Canada’s cannabis industry says they need the same sorts of support provided to the country’s craft brewers.
In an announcement on March 9, the Canadian government said it plans to provide thousands of dollars in alcohol excise duty relief to Canadian businesses, particularly local craft breweries.
Canada’s cannabis industry has been asking for similar relief for years, with some noting their industry is larger and more heavily taxed and regulated than even beer makers.
In order to help alcohol businesses, the federal government is proposing to cap the inflation adjustment at 2% for beer, spirit, and wine excise duties for an additional two years, and to cut the excise duty rate on the first 15,000 hectolitres of beer brewed in Canada by half for two years. The government says this will provide the typical craft brewery up to $86,952 in additional tax relief in 2024-25.
In a press release, with comments from Deputy Prime Minister and Minister of Finance Chrystia Freeland and Minister of Small Business Rechie Valdez, the government acknowledges the number of jobs created by the brewing industry in Canada and the contribution this makes to the broader economy.
“This announcement is great news for breweries, distilleries, and wineries from all across Canada who contribute so much to our national economy,” said Valdez. “Not only are they producing incredible products, they are also small businesses who are creating jobs and opportunities in their local communities. Today’s relief on alcohol excise taxes will allow craft breweries to spend less on duties, and more on what matters most: growing and innovating their small businesses.”
Jonathan Wilson, CEO of Crystal Cure, a small-scale cannabis producer in New Brunswick, said he found the news difficult to swallow given how much his industry is currently struggling.
“For the Ministers to announce this excise tax relief for alcohol today, with the core message being to support small business in peril, it’s one of two things: cold-hearted or oblivious, and I can’t tell which one. Small cannabis producers that have been suffering under the current industry ecosystem, they are the ones without the cash flow to absorb the exorbitant taxes and fees, and they can’t sell at a loss in perpetuity. These producers were supposed to be the cornerstones of the industry, and it seems everyone is fine with them being allowed to crumble.”
Deepak Anand, an industry analyst and consultant, shared similar sentiments with StratCann.
“The federal government needs to urgently make some similar provisions available for the cannabis industry, which has been struggling much harder than the alcohol industry. Much like alcohol, there are dozens of craft cannabis cultivators who can benefit greatly from similar relief.”
For a comparison:
- According to Statistics Canada, in 2022, breweries employed nearly 23,000 Canadians.
- A Deloitte Report from 2021 said the cannabis industry employed more than 43,000 direct and another 180,000+ indirect jobs in its first three years.
- In 2018, the Conference Board of Canada reported that the beer industry supported 149,000 Canadian jobs, paid $5.3 billion in wages, and contributed $13.6 billion to Canada’s GDP in 2016.
- A Deloitte Report from 2021 said the Canadian cannabis industry contributed $45.5 billion to Canada’s GDP in its first three years, or an average of about $15 billion a year.
“Canada’s small craft brewers are among the finest in the world, and are an important contributor to our growing economy by creating jobs in communities across the country. Today’s announcement is good news for Canadians and for the craft breweries they visit, which will now benefit from thousands of dollars in new tax relief every year,” said Freeland in the press release.
Budget 2022 called for a more streamlined approach to the cannabis industry, which included the creation of a “Cannabis Strategy Table” led by the Department of Innovation, Science and Economic Development (ISED), intending to provide an opportunity for the federal government to hear from industry leaders and identify ways to work together to grow the legal cannabis sector in Canada.
Last year’s budget noted that as the legal cannabis industry in Canada grows, there are opportunities for the federal government to “streamline, strengthen, and adapt the cannabis excise duty framework specifically, and other excise duty regimes under the Excise Act, 2001 accordingly.”
