Canada: 5 years after legalization, the illegal cannabis market continues to thrive. C3 calls on the government to make changes

The fifth anniversary of the legalization of cannabis in Canada, on October 17th, marked a significant milestone for the Canadian Cannabis Council (C3) and for the entire cannabis community in the country. However, alongside this celebration, there are many challenges and an urgent need for change. The illicit market continues to thrive, with almost half of consumers opting for illegal products over legal ones. Recognizing the challenges facing the emerging industry, C3 called on the Canadian government to deliver on the promise of legalization by addressing the financial obstacles hindering the growth of the legal cannabis sector.

Um inquiry A recent study carried out by C3 with 122 Licensed Producers (LPs) from across the country revealed alarming statistics:

• 71% of respondents reported a sharp increase in excise tax payments from 2021 to 2022, a consequence of escalating excise taxes due to price compression and heavy regulatory fees;
• 83% of LPs reported a negative net profit in 2022, indicating the severe financial strain caused by the escalating excise tax burden, hampering their ability to invest in growth and innovation.

To address these challenges and revitalize the cannabis industry, C3 outlined three urgent recommendations in its position paper:

1. Reform the excise tax framework: C3 defends a fairer taxation system, proposing to reduce the excise tax to a flat rate of 10% of sales. Structural changes are also imperative to eliminate inefficiencies, ensuring the sustainable growth of the diverse cannabis industry and its ability to compete with the illicit market.
2. Eliminate excessive regulatory fees: Excessive regulatory fees, unique to the cannabis sector, have stifled the growth and profitability of LPs. C3 calls on the government to eliminate these unfair taxes, aligning regulations with those of other sectors, such as alcohol and tobacco.
3. Reform the edible product category: C3 calls for an increase in the THC limit allowed in edible products to 100 mg. This adjustment aligns regulation with consumer protection standards and aims to recover market share from the illicit market.

George Smitherman, president and executive director of the Cannabis Council of Canada, highlighted the urgency of these reforms, stating that “after five years of legalization, the regulated cannabis industry is struggling with high taxes, excessive regulation and unbridled competition from the illicit market. To realize the potential of legalization, the sector needs urgent reform.”

Mike Schilling, President and CEO of Community Savings, highlighted the economic benefits that a thriving cannabis sector can bring to Canada and stressed that “a revitalized cannabis industry can serve as a valuable source of tax revenue and employment opportunities. It is time for the government to support the economic potential of Canada’s nascent cannabis industry.”

On this significant fifth anniversary of the legalization of cannabis in Canada, the Cannabis Council of Canada calls on the government to quickly implement these critical reforms. The industry is at a crossroads and government support is crucial to ensuring its success. By adopting fair taxation, eliminating excessive fees and adapting regulation to market demands, Canada can pave the way for a thriving, legal cannabis industry that not only contributes significantly to the economy, but also ensures consumer safety and satisfaction Canadians.

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João Xabregas

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With a professional background in CAD technical drawing (2D and 3D), João Xabregas is an activist and advocate for all uses and applications of cannabis. He discovered and entered the world of cannabis during his youth, where he developed a special interest in the cultivation of the plant, which led him on a journey of self-learning through the world of cannabis that continues to this day. His adventures linked to cannabis cultivation began with the same goal as many others: to be able to guarantee the quality and eliminate any possible risks to his health of what he consumed, as well as to avoid any type of dependence on the illicit market. However, he quickly began to view the world of cannabis and everything related to it with a very different perspective. He admits the enormous passion he has for the most persecuted plant in the world and about which he is always willing to write and have a good conversation.

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