Cannabis Council of Canada Marks Five-Year Legalization Anniversary, Calls on Governments to Make the Changes Needed to Save the Struggling Cannabis Sector

The illicit market remains strong with about half of consumers purchasing legal products in Canada.

Ottawa, Ontario, October 17, 2023 – The Cannabis Council of Canada (C3) is calling the cannabis community to Ottawa to commemorate the fifth anniversary of cannabis legalization in Canada and appeal to the Government of Canada to fulfill the promise of legalization by responding to the mounting evidence of challenges faced by the nascent industry.

A recent C3 survey of Licensed Producers (LPs) from coast to coast underscored the urgent need for government reforms to rejuvenate the sector, ensuring its continued growth and contribution to the Cannabis Act’s public policy objectives. The survey, compiling responses from 122 LPs across the country, identified the major financial challenges facing the Canadian cannabis industry:

• 71% of respondents reported a surge in excise tax payments from 2021 to 2022, reflecting the adverse financial impact of escalating excise taxes due to price compression and burdensome regulatory fees.
• 83% of LPs reported negative net income in 2022. This significant increase in the excise tax burden has placed an unsustainable strain on LPs, impeding their capacity to invest in growth and innovation.

C3's Key Recommendations to Government:

The Cannabis Council of Canada, recognizing the importance of the cannabis sector’s contributions to the success of the Cannabis Act, has released a position paper outlining three urgent recommendations:

1. Reform the Excise Duty Framework: C3 advocates for a fairer taxation system, proposing the reduction of excise tax to a fixed rate of 10% of sales and structural changes to the operation of the program that are costly and inefficient. These changes would ensure that the diverse cannabis industry is sustainable and can compete with the illicit cannabis industry.
2. Eliminate Excessive Regulatory Fees: Overbearing regulatory fees, which do not exist in other sectors such as alcohol and tobacco, have hampered the growth and profitability of LPs. C3 urges the government to eliminate these unfair fees.
3. Reform the Edibles Product Category: C3 calls for an increase in the allowable THC limit in edibles to 100 mg, aligning regulations with consumer protection and winning this category back from the illicit market.

"After five years of legalization, the regulated cannabis industry is struggling due to high taxes, excessive regulation and unbridled competition from the illicit market. To fulfill the potential of legalization, the sector needs reform urgently. We’ve identified the top areas the government can change today to allow us to collectively grow the pie,” said George Smitherman, President & CEO of the Cannabis Council of Canada. “Growing the pie means more revenue for the cannabis sector and governments and it means extending the protection of the regulated sector to more Canadian cannabis consumers,” concluded Smitherman.

Mike Schilling, President & CEO of Community Savings, stressed the economic benefits that a thriving cannabis sector can bring to Canada. He stated, "A revitalized cannabis industry can serve as a valuable source of tax revenue and employment opportunities, especially in challenging economic times. Between 2018 and 2021, the legal cannabis industry generated $11B in sales, $29B in investments, 98,000 jobs and added $43.5B to Canada’s GDP. It's time for the government to support the economic potential of Canada’s nascent cannabis industry."

On this landmark fifth anniversary of cannabis legalization in Canada, the Cannabis Council of Canada urges the government to take action promptly to implement these critical reforms and support an industry that has the potential to contribute significantly to the Canadian economy. The cannabis sector stands at a crossroads, and the government's support is pivotal in ensuring its success.

Visit www.cannabiscouncil.ca for more information and access to the full position paper and survey results.

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For media inquiries (English)

George Smitherman

President and CEO

Cannabis Council of Canada

george@cannabis-council.ca

For media inquiries (French)

Pierre Killeen

Cannabis Council of Canada

pierre@cannabis-council.ca

About Cannabis Council of Canada (C3)

The Cannabis Council of Canada is the national trade association representing businesses that are dedicated to the responsible production and distribution of cannabis. C3 advocates for the interests of the Canadian cannabis industry, working to create a supportive regulatory environment and promote the economic and social benefits of cannabis legalization.

Follow us on Twitter: @Cannabis_Canada and LinkedIn: Cannabis Council of Canada

About Community Savings

Community Savings Credit Union is driven by its purpose to unite working people to build a just world. As BC’s largest fully unionized credit union, Community Savings provides best-in-class personal and business banking and advocates for workers’ rights, mental health and financial inclusion for the cannabis industry. It is the largest cannabis banker in BC.

Community Savings is a vocal advocate for the cannabis industry and for equal access to fair and affordable banking, winning two Canadian Marketing Association awards for its advocacy campaigns. Community Savings operates seven branches across the Lower Mainland and Victoria. Visit www.comsavings.com for more.

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