Canada’s Cannabis Crisis Four Years In
Four years into legalization, and Canada’s cannabis crisis seems to be deepening. Producers and processors across the country say that they cannot compete. By some estimates, the number of producers will be down 60 per cent year over year next March.
“It’s no exaggeration to say that, unfortunately, all businesses of any size in the production and processing side of the cannabis industry today are systemically absent income,” said Tantalus Labs CEO Dan Sutton to the Toronto Star. “This is an industry that cannot pay its own bills and cannot make ends meet.”
At the heart of the cannabis crisis, said George Smitherman, is an outdated excise tax and a still-surviving illegal cannabis market. Smitherman is the CEO of the Cannabis Council of Canada and a former Ontario health minister. But there are no easy fixes when it comes to tax reform.
“That’s going to take work with numerous governments,” Smitherman said.
Currently, excise tax is $1 per gram or 10%, whichever is greater. But those numbers were created based on a $10/gram minimum model. With producers selling as low as $4 per gram, 25% of that goes to the excise tax. The fact that the federal government shares that tax with the provinces and territories in a 25/75 split means that there will have to be a lot of conversations before that number can be changed.
“Our eyes are wide open about the fact that the excise is very much a shared revenue tool with provincial governments and the like,” Smitherman said. “But we’ve got to get back to the public health mission of elimination of the illicit market, and that helps to bring these things into clearer focus.”
News of the Death of the Illegal Cannabis Market May Have Been Exaggerated, Adding to the Cannabis Crisis… LPC
Governments across Canada have been touting how the cannabis retail market has grown compared to the illegal one. In September 2020, Stats Canada announced that legal market cannabis sales outpaced the illegal cannabis market for the first time ever. The Ontario Cannabis Store (OCS) announced that legal cannabis sales in Ontario surpassed illegal ones for the first time in 2021.
Illegal BC cannabis producers have been the hardest to oust, likely due to the long and deep cannabis culture in BC. From the beginning, BC had the lowest legal cannabis sales in Canada.
Not helping Canada’s cannabis crisis is the fact that the industry seems to be in a state of flux as well throughout the supply chain. BC experienced a strike in August that threatened cannabis supply. A cyberattack on an OCS third-party caused an Ontario cannabis shortage. Thinning margins in Toronto cannabis retail were seen as a problem last February. Ontario cannabis retailers have also been calling for a tax break.
It’s easy to see the doom and gloom here. It’s harder to see the silver lining. Many say that Canada’s cannabis industry in general needs to be fixed. That’s not going to happen overnight. But it’s pressures like these that help bring about change. And if the government sees the writing on the wall soon enough, hopefully change will be relatively swift.
At four years young, Canada’s cannabis industry still has a lot of maturing to go. That’s not unusual – the electric industry, the car industry, even Internet and tech took years to shake out all the bugs and become (relatively) stable. There is no need to throw in the towel. We have a basis and a system. That system may need fixing though.
So let’s fix it.
Read the Original Story at the Toronto Star
ADD YOUR STORY HERE
Do you have a business in Canada’s legal cannabis market? Are you a craft cannabis producer or own a chain or independent cannabis retail store? Let’s tell your story here! A news article and your approved listing page make great ways to connect your brand with a qualified audience looking for what you are offering. Learn more about submitting your article to LPC.
