The Canadian Cannabis Council (C3), the Canadian organization of cannabis licensees registered with Health Canada, commemorated the fifth anniversary of the legalization of cannabis in Canada by calling on the government to better respond to the many challenges facing the industry.
A recent C3 survey of licensed cannabis producers (LPs) highlighted the urgent need for government reforms to boost the sector, ensure its continued growth and contribution to the public policy objectives of the Cannabis Act. The survey, compiling responses from 122 LPs across the country, identified the key financial challenges facing the Canadian cannabis industry:
- 71% of respondents reported an increase in excise tax payments between 2021 and 2022, reflecting the financial impact of escalating excise taxes due to price suppression and burdensome regulatory fees
- 83% of distributors reported negative net income in 2022. This significant increase in excise tax burden has placed unsustainable pressure on LPs, hindering their ability to invest in growth and innovation, according to C3
Main recommendations of the C3 to the government
The Cannabis Council of Canada has released three urgent recommendations:
- Reform the excise tax framework: C3 advocates a fairer taxation system, notably proposing a reduction in the excise tax to a fixed rate of 10% of sales. This change would ensure the viability of the cannabis industry and compete with the illicit cannabis industry
- Eliminate Excessive Regulatory Taxes: Excessive regulatory fees, which do not exist in other industries such as alcohol and tobacco, have hindered the growth and profitability of LPs. C3 asks the government to eliminate these fees that it considers unfair
- Reform the edible category: C3 calls for an increase in the THC limit authorized in edibles at 100 mg, in order to align regulations with consumer protection and take this category back from the illicit market
“After five years of legalization, the regulated cannabis industry is struggling due to high taxes, over-regulation and cutthroat competition from the illicit market. To realize the potential of legalization, the sector urgently needs reform. We have identified key areas that government can change today to enable us to collectively grow the pie,” said George Smitherman, President and CEO of the Canadian Cannabis Council.
“Growing the pie means more revenue for the cannabis sector and governments, and it means extending the protections of the regulated sector to more Canadian cannabis consumers.”