Streamlining excise stamps could go a long way to relieving regulatory burden, costs

by Grow Up Conference | Oct 10, 2024 | Media Partners, Stratcann

Changing the federal excise rate has been at the top of the industry wish list since legalization began, but making logistical changes to how the program is managed can also make a big difference.

That’s one of the messages from a recent meeting held by the Cannabis Council of Canada (C3) on October 1 in Ottawa that brought together industry leaders and government officials for a half-day of panel discussions. 

One of the subjects highlighted by the recent meeting was changing how the excise stamps used by producers are implemented, and can save the industry millions of dollars a year in staffing and logistics alone. 

Call for a single federal excise stamp

Moving to a single, federal excise stamp rather than 13 provincial and territorial stamps is a great example of one of these changes, says Orville Bovenschen, President of Pure Sunfarms. Pure Sunfarms is a member of C3.

Based on the extra costs involved with managing all these different stamps and ensuring they are being sent to the correct jurisdictions, he says it could save his company around one million dollars a year. This compares to $78.3 million the company incurred in excise tax for the year ended December 31, 2023.

“It’s not just us,” says 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.”

He notes he’s encouraged by events like the recent C3 meeting in Ottawa, and seeing representatives from Health Canada and CRA in the room, listening and engaging. While he knows the industry is very frustrated by a lack of movement on big ticket issues like the federal excise rate, he sees collaboration as the only real viable path forward. 

Changing the excise rate is complicated, he admits, which is why 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.”

Challenges for smaller cannabis businesses

Highlighting some of these logistical issues, another cannabis producer in BC, Dylan King, CEO of Pistol and Paris, who processes and sells cannabis from an array of micro and craft producers, says the deposits the CRA requires them to pay upfront are often very difficult for his company to meet. 

While King says he’s accepted the excise rate as something that won’t change anytime soon, being forced to pay upfront before they even receive payment for the cannabis they sell into provincial markets pushes his small business to the limit. The company currently pays around $200,000 a month in excise.

“As I pay more and more excise every month as my company grows, the CRA wants to keep upping our security deposit with them,” says King. “I started with a $5,000 deposit. Because my company grew so fast they now want over $200,000 deposit. Again, where am I supposed to just come up with an extra $200,000 that I dont have sitting around for a deposit?”

Another issue, says King, is he was recently hit with a tax bill for 130 kilograms of cannabis stolen from his facility in a rare break-in in 2023.

“A year later the CRA gave me an excise tax bill for $130,000,” explains King. “I thought there was some sort of mistake, but there wasn’t. They told me that due to the loss of the 130 kilograms, because in their eyes it was destined for the Canadian market, they didn’t get their excise. 

“I was in shock. I don’t have an extra $130,000 to pay them as I’m already out $200,000 from the loss. The flower that was stolen was bulk and not excised so it just makes no sense.”

King says he will be fighting this bill. 

Tremendous amount of waste

In an equally frustrating issue on the other side of the country in New Brunswick, Jonathan Wilson at Crystal Cure—a micro producer who recently revoked their licence—posted a video online explaining how they had to deal with all the stamps they had on hand as they went through the process of closing their facility. 

This included counting tens of thousands of individual stamps and then burning them rather than being able to sell or otherwise transfer them to another producer. 

“Tell me again that there’s not a tremendous amount of waste,” he asks.

“The excise stamps are absolutely ridiculous, for many reasons,” says Wilson in the video. We know that we can already know where the product is going without the use of a stamp. We report it, and they report it back. It’s there. We see it in beverages/alcohol, and it works fine. We’ve just been hit with a much more convoluted system as punishment, it seems.”

Jen Meyers, CEO & Founder of micro processor Zelca Ltd., and a member of C3, says events like the recent C3 summit in Ottawa help rally the industry around these specific issues. 

“The summit successfully brought together key stakeholders from industry and government, fostering productive dialogue toward a sustainable future,” Meyers told StratCann in an email. “It reflected both the maturation of our industry and C3’s evolution under new leadership, uniting a strong and diverse membership.

“Excise reform remains crucial. A simple solution, such as changing ‘10% or $1 per gram, whichever is greater’ to ‘10% or $1 per gram, whichever is lesser,’ could provide much-needed relief without reinventing the wheel. 

“Additionally, the discussion around adopting a universal stamp would significantly ease the regulatory burden, especially for small producers selling across provinces.”

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OCS to open illegal pop-up “cannabis shop” in Toronto

by Grow Up Conference | Oct 9, 2024 | Media Partners, Stratcann

The OCS will be hosting a fake cannabis store in Toronto on the sixth anniversary of legalization to highlight the need for consumers to distinguish between legal and illegal stores. 

Beginning on October 17, 2024, the Ontario Cannabis Store (OCS) will host a four-day “Buzzkill” pop-up—a retail space designed to look like an illegal cannabis store within the heart of the largest city in Canada, at 474 Queen Street West.

The OCS’ goal is to help educate consumers on the difference between legal, tested cannabis products and those that can be found in an array of illegal and unlicensed stores operating in the province. 

“With this campaign, the intention is to reach adult consumers who may not realize they shop at illegal dispensaries, or who may believe that all cannabis is created equal, in a way that captures their interest and creates conversation,” says Amanda Winton, Manager, Communications and Strategic Engagement at the OCS. “We want to drive the message that shopping legal means shopping safe.”

Instead of cannabis products, those who visit the “store” will find mock packaging that highlights the risks of illegal cannabis. One example is a satirical beverage called ‘Pesti Cider’ which reads: “What gives this cannabis-infused cider its signature oomph? We like to think it’s love. But realistically, it’s probably our unregulated use of toxic pesticides. Don’t worry though, we’re like pretty sure it doesn’t have any long-term effects …”

The Buzzkill pop-up is part of a broader Buy Legal campaign the OCS launched on October 7 and will run through November 30. The buylegal.ca page on the OCS website has complimentary information emphasizing the need for third-party testing for cannabis products, something generally not found in products in the illicit and unregulated market. 

The page also includes information on how to distinguish a legal, licensed cannabis store in Ontario from some of the many new unlicensed stores that have been proliferating in different parts of the province, especially Toronto and Ottawa, often operating within a few steps of legal stores.

The Buzzkill campaign, meanwhile, takes a more tongue-in-cheek approach.

“At Buzzkill, we’re all about bringing you the best selection of cannabis products from sources unknown and untested,” reads a page on the OCS website. “So what if we don’t have the right paperwork? Just roll with it. Whether it’s a mystery strain or an edible with a surprise kick, we’ve got you covered – as long as you don’t ask too many questions.”

As part of the the campaign, OCS has also launched a “takeover” of the Reddit page /r/TheOCS, an otherwise unofficial review page for products available through the OCS. The takeover includes numerous ads promoting the campaign to “Shop safe. Shop legal.”

A 2022 study from the National Research Council on behalf of the OCS and Ontario Provincial Police showed that 86% (19 out of 22) of the illegal cannabis edibles tested contained multiple pesticides, in many cases at levels several hundred times above Health Canada’s limits. THC levels in those edibles were often much lower than advertised, as well. New Brunswick and British Columbia have released their own similar testing results looking at illicit products.

The OCS also notes that a recent survey found that 62% of all Ontarians aged 19+ ranked “no quality control or assurance of product safety” as one of the top three downsides of illegal cannabis. The survey also noted that two in three Ontarians believe that if a cannabis store is open, it must be legal which can allow some unlicensed operators to operate in plain sight. 

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BC Budtender’s Union gives strike notice to Vancouver Canna Cabana 

by Grow Up Conference | Oct 9, 2024 | Media Partners, Stratcann

The BC Budtender’s Union says they have served a strike notice at a Canna Cabana store in Vancouver.

In a post shared on UFCW 1518’s social media accounts on Tuesday, October 8, and confirmed to StratCann in an email, the union said the store’s workers were prepared to strike to address what they say is a shortage of hours at the Davie Street Cannabis Cabana in downtown Vancouver, leading to understaffing. UFCW is the United Food and Commercial Workers Union.

“Members at this store have made it clear they are prepared to strike to seek a fair contract that addresses a shortage of scheduled hours,” wrote the union in a post. “It’s not in the interests of staff or customers for a dispensary to be understaffed.”⁠

Canna Cabana is part of a chain of cannabis retailers across Canada and is owned by parent company y High Tide, which operates 184 stores as of October 7, including eight in BC. BC doesn’t allow a company to operate more than eight cannabis stores. Four are located in Vancouver, the other four are spread out across the province in Fort St John, Prince George, Kamloops, and Cranbrook.

A representative for High Tide told StratCann that the company did not wish to weigh in at this time. 

“Out of respect for the collective bargaining process, we will not be commenting at this time.”

In March of this year, the union announced that employees at the Davie Street Canna Cabana had joined the BC Budtenders Union. At the time, the union said staff were pushing back against low wages, minimal protections, and limited job security.

A post on the union’s Facebook page at the time said the two-year contract for those employees includes a 6.5% wage increase, retroactive pay on all wage increases to November 11, 2023, doubling the call-in premium to $1.00 per hour, and “timely and fair redistribution of cannabis samples from sales reps.”

BC began allowing producers to provide samples to retailers in 2023.

The BC Budtenders Union has slowly been gathering members since it became the first union to represent budtenders in Canada in 2020. There has been an increase in cannabis store employees joining unions in the past year, especially in BC and Ontario. 

As of April 2024, the BC Budtenders Union said it represents workers at nine cannabis businesses and 16 locations.

Fifteen of these locations are cannabis stores. It also represents workers at a cannabis production facility in BC, the first cannabis production facility to successfully unionize in Canada, following a 2020 court ruling that found the company had unfairly penalized workers for trying to unionize. 

Not all employees have stuck with their decision to join a union, though. Employees at Eggs Canna on East Hastings in downtown Vancouver voted to join the union in early 2022 but changed course shortly after that, voting to decertify union membership, meaning it no longer acts as their bargaining agent. 

A media representative with UFCW 1518 told StratCann they currently have around 150 members in 12 cannabis stores and one commercial grower. In April 2024, the union told StratCann that UFCW represented workers at nine cannabis businesses in BC (including one grower) and 17 locations.

In December 2023, Trees Cannabis, which has several unionized stores, announced that it and its subsidiaries filed for and was granted creditor protection under the CCAA. Two of four unionized Trees locations in BC have since closed (Alpha St and Fort St)

UFCW 1518 is British Columbia’s largest private sector union, with more than 27,000 workers in the retail, industrial, cannabis, healthcare, professional and agricultural sectors.

Featured image via Google Maps

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