No Cannabis Tax Relief In Canada, Tilray CEO Says This 'Hinders Our Ability To Compete With The Illicit Market'

Author: Nina Zdinjak | April 17, 2024 09:11am

The Canadian government unveiled its 2024 budget on Tuesday and there was no excise tax relief for cannabis companies the industry was hoping for. 

In February, the House of Commons Standing Committee on Finance recommended limiting the excise tax rate to 10%, igniting optimism across the cannabis space.

Analyst Pablo Zuanic, in a discussion about the impact potential excise tax changes would have on the cannabis industry, said marijuana businesses could have seen valuations soar by up to 300% with tax reform. But apparently, this is not going to happen.

The 430-page primary budget document mentions the word "cannabis" only once in relation to the committee’s plan to present a bill allowing Indigenous governments to create their own value-added sales taxes on certain goods, writes MJBizDaily's Solomon Israel. 

Cannabis Businesses Disappointed 

Beena Goldenberg, CEO of Organigram Inc. (NASDAQ:OGI), a federally licensed producer of cannabis products said in an emailed statement, "Organigram is very disappointed that Deputy Prime Minister Freeland did not announce a review of the cannabis excise framework in Budget 2024."

"Canada's federally licensed cannabis producers struggle to compete with aggressive illicit suppliers, who continue to operate with relative impunity and who are not subject to any regulatory regimen," Goldenberg continued. "The House of Commons Standing Committee on Finance and Health Canada's Expert Panel on the Legislative Review of the Cannabis Act both recognized these pressures and recommended that Finance Canada rework the excise framework. We simply don't understand why the federal government ignored these recommendations."

Irwin Simon, the CEO and chairman of the Canadian cannabis giant Tilray (NASDAQ:TLRY) shared the company's disappointment.

"The current tax structure places an unfair burden on legal cannabis companies and hinders our ability to compete with the illicit market," Simon wrote. "At least 123 federal cannabis business licenses either were canceled or pending cancellation in 2023 because of uncollected excise tax, which is a concerning trend for the industry. We urge the government to reconsider this issue and work towards a fair and competitive tax system that supports the growth of the legal cannabis industry in Canada."

We are disappointed that the Canadian government did not take the opportunity to implement cannabis tax reform in the budget. The current tax structure places an unfair burden on legal cannabis companies and hinders our ability to compete with the illicit market.

At least 123… pic.twitter.com/9fKv2rC3Ba

— Irwin D. Simon (@IrwinDSimon) April 16, 2024

Canopy Growth Corp. (NASDAQ:CGC) CEO David Klein also provided a statement. "This oversight signals a lack of commitment to the legal cannabis industry as well as the jobs and economic growth we create. The failure to correct this broken tax regime and to leave other critical issues like potency limits unaddressed will continue to hinder the growth of legal cannabis businesses and compromise consumer access to safe, regulated products."

Unpaid cannabis excise taxes hit CA$273.4 million (about $200 million) close to the end of last year.

Now Read: Justin Trudeau Says There Are No Downsides To Cannabis Legalization, Slams International Treaties’ Excuse To Reject Reform

Photo: Courtesy of karen roach via Shutterstock

Posted In: CGC OGI TLRY