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The high consumer costs, combined with a shortage of legal cannabis, fuelled the black market, according to analysts.

With that in mind, the government replaced that system with a combined 37 per cent excise tax on the marijuana sales price, but the question of whether this is helping to eliminate illicit sales is up in the air in the still-nascent sector.

U.S. states that have already legalized recreational pot sales — such as Washington, which has an estimated effective tax rate of 50 per cent, and Alaska, where the rate is closer to 20 per cent — are some of the few jurisdictions that can offer history lessons, albeit short and unfinished ones, on how to navigate such complex issues.

Canada’s proposal seems to have landed on a pricing middle ground.

Liberal MP Bill Blair, Ottawa’s point man on pot reform, pitched the government’s federal tax scheme last month. His proposal would impose an excise tax of the higher of $1 per gram or 10 per cent of the final retail price — on top of other levies, such as federal and provincial sales tax.

Ottawa’s proposed tax regime so far (not accounting for municipalities) works out to a 23 per cent total tax on cannabis in Ontario if incorporating the 13 per cent HST. However, it would be cheaper in provinces with just five per cent GST, such as Alberta. But the rate could be as high as 25 per cent in New Brunswick and other provinces with a 15 per cent GST rate.

Governments still have much to learn and there is little available evidence on which to base policies, says Beau Kilmer, the co-director of the RAND Drug Policy Research Center in California, where sales of recreational marijuana are set to begin on January 1.