A new tax of 0.5% could disrupt the hemp industry in Canada
In Canada, a mandatory tax of 0.5% on industrial hemp came into effect to fund research and develop domestic and international markets.
This measure partially replaces a system that, until now, relied on voluntary contributions from the industry, membership dues, and public funding. It could offer the Canadian organizations in the hemp industry a more predictable source of revenue, at a time when the industry is seeking new business opportunities.
A tax of 0.5% on the entire Canadian hemp supply chain
Approved by the Agricultural Products Council of Canada (APCC), this tax is paid to the’Canadian Agency for the Promotion and Research of Industrial Hemp (CIHPRA), which operates under the name of Hemp Canada (HCC).
According to the Canada Gazette, as reported by HempToday, HCC was established to «coordinate a national approach to funding research and commercialization activities,» while supporting competitiveness, exports, and the development of new markets.
The fee covers a wide range of hemp-based products sold between Canadian provinces, including seeds, grains, and stems, flowers, the leaves and biomass intended for extraction. It also applies when hemp grown in one province is transported to another for processing.
In practice, buyers deduct the contribution of 0.5% at the first point of sale before transferring it to HCC through a designated collector. When production and processing take place in different provinces, the processor pays the royalty on behalf of the producer.
The Hemp Producers Committee, who drafted the proposal that led to the agency's creation, had previously estimated that the fee could initially generate approximately 200,000 Canadian dollars per year (125,000 euros). Revenue could eventually exceed 400,000 Canadian dollars per year (250,000 euros) if the area devoted to hemp in Canada, production volumes, and prices increase.
A One-Year Trial Period for Hemp Canada Chanvre
The federal ordinance establishing the contribution provides that the The 0.5% rate will remain in effect through August 4, 2027.
This first year will therefore be a crucial implementation period for Hemp Canada Hemp. The organization will need to establish its collection infrastructure, determine how to allocate the revenue, and begin allocating funds to research, promotion, and market development projects.
What happens after August 2027 will depend on decisions regarding the continuation and potential evolution of the mechanism.
Canada is strengthening the structure of its hemp sector
The introduction of the fee follows the creation of CIHPRA in November 2024 under the Canadian Agricultural Products Boards Act. It became the country’s first promotion and research agency dedicated to a non-animal agricultural product before adopting the name Hemp Canada Chanvre.
Its governing body includes representatives from the hemp production sector, the import sector, and the entire supply chain.
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