Achi news desk-
A group convened by the federal government to study the legislation that legalized cannabis is recommending that the country review one of the industry’s biggest gripes: excise taxes levied on pot producers.
A report outlining 54 recommendations from the five-person expert panel released Thursday urged Finance Canada to consider a new model that would increase excise taxes on products with high amounts of tetrahydrocannabinol, the psychoactive component of cannabis, and lower fees on those with smaller amounts. He pitched the change as a way to move consumers away from high THC products.
The tax, which the panel called a “significant burden” on cannabis producers, equates to the higher of $1 per gram or a fee of 10 per cent per gram for dry and fresh cannabis, plants and seeds.
It was set in 2018, when Canada legalized cannabis and the government expected a gram of cannabis to sell for $10, and the 10 percent price is $1. These days, it’s easy to find products priced as low as $3.50 per gram, resulting in higher fees for producers who still have to pay $1 per gram.
“We see an opportunity to update tax policy to reflect the current reality,” said the report.
The recognition of the financial burden of the tax comes as the legal cannabis sector faces the sobering reality that the market is not as big – or as easy to navigate – as predicted.
The finding came as the legal cannabis sector faced the sobering reality that the market is not as big – or as easy to navigate – as predicted.
Many of the industry’s biggest players, including Canopy Growth Corp., Aurora Cannabis Inc. and Tilray Brands Inc., have spent the past five years laying off workers, closing facilities and grappling with balance sheets that reflect a challenging market and a slow crawl toward. profitability.
Others have already fled the industry, selling their businesses or declaring bankruptcy. To blame, they say, is a combination of over-regulation, a still-powerful illegal market, falling prices and in some regions, too many cannabis shops.
Many were hopeful that the review would give credibility to their experiences and if they were lucky, push the federal government towards meaningful change.
Shortly after the report was released, Canopy Growth chief executive David Klein said his staff “welcomed” the recommendations and urged the government to use next month’s federal budget to “take urgent action on the issues biggest impact on the industry.”
He named a review of the excise tax as priorities and another to study whether it should be applied to medical products.
However, Rick Savone, senior vice president with Aurora, said the report was “disappointing” because it failed to address industry sustainability and provide actionable recommendations that would combat the illegal market. or offers immediate excise duty relief. Savone added a call for immediate excise duty relief in the upcoming budget, rejecting the idea of ​​incremental changes.
The recommendations were drawn up over 18 months and go beyond the economics of pot to also investigate Indigenous participation in the sector and the health and safety of Canadians, including young people who may be exposed to cannabis.
Large parts of the report focused on cannabis packaging, which manufacturers are required to ensure does not attract youth to try their products. Therefore, it cannot contain cartoons or celebrity endorsements.
The report said Health Canada should revise packaging rules to allow companies to include QR codes to convey credible information about cannabis or even labels that say a product is definitely organic or recyclable.
It also recommended that Health Canada develop a “standard dose,” which companies could use to help communicate how much product should be consumed at one time.
“This could be an effective boost for cannabis users to move towards lower risk behaviors of using cannabis,” said the report.
Despite warning that such a standard has been “ambitious for several years” because cannabis is consumed, metabolized and tested in many different ways, he said the measure would be a worthwhile undertaking for Health Canada.
While the report outlined several areas of change, it also reaffirmed some of the country’s current pot policies, such as the 10 milligram per pack limit for tetrahydrocannabinol (THC), the psychoactive component of cannabis.
The panel said the industry felt raising the limit would help it squeeze out illegal sellers with products containing higher THC amounts and prices for edibles that can be up to 90 percent lower than legal counterparts .
On the other hand, public health stakeholders supported maintaining the current limit because they had seen an increase in accidental cannabis poisoning among children since legalization and were concerned that the severity of these incidents would only climb with a higher THC threshold.
“Ultimately, we felt there were too many unknowns and too much uncertainty about the likely consequences of increasing the amount of THC in these products,” the panel said.
“Therefore, we are of the opinion that prudence is justified here and accordingly, we recommend that the current limit be maintained, and that research should be carried out which will fill essential gaps in information relating to this matter.”
Health Canada said Thursday it is reviewing the panel’s conclusions and will provide recommendations to the federal government on possible next steps. He did not offer any timetable as to when those suggestions may be submitted.
The government was late to launch the panel’s review of the Cannabis Act, which was due to start about three years after its legalization but was pushed back when the COVID-19 pandemic emerged.
The review chaired by Morris Rosenberg, former deputy minister of justice and deputy attorney general of Canada, began in September 2022.
By the time it was over, the panelists had heard from 600 participants, including cannabis retailers, growers, medical professionals, public health advocates and consumers.
This report was first published by The Canadian Press on March 21, 2024
