A federal government panel studying Canada’s cannabis legislation has recommended changes to address industry challenges, particularly the excise tax on cannabis producers.
Released on March 22, the report includes 54 recommendations from a five-person expert panel. It suggests that Finance Canada consider a new excise tax model, increasing taxes on high-THC products while lowering them on products with less THC. This aims to shift consumer preference towards lower-THC products. The current tax, considered a "substantial burden," is the higher of $1 per gram or a 10% per-gram fee, regardless of market price.
Industry Struggles
The legal cannabis sector has faced a challenging market, with many companies like Canopy Growth Corp., Aurora Cannabis Inc., and Tilray Brands Inc. laying off workers, closing facilities, and struggling with profitability. Overregulation, a robust illicit market, decreasing prices, and an oversaturation of cannabis stores have compounded these difficulties.
Industry Reactions
Canopy Growth CEO David Klein welcomed the recommendations, urging the government to address the excise tax in the upcoming federal budget. Conversely, Aurora's senior VP Rick Savone criticized the report for lacking actionable solutions to combat the illicit market or provide immediate tax relief.
Health and Safety Focus
The report also addresses health and safety, particularly the protection of youth. It recommends revising packaging rules to allow QR codes for credible information and labels indicating organic or recyclable products. The panel advocates for a "standard dose" to guide consumers on safe consumption, despite challenges due to the varying effects of cannabis.
Maintaining THC Limits
The panel recommended maintaining the current 10 milligram per package limit for THC in edibles. This decision balances industry desires to compete with illicit sellers and public health concerns about cannabis poisoning among children.
Next Steps
Health Canada is reviewing the panel’s conclusions and will make recommendations to the federal government. There is no timeline for when these suggestions will be delivered.
The review began in September 2022, delayed from its original schedule due to the COVID-19 pandemic. The panel, chaired by former deputy minister of justice Morris Rosenberg, consulted 600 participants, including retailers, growers, medical professionals, and public health advocates.
