boost the industry by $2 billion per year, but they are likely to contribute further to short-term supply shortages as licensed producers struggle to fulfil demand.

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