Cannabis Retailer Social Responsibility Fee and Wholesale Mark-ups



Frequently Asked Questions

 

How does Manitoba price cannabis products?

Manitoba Liquor and Lotteries (MBLL) applies a wholesale mark-up of 9 per cent on non-medical cannabis. The mark-up was effective upon legalization and this approach is similar to that for the sale of alcohol in Manitoba.

The Manitoba government also collects a cannabis retailer Social Responsibility Fee (SRF) on the annual revenues from the sale of non-medical cannabis by all provincially-licensed cannabis retailers. The fee was effective on January 1, 2019.

Manitoba does not apply the provincial sales tax (PST) on non-medical cannabis sales, but continues to apply the PST to the sale of medical cannabis. The federal goods and services tax (GST) applies to both medical and non-medical cannabis sales.

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Why are you not collecting PST on cannabis?

Charging the PST on cannabis would increase the cost to consumers and reduce the competitiveness of legal sales. Our goal is to keep the price for legal cannabis as low as possible to help end the illegal market.

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Why not just charge PST instead of the retailer Social Responsibility Fee?

PST would be paid by the consumer. By applying the SRF instead of PST, Manitoba ensures that all cannabis retailers are contributing to the social costs that will be associated with the use of non-medical cannabis.

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Why are you charging the PST on medical cannabis and not on non-medical cannabis?

PST is an existing tax on medical cannabis, but the Manitoba government will be reviewing its application on medical cannabis in the future. Medical cannabis is also not subject to the Manitoba Liquor and Lotteries' (MBLL) mark-up, because medical cannabis is federally regulated and distributed to licensed users.

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Why are you collecting a Manitoba Liquor and Lotteries (MBLL) mark-up and a Social Responsibility Fee (SRF)?

The mark-up is collected to ensure MBLL's administrative costs are met and to cover costs to the Manitoba government. The mark-up is embedded in the final price paid by the end consumer. Mark-ups apply in all provinces that are using a provincial Crown to distribute cannabis.

The SRF is the retailer's contribution to the social costs of legalized cannabis, and is designed to apply after the retailer has earned revenues rather than as an up front cost that would increase the retail price.

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What is Manitoba Liquor and Lotteries' (MBLL) mark-up used for?

MBLL's mark-up of nine per cent is used for its administrative cost recovery, and covers some provincial costs associated with the legalization of cannabis. The mark-up is embedded in the price at the wholesale level and is ultimately paid by the consumer.

The mark-up may be adjusted to ensure that the retail price remains competitive and Manitoba accomplishes the goals of eliminating the illegal market and protecting our youth.

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What are the Social Responsibility Fee (SRF) revenues used for?

The SRF and mark-up revenues (net of administration costs) will be used to ensure cannabis legalization protects vulnerable populations and to help eliminate the illegal market. This includes paying for the social costs that result from cannabis use (e.g., health and addictions, education, policing and enforcement, and court costs).

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How does this fiscal framework impact First Nations?

Manitoba's retail framework allows First Nations to participate in this new market and earn profits for the benefit of First Nation communities.

First Nations cannabis consumers are impacted in the same way as non-First Nations consumers in that the Manitoba Liquor and Lotteries (MBLL) mark-up is part of the price. This is the consumer's contribution to the costs of legalized cannabis.

The Social Responsibility Fee (SRF) applies to all provincially-licensed retailers, including First Nation retailers, representing the retailers' contribution to the costs associated with non-medical cannabis legalization that will be borne by all Manitobans.

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Do First Nations with status exemptions pay taxes on cannabis?

First Nation Status Indians have a section 87 tax exemption, so retail purchases by a Status Indian individual or Band on a reserve are exempt from the federal GST. PST does not apply to the purchase of non-medical cannabis.

The wholesale mark-up and Social Responsibility Fee are not taxes; the mark-up is included in the price paid by all retail consumers in Manitoba, including First Nations consumers. All licensed retailers must pay the Social Responsibility Fee as a condition of being able to hold a retailer licence in Manitoba.

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