Manitoba repeals 6% retail levy on legal marijuana sales

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Manitoba has repealed a requirement for legal cannabis retailers to pay a 6% “social responsibility fee” based on their gross annual sales to the province.

The move could add approximately 11 million Canadian dollars ($7.8 million) back into the pockets of businesses, who have been struggling amid fierce competition and tight margins.

The province’s regulated cannabis sales amounted to CA$181.68 million in 2022.

Manitoba currently has approximately 178 stores in operation.

“This will help Manitoba’s legal cannabis retailers of all sizes maintain margins while reinvesting in their businesses so they can better compete with a well-entrenched illicit market,” Raj Grover, CEO of retailer High Tide, said in a statement.

“While today’s announcement is a positive first step, much more needs to be done, especially by the federal government, to ensure the sustainability of Canada’s legal cannabis sector, which directly employs tens of thousands of Canadians but is struggling to succeed under the current regulatory and legislative environment.

“We encourage other provinces and the federal government to follow Manitoba’s lead and come up with concrete measures to ensure our industry continues to grow and create jobs while protecting public health,” Grover said.

Manitoba introduced the bill, Bill 10, to repeal the fee last November.

Manitoba’s legislature approved it this week.

In a bulletin sent to retailers in May, the province explained that it would pause the payment process for all unpaid fees retroactive to November 2022, and refunds would be provided to stores which had already paid their levy.

“Please note that while (the province) will also work to prepare to issue refunds to retailers that have already submitted their 2022 (social responsibility fee) assessment payment in part or in full, these refunds cannot be issued until after Bill 10 has formally passed into law,” the bulletin stated before the bill’s passage.

Grover said those retroactive payments could amount to CA$18 million.

Manitoba’s move comes as Canada’s federal and provincial governments come under pressure to ease their levies on legal cannabis businesses.

Ontario’s government-owned wholesaler is lowering its markup on cannabis edibles from almost 45% to 25%, and vapes from over 36% to $25%.

Ontario said the concession would provide industry with an additional CA$60 million annually.

The Ontario Cannabis Store is the most profitable cannabis corporation in Canada.

Various levels of government in Canada collected more than CA$1.5 billion in cannabis profit and tax revenue in fiscal 2021-22, according to Statistics Canada.