The future of carbon tax and Canadian cannabis

Carbon tax is becoming normal. How will this affect the costs associated with cannabis production?

The Federal Government has said Canadian provinces will be required to put a price on carbon through either a carbon tax or cap-and-trade system by 2018. Prime Minister Trudeau has said the provinces will be required price at a minimum of $10 per tonne, increasing to $50 by 2022.

British Columbia, Quebec, Alberta and Ontario all have carbon-pricing plans already in place, and other provinces will be required to follow suit.

While much has been written discussing how carbon taxes impact consumer goods, one subject not yet explored is how that factors into the cost of producing cannabis.

To estimate this, we’ve looked at the 2011 study performed by Evan Mills, Ph.D. on the carbon footprints for indoor grow spaces in California. The study investigated energy usage for several indoor facilities and determined the average carbon output per kilogram of cannabis produced and found that producing a kilogram of processed Cannabis resulted in 3,000 kilograms of CO2 emissions.

We've used the carbon footprint per kilogram with the 2017 provincial carbon permit costs to give a rough estimate of the tax on cannabis produced in Canada. It is important to note that the carbon emissions figures in the Mills study are based on California energy costs and required energy intensities to grow Cannabis indoors in the state (200 watts per square foot); actual Canadian figures will differ. Energy costs in Canada will differ regionally, with respect to energy cost and production method.

Moving forward, Carbon Tax levies are predicted to increase on the national level to $50 per tonne by 2022, increasing the levy on a kilogram of processed cannabis from $28.00 to $140.00. In Alberta, Carbon Tax levies will increase from $20 per tonne in 2017 to $30 per tonne in 2018, an increase of $28 of Carbon Tax on a kilogram of cannabis. Ontario’s cap-and-trade system is predicted to maintain permit prices around $19.00 per tonne in 2020; adding an estimated $3.50 per kilogram of cannabis over the 2017-2020 period.

Featured image via Wikipedia.

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