This post is presented by our media partner Stratcann
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The federal government will explore a single, harmonized federal excise duty stamp as part of a red tape reduction measure outlined in its 2024 Fall Economic Statement.
More info on the proposal is expected as part of Budget 2025, which is anticipated in February 2025.
The move from requiring producers to use 13 different provincial and territorial excise tax stamps to a single, harmonized stamp is something the industry has said would save cannabis producers time and money. In a meeting in October, The Canadian Cannabis Council (c3) called for such changes, saying it would go a long way to addressing some of the logistical challenges the current tax stamp program creates.
Paul McCarthy, the president of C3, says he’s happy to see the government acknowledging the issue, but is frustrated that this announcement used a lot of vague wording rather than committing to immediate action.
“What they should be doing is implementing this,” says McCarthy. “It will help businesses. There’s no downside for anybody anywhere, but they still want to wring their hands and look at it more. Talk about a government that is not in touch with the needs of the sector.”
McCarthy adds that he was cautiously optimistic that the fall 2024 statement would have included some movement of the tax, but also acknowledges that expectations have been low due to the complexity of such a change. Although the industry has been asking for the excise rate to be lowered, many in the industry say a single stamp would at least relieve some of the financial burdens associated with the current stamp regime.
“To cut red tape for growing businesses and help them to succeed, the 2024 Fall Economic Statement also announces the government’s intent to explore a transition from cannabis excise duty stamps specific to each province and territory to a single, national stamp. This would make it easier for regulated cannabis producers to ignite new business opportunities in other provinces. More details will roll out in Budget 2025.”
In a post on C3’s website, McCarthy added: “The government’s continued neglect of the cannabis sector is alarming. Their unfair taxation policies are creating an unsustainable environment for legal businesses, forcing many to close their doors and driving consumers back to the illicit market.”
Earlier this year, Orville Bovenschen, President of Pure Sunfarms, told StratCann that such a move could save his company around a million dollars a year. However, these savings would not be limited to just larger companies like Pure Sunfarms.
“It’s not just us,” said Bovenschen. “If you look at small producers, medium-sized producers, it’s very complicated for them as well. A change like this can make it easier for us to operate and become more profitable. I think this is much easier to achieve before we get to the bigger issue of the excise tax itself.”
While changing the actual excise rate is complicated, he added, solutions like these could make more sense in the more immediate term.
“I think it could be an achievable win. Nothing is easy but I think it can be a much needed win for everybody. For the government, for us. I don’t think there’s a single person that isn’t aligned with this idea of having one single stamp for the entire industry.”
Janeen Davis, VP of sales at DEALR Cannabis (formerly JVCC), which distributes cannabis, often from micro cultivators and processors, in BC and Ontario, says the change will definitely help the company save time and money, even if it doesn’t go as far as she would like to see in terms of lowering the actual excise rate itself.
“We spend so much time just managing our stamp inventory for the provinces,” explains Davis. “Managing stamp inventory can be a major administrative burden to all processors in Canada, and I think if there were just one excise stamp, it would be something to celebrate.”
Gord Nichol, the owner of North 40 Cannabis, a micro producer in Saskatchewan, though, says the move doesn’t address “the giant elephant in the room” that is the need for lowering the excise rate itself, especially for smaller producers like his company.
“Excise tax reduction for micro processors is the only issue that might save me”, Nichols tells StratCann.
Such a move would require the support of the provinces, who receive 75% of every dollar the federal government collects from the federal excise tax.
Some in the industry, speaking with StratCann strictly on background, have also suggested that the recent stepping down of Chrystia Freeland from the role of Finance Minister could bode well for efforts at lowering the excise rate itself. In the past, some have suggested that Freeland was one of the main last-minute impediments to such changes in previous federal budgets.
This post was originally published by our media partner here.