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Thursday, Oct 21, 2021
Mugglehead Magazine
Cannabis & psychedelics industry news based in Vancouver, B.C.
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Canadian craft producers call for tax reform push ahead of Cannabis Act review

The Stand for Craft initiative says the excise tax is killing small- and medium-sized producers

Canadian craft producers call for help in tax reform push ahead of Cannabis Act review
Cultivators say their excise tax burden outweighs monthly staff salaries. Photo of Tantalus Labs employees by Nick Laba

Since the outset of legal cannabis in Canada, the way the plant is taxed has been an evergreen object of criticism for producers, recreational consumers and patients.

But while the industry has evolved in many ways over the past three years, the taxation regime has stayed the same.

On Wednesday, Tantalus Labs CEO Dan Sutton kicked off the Stand for Craft campaign alongside other producers and industry stakeholders, calling for help in their effort to lobby for tax reform.

Sutton has been drawing attention to the issue on social media for over a year now, but the current push is timed with a mandated three-year review of the Cannabis Act — the country’s set of pot laws — which is set to begin Oct. 17.

At that time, government will be considering which parts of the Act could be changed to better meet policy objectives.

While regulator Health Canada has reiterated in numerous statements that its primary focus is on pubic health, many in the industry argue that hampering licensed producers with burdensome regulations indirectly bolsters the illicit market, and the unregulated products sold there.

Just how heavy is the excise tax?

According to Sutton, craft cultivators are paying 20–30 per cent of top-line (gross) revenue to excise tax, which is often a higher monthly amount than team salaries.

“Immediate excise reform is a hill craft growers are literally about to die on,” reads the Stand for Craft webpage.

The group is recommending two policy changes:

  • Remove the $1 minimum per gram tax per gram, and maintain a floating percentage on every gram sold.
  • Tax businesses based on scale, as is seen in the Canadian beer industry. This compensates for the substantial economies of scale enjoyed by large producers. Introduce different tax tiers for: micro-cultivators, “craft-scale” standard growers, small-to-medium cultivation enterprises and large cultivators.

To support the effort, Stand for Craft is encouraging people to sign a pre-written note that will be emailed to over 100 government stakeholders.

Read more: BC cannabis industry leaders create first advocacy coalition for growers

Read more: Health Canada requests public feedback on amending various strict pot rules

In July, Tantalus Labs joined Village Farms International’s (TSX: VFF) (Nasdaq: VFF) cannabis business Pure Sunfarms and Rubicon Organics Inc. (TSXV: ROMJ) (OTCQX: ROMJF) in launching Cannabis Cultivators of B.C., a group focused on advancing favourable business conditions for cultivators.

While not mentioned in the release, Canadian patients accessing medical cannabis pay the same taxes as recreational consumers. No other medicine in the country is taxed like this.

While many patients can access compassionate pricing programs and claim sales taxes on their income tax returns, they are still affected by the excise tax and high upfront costs can be a significant barrier. Advocates have been consistently calling for the removal of taxes on medical cannabis.

Read more: MP calls on Ottawa to drop taxes on medical cannabis

Read more: Over 90% of Canadian cannabis patients want policy change: survey

Many industry voices took to Twitter on Wednesday in support of Stand for Craft.

 

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nick@mugglehead.com

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