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‘Illegal’ cash from renegade marijuana retail shops creates tax jackpot for government

OTTAWA — Illegal pot sales are turning into a high earner for governments.

VIDEO: Vancouver marijuana dispensary chain keeps up with the taxman

Don Briere’s national chain of renegade retail shops remitted $688,449 in GST/HST collected from December to May on exploding sales of unlicensed marijuana, hashish and cannabis-laced edibles to relieve aches and pains.

Briere remitted $286,452 more in federal payroll taxes and employer contributions to Employment Insurance and the Canada Pension Plan for 2015. Then there’s personal income tax, corporate tax, store property taxes, workers’ compensation and more.

His illegal business rivals are expected to generate oodles more for government.

“They’re not quaking in their boots when the police come, they’re quaking in their boots when the taxman comes,” Briere said from one of his three stores in Vancouver, part of the contested 19-store Weeds empire rising in British Columbia, Ontario and Quebec.

The apparent contradiction between criminal law and tax law is the latest pot hole on the road to marijuana legalization.

Don Briere owner of Weeds Glass and Gifts in Vancouver looks through some financial records for his national chain of cannabis retail outlets, July 7, 2016. (Ric Ernst/Postmedia News)
Don Briere owner of Weeds Glass and Gifts in Vancouver looks through some financial records for his national chain of cannabis retail outlets, July 7, 2016. (Ric Ernst/Postmedia News)

Weeds is part of a budding, illicit industry that believes it has a legal right to sell cannabis products to customers who can show they have a diagnosed medical ailment that pot is known to treat.

Medical marijuana is legal in Canada but only for patients with a doctor’s prescription who purchase it from one of 33 growers licensed by Health Canada.

As a result, Briere is spending “thousands and thousands” on legal fees — plus tax, of course.

While governments knowingly profit from rebels such as Briere, they condemn the storefront operations. (Licensed growers send the medicine by registered mail.)

The Liberal government recently supported crackdowns such as the police and municipal bylaw raids in June on the hundreds of unlicensed cannabis shops sprouting around Toronto and Vancouver.

Five Weeds outlets closed in Toronto, but days later a chic outlet opened in downtown Ottawa, six blocks from Parliament Hill and the office the justice minister.

Justice Minister Jody Wilson-Raybould
Justice Minister Jody Wilson-Raybould

Jody Wilson-Raybould and the ministers of public safety and health last month issued a joint statement warning that Criminal Code laws against recreational cannabis possession remain in force until the Liberal government legalizes recreational use under legislation to be tabled in the spring.

In the meantime, another section of the Criminal Code makes it a crime to knowingly possess proceeds derived, directly or indirectly, from an indictable offence.

Unless that happens to be the government, in which case crime pays.

“According to the Income Tax Act and to the Excise Tax Act, all income, either from legal or illegal activities, is taxable and is to be reported,” David Walters, Canada Revenue Agency spokesman, said in a statement. “Income earned from a marijuana dispensary/shop is taxable, and should be reported as business income.”

Taxpayers and GST/HST registrants suspected of deriving income from illegal activities are, “risk assessed and appropriate compliance actions are taken by the Canada Revenue Agency that works closely with the Royal Canadian Mounted Police, provincial and local police, and other law enforcement agencies.”

Briere estimates he’ll hit $20 million in sales this year and contribute another pile of “illegal” cash to federal coffers.

“I’m very happy to pay into the system and contribute … to support the police, schools and hospitals,” he said. “It’s not funnelled to a bunch of people who are buying guns and running cocaine.”

Article source National Post

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