Canada’s federal government has assessed more than 1 billion Canadian dollars ($740 million) in total duty on cannabis products since they were legalized for recreational use in 2018, according to federal data.
The milestone comes as executives hope the government offers relief on the fee and excise regime it imposes on the industry amid mounting job and financial losses.
According to the Canada Revenue Agency (CRA), the federal government assessed approximately CA$862.3 million in total duty on cannabis products between the 2018-19 and 2020-21 fiscal years, most of which has been shared with provinces and territories.
The CRA has yet to publish comparable figures for the 2021-22 financial year.
But the most recent public accounts, which detail the government’s expenses and revenues, show the federal government received revenue from the cannabis levy worth CA$160.2 million that year, bringing total duty since 2018 to a minimum of CA$1.02 billion.
Breaking $1 billion
The total duty since 2018 is likely even higher, given that the public accounts figure for 2021-22 does not include, among other things, duty collected by the federal government and shared with provinces and territories.
The total duty assessed by the CRA on cannabis during the earlier financial years was:
- CA$514 million in 2020-21.
- CA$256.7 million in 2019-20.
- CA$91.6 million in 2018-19.
The figures include duty assessed by the federal government and shared with provinces and territories, in addition to further duty applicable only in some jurisdictions.
Since 2018, total duty assessed on cannabis products by the federal government has increased as sales have climbed.
Meanwhile, the federal government’s own revenue from the cannabis levy was:
- CA$160.2 million in 2021-22.
- CA$108.9 million in 2020-21.
- CA$52 million in 2019-20.
- CA$18.3 million in 2018-19.
Of the CA$514 million assessed by the CRA for the 2020-21 financial year, CA$403.3 million was classified by the revenue service as the sum of “additional” cannabis duty and an “adjustment” to that additional duty.
In an email to MJBizDaily, the CRA said the “additional” duty represents cannabis excise duty that the federal government agreed to share with provinces and territories from recreational marijuana sales in their respective jurisdictions.
The federal government agreed to share 75% of the revenues it collects while keeping a quarter for itself.
Canada’s excise duties imposed on producers’ dried cannabis is either CA$1 per gram or 10% of the value of the gram, whichever is greater.
Some jurisdictions impose an extra excise duty on top of the federal levy. The CRA refers to those amounts as an “adjustment” to the additional cannabis duty.
The agency said money collected under that so-called adjustment is returned to the applicable province or territory.
The CRA tables do not break out the “additional” duty versus the “adjustment” to the additional cannabis duty.
When all taxes – provincial and federal – are accounted for, Canadian governments earned CA$1.6 billion from from the sale of cannabis in the 2021-22 fiscal year.
That revenue consists of:
- CA$300 million in net income of province-owned liquor and cannabis authorities.
- CA$1.3 billion from “total taxes” and other revenue.
The CA$1.3 billion consists of:
- CA$200 million in federal excise tax.
- CA$600 million from provincial excise taxes and other provincial or territorial revenue.
- CA$500 million from retail sales taxes.
Most duty from flower
By product segment, dried/fresh cannabis accounted for the lion’s share of the duty assessed by the federal government.
For the fiscal years covering the period 2018-21, duty assessed on dried/fresh cannabis made up 79.2% of the total.
Cannabis extracts, including oil, accounted for 16.5% of the total duty.
Duty applied to cannabis edibles did not start to meaningfully expand until the end of the 2019-20 financial year, when the products were rolled out across Canada.
Total duty assessed on edibles grew from CA$1.2 million in 2019-20 to approximately CA$6.5 million in 2020-21.
During the 2020-21 fiscal year, duty assessed on topical cannabis products amounted to CA$973,000.
Duty applied to cannabis plants and seeds, respectively, that year was not disclosed by the CRA because of “confidentiality purposes.”
The total, however, did not exceed CA$436,000.
Matt Lamers can be reached at matt.lamers@mjbizdaily.com.
