Canadian cannabis industry calls for regulatory changes on 5-year anniversary of legalization

The Cannabis Council of Canada (C3), the Canadian organization of Health Canada-registered cannabis licensees, commemorated the fifth anniversary of cannabis legalization in Canada by calling on the government to better address 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 main 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 compression and burdensome regulatory costs
• 83 % of distributors reported negative net income in 2022. This significant increase in the excise tax burden has placed unsustainable pressure on LPs, hampering their ability to invest in growth and innovation, according to C3

C3's main recommendations to the government

The Canadian Cannabis Council has issued three urgent recommendations:

• Reforming the excise duty framework C3 advocates a fairer taxation system, proposing a reduction in excise tax to a flat rate of 10% of sales. This change would ensure the viability of the cannabis industry and help it compete with the illicit cannabis industry.
• Eliminate excessive regulatory fees: Excessive regulatory fees, which do not exist in other sectors such as alcohol and tobacco, have hampered LP growth and profitability. C3 calls on the government to eliminate these fees, which it deems unfair.
• Reforming the edible products category: C3 calls for an increase in the THC limit allowed in edible products. edibles 100 mg, to bring consumer protection regulations into line and take this category back from the illicit market

« After five years of legalization, The regulated cannabis industry is struggling due to high taxes, excessive regulation and fierce competition from the illicit market. To realize the potential of legalization, the sector needs urgent reform. We've identified the key areas where government can make changes today to allow us to collectively increase the pie,» says George Smitherman, President and CEO of the Canadian Cannabis Council.

«Increasing the pie means more revenue for the cannabis sector and governments, and it means extending the protection of the regulated sector to more Canadian cannabis consumers.».