The federal government will allow provincial governments to keep a larger share of revenues than initially anticipated.
Finance Minister Bill Morneau has reached deals with Canada's provincial and territorial governments on sharing taxes from legalized marijuana.
For every dollar collected over the two years after legalization, the provinces will receive 75 cents.
Ottawa will cap their own revenues at $100 million, meaning any left over monies will also go to the provinces.
This is a substantial shift from the federal government's original position that taxes would be split 50-50.
While the exact rate of taxation has yet to be approved, one proposal is to have cannabis taxed at $1 per gram or 10% of the final retail price.
Note: This story originally stated that the provincial and territorial governments would receive 70% of legal cannabis revenues.
- David Opinko / with files from Canadian Broadcasting Corporation