Five years since the legalization of cannabis in Canada, the industry finds itself grappling with significant challenges. Despite making economic contributions on par with the dairy sector and marking its presence on the global stage, primarily in the medical cannabis export market, this promising industry is hindered by financial strains, murky advocacy, and unyielding regulations.
Excise Tax: A Thorn in the Side
A primary issue, raised during a recent industry gathering in Toronto, is the hefty excise tax, which critics suggest is out of sync with current market prices and disproportionately burdens businesses, gobbling up as much as 30% of their revenue. The tax calculation was initially based on an estimated price of C$10 per gram. However, it has failed to adjust to the actual market price, which has plummeted to as low as C$1 per gram. This discrepancy has left producers grappling with narrow margins, threatening the viability of their businesses.
Producers Bear the Brunt
According to a survey conducted by the Cannabis Council of Canada, producers shelled out between 20-35% of their gross sales in excise taxes in 2022, marking a significant increase from the previous year. The industry is also subjected to a unique regulatory fee structure, not seen in other sectors. In the fiscal year 2020-2021, Health Canada amassed about C$75.7 million in regulatory fees from cannabis companies, while their counterparts in the tobacco and alcohol industries were exempted from similar fees.
Consumers in the Crossfire
Not just the producers, consumers of legal cannabis products also feel the pinch. Nearly half the cost of these products is due to government taxes and provincial markups. The current tax structure seems to place a heavy financial burden on consumers, potentially impeding the growth of the legal cannabis market.
Call for Reform and Consumer Education
Industry leaders are echoing calls for reform, and retail initiatives are stepping forward to educate consumers about the tax structure. The present state of affairs calls for the government to revisit the tax structure, streamline regulations, and create a more sustainable environment for both producers and consumers of legal cannabis in Canada.
Source: https://bnnbreaking.com/world/canada/canadas-cannabis-industry-struggles-under-weight-of-onerous-taxation-and-regulations/?utm_source=rss&utm_medium=rss&utm_campaign=canadas-cannabis-industry-struggles-under-weight-of-onerous-taxation-and-regulations
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