Hopes Of Tax Relief For Canadian Cannabis Industry Dashed As Budget Reveals No Changes
Canada's Cannabis Industry Disappointed as Federal Budget Maintains Excise Taxes.
Hopes of tax relief for Canada’s cannabis industry were derailed yesterday as the country’s Federal Budget 2024 revealed excise taxes would not be changed.
Canada’s excise tax on cannabis, which sits at $1 per gram or 10% of a prodycer’s selling price (whichever is higher), has long been the Achilles heel of its adult-use industry, leading to a thriving illicit market and a growing trend of Canadian producers selling products abroad to increase profits.
It has also caused a huge backlog in payments, with reports suggesting that as of the middle of last year, some $200m was owed to the Canada Revenue Agency (CRA) in excise tax.
As Business of Cannabis reported in March, Canada’s House of Commons Standing Committee on Finance recommended a change in excise tax.
The committee proposed that the tax be limited to be to 10% ‘ad valorem’, a percentage of the wholesale selling price of the cannabis product.
Weeks later, the government published the long-awaited final report on its review of the Cannabis Act, which made 54 recommendations on how to improve the country’s adult use market, including making changes to the excise tax rate.
While the industry remained cautious on whether these proposed changes would be implemented, given that this would require coordination with provincial authorities who secure 75% of each dollar collected, some remained hopeful change was on the horizon.
However, following yesterday’s publication of the budget for the year ahead, these hopes have now been dashed.
CEO of Canadian cannabis producer Organigram, Beena Goldenberg, has accused the government of ‘ignoring the needs of the sector’ and jepardizing its ability to ‘compete with illicit suppliers’.
“Organigram is very disappointed that Deputy Prime Minister Freeland did not announce a review of the cannabis excise framework in Budget 2024.
“Lowering the excise rate so that it is limited to a 10% ad valorem rate and amending the onerous excise stamping requirements will free up much needed capital to allow Canada’s nascent cannabis sector to deliver on the public policy objectives of cannabis legalization to keep profits out of the hands of criminals, and to keep kids safe.”
