Canadian cannabis leaders will be converging in Ottawa on Oct. 1 to voice their most pressing concerns near the Parliament building’s front porch.
The 2024 Canadian Cannabis Leadership Summit will be a panel-style conference featuring some of the domestic industry’s most influential figures. This upcoming event, held at Ottawa’s National Arts Centre, has been organized by the Cannabis Council of Canada (C3).
Notable panellists will include C3 President Paul McCarthy; Kendel Weber, Assistant Deputy Minister at Health Canada; and David Lobo, CEO of the Ontario Cannabis Store.
Representatives from influential Canadian producers will also be in attendance. Namely SNDL Inc (NASDAQ: SNDL), the Village Farms International Inc (NASDAQ: VFF) subsidiary Pure Sunfarms, OrganiGram Holdings Inc (TSE: OGI), Rose LifeScience, Cronos Group Inc (TSE: CRON), Peak Processing and Aurora Cannabis Inc (TSE: ACB).
One influential American will be leading a panel discussion too. That is Gillian Schauer, Executive Director of the US Cannabis Regulators Association. She will be providing insights acquired from the industry in the United States.
Read more: Village Farms scoops remaining 15% stake in Netherlands grower Leli Holland
Read more: Avant Brands to enter Australian cannabis sector with launch of BLK MKT
Excise tax is Canadian problem #1, McCarthy says
Domestic cannabis operators currently face unreasonably high tariffs exceeding that of other industries significantly. They are burdened with an excise tax of over 30 per cent, thereby making turning a profit difficult.
“If you talk to anybody in the consumer packaged goods business and you tell them that you are in a business where you’re selling your goods at a taxation rate of over 30 per cent they will look at you gobsmacked, and they will say, how do you make money?” McCarthy described in an interview.
The short answer is that you don’t, the C3 leader explained. It’s just not financially viable. This is the number one issue plaguing Canada’s industry by far, McCarthy says.
He pointed out that the New Brunswick company Crystal Cure just had to shut its doors largely because of the excessive tax. McCarthy described the cultivator as being a “fantastic operator,” but it just couldn’t thrive in the current industry environment.
“We were unable to finalize our funding to expand to meet demand and need to pause,” Crystal Cure described on its website.
Previous research by C3 shows ugly numbers
A 2023 study completed by C3 found that a whopping 83 per cent of licensed producers in the country reported negative net income the previous year. Excise tax and regulatory fees were a primary factor driving this issue and the struggle to turn a profit remains today.
McCarthy’s organization has presented a case regarding its stance on these issues to federal government officials, including finance minister Chrystia Freeland.
“They’re understanding that this is a sector in distress and that there are a number of things that need to be done,” McCarthy said. But, the tax burden persists.
The Canadian Cannabis Leadership Summit was specifically organized to draw more attention to the excise tax problem and other pressing issues within a stone’s throw from the federal government headquarters.
“We’re trying to make sure that everybody understands our position and the precarious position of this sector at this moment in time,” McCarthy remarked.
“And that means reaching lawmakers, senior public servants who advise on these issues and provide analysis to decision-makers, the media and anyone who would comment on this.”
C3’s president hopes to find positive changes made for the industry’s regulations in Canada’s upcoming fall economic statement. It is expected to be released sometime in November.
“It’s an opportunity for them to do something about this, but it doesn’t mean that they will,” he explained.
C3's 2025 Excise Survey results are in, and they are staggering. The need for reform has never been more clear – we need to adjust excise taxation now. Register for the Canadian Cannabis Leadership Summit to join the conversation: https://t.co/zS7xmuFWsQ pic.twitter.com/H7woq5Nt6a
— Cannabis Council of Canada (@Cannabis_Canada) September 26, 2024
Read more: Cannabis Council of Canada leader George Smitherman steps down after 4 years
Read more: Canada hits 5 years since adult-use legalization as producers struggle to turn a profit
Excise stamps: having just 1 would alleviate headaches
Primary issue number two is the excise stamp and the logistical issues caused by having a different one for each province and territory. Distributors may have ordered and paid the government for stamps in one province, but if they decide to send product to another later on they have to deal with the hassle of acquiring more.
“It creates havoc on the whole supply chain system and inventory movement,” McCarthy elaborated. “It’s just a massive nightmare, and it costs operators a lot of money.”
He says cannabis product distribution in the country would be much more efficient with just one domestic Canadian stamp. Although there are other issues with the stamping system, C3 wants to hit this home first.
“If you’re running product off of a line and you have to hit it with a different stamp depending on where it’s going, you’re trying to figure out how much of this single product do I need to send to Ontario, to Quebec, etc. because they all need different stamps,” McCarthy said.
“And you’re basing that on projections, but then when you get the actuals and they don’t match up, now you’re in the business of trying to take that individual product off the shelf, remove the stamp and so on.”
Those stamps that get pulled all have to be saved and catalogued for audit purposes too, he added. Having just one would save a great deal of time and wasted capital.
Read more: High Tide is king among Canadian cannabis stocks, Ventum Financial determines
Read more: Northern Canada gets a new cannabis distribution warehouse
Change starts at the top; Ottawa is the best venue
McCarthy expects that multiple Canadian Parliament members will be in attendance next week. Also, representatives from Health Canada and other government departments.
“So that’s that’s the purpose of the of having this conference — to bring these issues to the doorstep of parliament in the hopes that they’ll hear us loud and clear, in the hope that they’ll respond,” McCarthy concluded.
There are other issues facing Canada’s cannabis industry, such as the problems created by the illicit market and the THC limit on edibles, but the Cannabis Council of Canada’s top priorities are reducing taxes and fixing the stamp problem.
“We are effectively steps from parliament. We’re trying to make it as easy as possible for people to take this in.”
C3 is Canada’s largest lobby group that is broadly supported by the industry. The organization held another cannabis leaders summit in Ottawa last fall that was designated as “Grass on the Hill.”
Oct. 17 will mark six years since marijuana was legalized nationwide.
rowan@mugglehead.com
