Industry pushes back against cannabis tax


Resident Canadian
Dec 1, 2020
Canada's Ocean Playground

In Canada, cannabis is taxed at 10% of the dried flower selling price, or $1 per gram – whichever is higher. About 25% of this revenue goes to the federal government, and 75% to a provincial or territorial government.

This approach was intended to ensure flexibility. Now, some are saying the system is broken.

“If cannabis were selling at over $10 a gram, then the percentage formula would kick in,” says Dan Sutton, CEO at Tantalus Labs in Vancouver, BC. “But now we’re paying $1 in tax on $3.50 to $4.00 for a wholesale gram.”

“Large firms are well funded, and for now they can operate at a loss,” says Sutton. “In my view, they would prefer to compete on price than quality. The Canadian cannabis industry is price competitive, but if price were the only issue, the regulated industry would have been more successful at eroding the illicit market.”
And there it is: Big business intentionally buying legislation that they can survive to crush the little guy.

Once all the little guys are crushed out of the industry, they'll redo the legislation and make bank.

That is EXACTLY the sort of thing that group I posted about yesterday is up to: they'll set the national policy up with things like this and more knowing they can weather the initial storm, crush all the competition, redo the legislation and roll in profits.
I'm not sure. They've only recently crossed a threshold of more legal sales then illegal (which really means illegal-sales are still more but good-sales are closing the gap). They (government sales) would never be this close with older higher prices.

They've (the federal liberals) also learned from the cigarette market that "you can tax too much" as evidenced by our illegal cigarette industry back in the late 90's which grew leaps and bounds when taxes grew too high.

Both the cigarette and cannabis markets have been liberal party agendas. The Liberals were initially concerned low cannabis prices would lead to more illegal "under 18" use which hasn't occurred as legal prices have dropped. i think they're learning like they did in the cigarette tax fiasco that too high of a tax is not good.

With the continued public push for an under $5 a gram (or cheaper) in retail I expect the Liberals will re-engage the tax and lower it, albeit slowly over time. Especially with reports that show outdoor commercial farming can produced cannabis for 42 cents (33 cents US) a gram.
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