Unpaid regulatory fees owed by cannabis companies to the federal government jumped more than 200% from the year prior to almost $4 million as of the end of March.
The overdue annual fees have grown every year since 2019 from $24,000 in 2020 to $1.2 million in 2022 and $3.9 million in 2023.
Source: Health Canada
Annual Regulatory Fee
The annual regulatory fee was introduced as a cost recovery measure by the federal government in October 2018 in conjunction with the Cannabis Act.
Cannabis licensees are required to pay the annual regulatory fee to the federal government by September 30. The fee is based on license class and is the higher of:
- The minimum fee for the business license class
- A percentage of the cannabis revenue on the business’s previous year’s statement of cannabis revenue. Revenue up to $1 million is subject to a 1% fee while revenue above $1 million is subject to a 2.3% fee.
The federal cannabis excise tax is separate from the annual fee. Industry has frequently criticized government for what they say are excessive taxes and fees.
$75.7 Million in Annual Revenue
Health Canada charges cannabis business license applicants and licensees four fees to recover program costs: license application screening fees, application for a security clearance, application for import or export permit, and annual regulatory fee.
According to their Annual Report on Fees, in 2021-2022, cannabis fees collected by Health Canada totalled $114,949,669 bringing in $75,683,891 in revenue. The annual regulatory fee brought in $71,121,867 of that revenue.
In 2021-22, Health Canada conducted a review of the cannabis cost recovery framework and assessed the progress of cost recovery and the impact of the fee structure on the policy goals of the Cannabis Act and the cannabis industry. A summary report will be published in 2022-2023.