The Canadian cannabis industry needs immediate action to revise the tax structure that is killing the legal cannabis industry as producers, processors, and retailers struggle to survive with excessively high tax rates. George Smitherman, CEO of the Cannabis Council of Canada (C3) says, “The current model of taxes and fees leaves too little for the producers and processors of cannabis that have invested billions in communities across Canada.”
The cannabis industry has created 150,000 jobs in both large and small communities across Canada and these jobs are now at risk as more companies are closing their doors.
Excessive regulations have also added to the cost of doing business in the cannabis sector and is affecting the financial viability of companies. In question period at the legislature, MP Scott Reid said, “Canada’s legal cannabis sector functions under crushing federal taxes and insanely high regulatory compliance costs. The result is that for consumers, legal cannabis costs about twice the price of illegal product. The government has made it impossible for legal producers to be competitive by closing this price gap.”
Canadian Cannabis Revenue
Statistics Canada recently released a report showing that the Canadian cannabis authorities have generated $1.55 billion in net income on sales of $3.1 billion in the past year!
|Net Income of Cannabis Authorities and Government Revenue
from the Sale of Cannabis
|Cannabis Revenue 2021/2022||Dollars (x1,000)|
|Cannabis authority sales||3,108,932|
|Deduct: cost of goods sold||2,453,286|
|Deduct: administrative and general expenses||349,946|
|Add: Other income||26,619|
|Net income of cannabis authorities||332,319|
|Total taxes and other revenue||1,219,842|
|Federal excise tax and customs duties||160,241|
|Provincial and territorial excise tax||592,225|
|Harmonized sales tax||236,100|
|Goods and services tax||110,674|
|Provincial/Territorial sales tax||110,818|
|Other provincial/territorial revenue||9,783|
|Net income of cannabis authorities and total taxes and other revenue||1,552,161|
Source: Statistics Canada. Table 10-10-0165-01 Net income of cannabis authorities and government revenue from the sale of cannabis (x 1,000)
As the federal government is getting ready to announce its 2023 budget, C3 is advocating for no regulatory fees for cannabis, so that this industry is treated the same as alcohol and tobacco. According to C3, the cannabis sector faces excise taxes around 50% higher than tobacco. Smitherman says, “Cannabis warrants a do-over from this unequal practice and the $100 M plus collected to date by Health Canada refunded!”
Photo courtesy of Cannabis Council of Canada. CEO delegation included Jonathan Wilson, CEO Crystal Cure, Margaret Brodie, Acting CEO and CFO Rubicon Organics, Niel Marotta, CEO Indiva, George Smitherman, President and CEO of the Cannabis Council of Canada, Mandesh Dosanjh, CEO Pure Sun Farms, Lennie Walser, President TRURO Cannabis, Pierre Killeen, Vice President Cannabis Council of Canada.