The Cannabis Council of Canada (C3) is calling the cannabis community to Ottawa to commemorate the fifth anniversary of cannabis legalization in Canada and appeal to the Government of Canada to fulfill the promise of legalization by responding to the mounting evidence of challenges faced by the nascent industry.
A recent C3 survey of Licensed Producers (LPs) from coast to coast underscored the urgent need for government reforms to rejuvenate the sector, ensuring its continued growth and contribution to the Cannabis Act’s public policy objectives. The survey, compiling responses from 122 LPs across the country, identified the major financial challenges facing the Canadian cannabis industry:
- 71% of respondents reported a surge in excise tax payments from 2021 to 2022, reflecting the adverse financial impact of escalating excise taxes due to price compression and burdensome regulatory fees.
- 83% of LPs reported negative net income in 2022. This significant increase in the excise tax burden has placed an unsustainable strain on LPs, impeding their capacity to invest in growth and innovation.
C3’s Key Recommendations to Government:
The Cannabis Council of Canada, recognizing the importance of the cannabis sector’s contributions to the success of the Cannabis Act, has released a position paper outlining three urgent recommendations:
- Reform the Excise Duty Framework: C3 advocates for a fairer taxation system, proposing the reduction of excise tax to a fixed rate of 10% of sales and structural changes to the operation of the program that are costly and inefficient. These changes would ensure that the diverse cannabis industry is sustainable and can compete with the illicit cannabis industry.
- Eliminate Excessive Regulatory Fees: Overbearing regulatory fees, which do not exist in other sectors such as alcohol and tobacco, have hampered the growth and profitability of LPs. C3 urges the government to eliminate these unfair fees.
- Reform the Edibles Product Category: C3 calls for an increase in the allowable THC limit in edibles to 100 mg, aligning regulations with consumer protection and winning this category back from the illicit market.
“After five years of legalization, the regulated cannabis industry is struggling due to high taxes, excessive regulation, and unbridled competition from the illicit market. To fulfill the potential of legalization, the sector needs reform urgently. We’ve identified the top areas the government can change today to allow us to collectively grow the pie,” said George Smitherman, President & CEO of the Cannabis Council of Canada.
“Growing the pie means more revenue for the cannabis sector and governments, and it means extending the protection of the regulated sector to more Canadian cannabis consumers.”
Mike Schilling, President & CEO of Community Savings, stressed the economic benefits that a thriving cannabis sector can bring to Canada. He stated, “A revitalized cannabis industry can serve as a valuable source of tax revenue and employment opportunities, especially in challenging economic times. Between 2018 and 2021, the legal cannabis industry generated $11B in sales, $29B in investments, 98,000 jobs, and added $43.5B to Canada’s GDP. It’s time for the government to support the economic potential of Canada’s nascent cannabis industry.”
On this landmark fifth anniversary of cannabis legalization in Canada, the Cannabis Council of Canada urges the government to take action promptly to implement these critical reforms and support an industry that has the potential to contribute significantly to the Canadian economy. The cannabis sector stands at a crossroads, and the government’s support is pivotal in ensuring its success.