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In a recently released report, titled ‘Shaping our Economic Future: Canadian Priorities,’ the House of Commons Standing Committee on Finance has unanimously recommended adjusting the excise duty formula for cannabis so that it is limited to a 10% ad valorem rate, and modifying the duty's operation, including applying excise stamps on cannabis products. Based on a survey conducted by the Cannabis Council of Canada, licensed producers currently pay up to 35% of top-line revenue in excise duties because of an erroneous assumption at the time of legalization that the price of cannabis flower would be approximately $10 per gram to the retail consumer. In reality, the price per gram of cannabis flower has fallen to as low as approximately $3 per gram, limiting cannabis companies’ ability to remain competitive on pricing, invest in innovation, retain jobs, and ultimately support the government’s stated objectives of illicit market conversion and promoting public health and safety.
“The pre-budget recommendation could not have come at a better time,” said Beena Goldenberg, CEO of Organigram. “Excise reform is critical to the long-term viability of the Canadian cannabis industry. The positive impact of the proposed reduction to a 10% ad valorem rate on the sustainability of the sector cannot be underestimated. We sincerely hope that the recommendation made by the Finance Committee is adopted by the Federal, Provincial and Territorial governments so that Canada can retain its position as global leader in the emerging cannabis movement.”
“We are also encouraged by recent reports indicating that the CRA is taking proactive measures to level the playing field by collecting more diligently from LPs who have fallen behind on their remittances for excise duties,” added Beena. - Stockwatch