Letter to Prime Minister Carney from Canada's $7B Cannabis Sector

Letter to Prime Minister Carney from Canada's $7B Cannabis Sector

The Cannabis Council of Canada, endorsed by over 50 CEOs across the legal cannabis sector, has called on the federal government to modernize the cannabis industry's regulatory framework. The council believes that such changes are crucial for promoting a viable and safe legal market, minimizing health risks, and reducing the illicit cannabis trade.

The council's key recommendations include streamlining and reducing regulatory complexity to support legal cannabis businesses economically. This would involve addressing challenges such as restrictive advertising rules, high tax burdens that favor illicit operators, and difficulties accessing banking and insurance services.

One of the council's proposals is to shift the obligation to remit excise duty from producers to provincial distributors, consistent with the alcohol taxation model. This move could help reduce outdated barriers and attract investment, creating jobs. The council also recommends adopting a single national excise stamp for legal cannabis to reduce red tape, cut costs, shrink environmental impact, and strengthen the sector's competitiveness.

The council suggests replacing the current $1 per gram minimum excise tax with a flat 10 per cent rate. This change could help alleviate the burden on producers, with some currently losing up to 34 per cent of gross sales to excise tax.

In terms of addressing the illicit market, the council urges the development of a national strategy to eradicate it. Elements of this strategy should include tackling illegal production, shutting down illegal storefronts and online sales, interdicting shipment of illegal product, and a public awareness and education campaign on the dangers of supporting the illicit market.

The legal cannabis industry is a significant contributor to the Canadian economy. It contributes more to direct GDP than several long-established sectors, including breweries, wineries, and dairy product manufacturing. In 2024, the industry is projected to contribute $7.6 billion to the GDP.

Public support for the federal government doing more to help the legal cannabis industry succeed is at 64%. With demand accelerating across Europe and other parts of the world, the opportunity for Canada's legal cannabis industry is vast and gaining momentum.

A bold national export strategy would position Canada as the world's trusted source for pharmaceutical-grade cannabis. Developing such a strategy is recommended, as Canada's federal framework gives us a rare edge in a cannabis market projected to surpass $140 billion by 2026.

It's important to note that the council emphasizes adherence to evolving product classifications and compliance requirements under the Cannabis Act and related regulations to foster a responsible legal market. The council also stresses the importance of maintaining stringent youth protection measures in cannabis promotion and labeling, as outlined by Health Canada, to ensure public health and safety goals are met even as the industry grows.

In summary, the Cannabis Council of Canada advocates for the federal government to:

• Streamline and reduce regulatory complexity to support legal cannabis businesses economically.
• Address fiscal and commercial barriers like advertising restrictions and tax structures.
• Facilitate industry access to essential services such as banking and insurance.
• Maintain strong public health protections, especially for youth.
• Support consistent enforcement and compliance aligned with the Cannabis Act.

These changes are seen as critical to promoting a viable and safe legal cannabis market that minimizes health risks and reduces the illicit cannabis trade. Paul McCarthy, the president and CEO of the Cannabis Council of Canada, stated, "A fairer, modern framework is essential for sustainable growth, consumer access, and Canada's global competitiveness."

1. The Cannabis Council of Canada, supported by over 50 CEOs from the legal cannabis sector, is urging the federal government to modernize the cannabis industry's regulatory framework.
2. As part of this modernization, the council recommends streamlining and reducing regulatory complexity to economically support legal cannabis businesses.
3. The council's proposals include addressing challenges like restrictive advertising rules, high tax burdens that benefit illicit operators, and difficulties accessing banking and insurance services.
4. One recommendation is shifting the obligation to remit excise duty from producers to provincial distributors, mirroring the alcohol taxation model, to reduce barriers and attract investment.
5. The council also proposes adopting a single national excise stamp for legal cannabis to cut costs, reduce environmental impact, and enhance competitiveness.
6. Instead of a $1 per gram minimum excise tax, the council suggests a 10 per cent flat rate to lessen the burden on producers.
7. In addition, the council advocates for a national strategy to eradicate the illicit cannabis market, emphasizing public awareness and education on the dangers of supporting it.

Read also: