Calls For Cannabis Excise Tax Reform Intensify In Canada
Taxing cannabis commerce can be a delicate thing. On one hand, a major argument in favor of cannabis policy modernization is that it will generate public revenue for governments that allow legal cannabis sales. But on the other hand, taxing cannabis commerce too much can hinder the industry’s ability to reach its full potential and displace the unregulated market.
Canada legalized adult-use cannabis sales in 2018, and according to a new report, the current excise tax model in Canada “is unsustainable and must be restructured to reflect the economic realities of the industry.”
Deloitte, a multinational professional services entity, recently published a report titled ‘The Impact of the Cannabis Excise Tax,’ in which the authors call for overhauling Canada’s current approach to applying cannabis excise taxes. The recommendations from Deloitte in their report are being echoed by the Cannabis Council of Canada.
“Canada likes to position itself as a global leader in legal cannabis – but since legalization in 2018, the federal government has failed this industry and the tens of thousands of hardworking Canadians it supports,” said Paul McCarthy, President of the Cannabis Council of Canada. “With a new government in office, it’s time for a fresh approach. The cannabis industry deserves the same attention and support as any sector of our economy.”
“Canada’s cannabis industry is a major driver of economic growth – since legalization it has contributed over $43 billion to the national GDP, with approximately $7.4 billion contributed in 2024 alone. To keep that momentum going, key policy changes are needed to ensure the industry can grow, compete and innovate.” the Council stated in a press release.
“The current excise taxation framework is completely misaligned with today’s market realities. When it was introduced in 2018, cannabis sold for approximately $10 per gram. Today, producers are receiving as little as $3 per gram – yet the excise tax remains the greater of 10% of the product’s value or $1 per gram.” the Council also stated.
The Cannabis Council of Canada is urging the nation’s government to eliminate the $1 per gram floor and replace it with a 10% ad valorem rate, which the Council points out was proposed by the Standing Committee on Finance in 2024.
