Canada’s ‘cannabis strategy table’ offers chance for tax, regulatory reforms

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Image of Parliament Hill in Ottawa, Ontario, Canada

Canadian marijuana insiders say a new federal “cannabis strategy table” bringing together industry leaders and government officials will be an opportunity to discuss key concerns such as excise taxes, marketing restrictions and THC limits on edibles and beverages.

The Canadian government announced the cannabis strategy table in its latest budget.

The strategy table comes approximately four years after passage of Canada’s landmark Cannabis Act, which paved the way for Canada to become the first major industrial nation to legalize recreational marijuana at the federal level.

The issues industry players expect to raise during the roundtable overlap with topics they want to tackle when the overdue legislative review of the Cannabis Act eventually launches.

However, industry stakeholders expressed hope for fresh approaches to those issues given the upcoming strategy table’s orientation toward fostering economic growth.

“Part of our frustration as an industry over the last few years has been, anytime we want to have a holistic discussion with government about the challenges and opportunities facing industry – and how can government and industry partner to overcome the challenges and also take advantage of the opportunities – we’ve always just been referred to Health Canada, and that’s not really in their mandate,” said Omar Yar Khan, senior vice president of corporate and public affairs with Canadian cannabis retail chain High Tide.

Beyond collaborating on cannabis industry issues, stakeholders said the creation of the economic strategy table marks a coming of age for Canada’s regulated cannabis sector, joining other key industries as an object of special government attention and collaboration.

Having a table led by both government and industry is “a good first step,” Khan said.

“It’s an acknowledgement on behalf of the government that we matter as an industry, and the proof will be in the pudding.”

How economic strategy tables work

Official details on the cannabis strategy table remain scarce as the forum has yet to formally launch.

The table will be the responsibility of Innovation, Science and Economic Development Canada (ISED), formerly Industry Canada, a federal department that works to develop the Canadian economy and foster innovation.

ISED told MJBizDaily in a statement that the strategy table is meant to be “an open and ongoing dialogue … with the legal cannabis sector around opportunities for, and challenges to, economic growth.”

The department said further details would be forthcoming.

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ISED has seven other economic strategy tables:

  • Advanced manufacturing.
  • Agri-food.
  • Digital industries.
  • Health and biosciences.
  • Clean technology.
  • Tourism.
  • Resources of the future.

Sherry Boodram, co-founder and CEO of Canadian cannabis consultancy CannDelta, said economic strategy tables typically meet monthly and aim to ensure that sectoral growth strategies are formalized and advanced.

“Basically, the government is working to engage and collaborate with key stakeholders that are part of a major high-impact economic sector; really, any sector that would influence Canada’s economic growth,” Boodram explained.

“The government tries to do that in a very strategic way by formulating these strategy tables that are largely industry-led, so they can have very streamlined conversations about that.”

Different industry strategy tables also meet with each other to discuss areas where their interests overlap, Boodram added.

High Tide’s Khan said existing economic strategy tables are co-chaired by an industry CEO and a deputy minister from the Canadian federal government, and he expects a similar leadership structure for the cannabis table.

Khan said ISED serves as a liaison between industry and different government departments “where holistic discussions can happen, so they’re not happening in silos,” although he acknowledged that final responsibility for policies affecting the cannabis industry still lies with other departments.

George Smitherman, president and CEO of industry group Cannabis Council of Canada, expects the table will serve as another way “by which we can actually begin to be proponents for proactive, growth-related policies,” which he said has been “impossible” in discussions with Health Canada and difficult with Finance Canada and national tax authority Canada Revenue Agency.

“So, you’d hope that this would provide the place for a broader, proactive growth, economic context to frame up a lot of the strategy and tactics that might flow from it.”

Key issues to raise

Within that economic context, Smitherman said he expects the industry will continue to highlight existing concerns about “an excise tax that’s overly aggressive and a set of nanny-state regulations that are really, really, really choking people.”

A number of Canadian cannabis companies owe the government unpaid excise duties, and producers have called for the tax to be reformed.

High Tide’s Khan said the strategic table should serve as an opportunity to set benchmarks for industry and government achievements in the coming years, then check in on those goals to measure progress.

“We’re going to want to work together with government and this table to establish a road map for industry success over the next five years,” Khan said.

“But then we’re going to also want to keep their feet to the fire and hold them accountable for implementing that roadmap, once it’s agreed on.”

According to Khan, one likely issue for discussion will be changing THC limits in edibles and beverages, which cap each edibles package and beverage container at a maximum 10 milligrams of THC.

“Public health is important,” he said, “but we also want to have these conversations in the context of, what is the impact on our ability to compete with the illicit market?”

Industry consultant Boodram hopes the table will be an opportunity for the Canadian cannabis sector to “move toward becoming a more sustainable industry, with opportunities for realistic economic growth.”

That could include reforming regulations around cannabis advertising and marketing “to allow for key performance drivers such as brand recognition, differentiation and cost leadership,” she suggested.

Boodram also hopes for cannabis excise tax reform beyond the technical tweaks announced in the recent budget.

“I think it would also be great if they talk about supporting programs for better funding opportunities and job creation for some of the smaller players,” Boodram added.

Industry evolution

Whatever the strategy table ends up accomplishing, industry proponents say its creation serves as a symbolic maturation for Canada’s regulated cannabis sector.

“I think the fact that Minister (of Finance Chrystia) Freeland wanted to have this included in her budget shows that there is a high-level acknowledgement within the government of the importance of this industry to Canadian families, to Canadian jobs, to Canadian economic growth,” High Tide’s Khan said.

Boodram said the government’s recognition of cannabis as “valid, high-impact economic contributor worth focusing on” is “a huge achievement for the industry.”

“It’s great that it’s being recognized as a high-impact industry that could drive economic growth for Canada and also be seen as an industry that can be competitive globally,” Boodram said.

Cannabis Council CEO Smitherman said he was hopeful the table would help the industry accomplish change, “especially because it comes as a sign of recognition, alongside a few other signs” like the recent excise tax modifications and a proposed increase to cannabis beverage possession limits.

“We’ve started to see some hopeful signs of recognition,” Smitherman said.

“But in the grand scheme of things, they’re incremental to the need, and we can’t lose sight of how urgent it is out there for a lot of people.”

Solomon Israel can be reached at solomon.israel@mjbizdaily.com.