Canadian campaign seeks reduced cannabis excise taxes

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A group of small- and medium-sized Canadian marijuana cultivators is calling on the federal government to reform its cannabis excise tax regime, seeking an end to a flat minimum per-gram tax and other tax adjustments based on a producer’s size.

The Stand For Craft campaign, which launched Wednesday, says it represents “craft (licensed producers), processors, and micro cultivators coming forward to reiterate systemic financial dysfunction in the current excise regime.”

Specifically, the campaign advocates for removal of the 1 Canadian dollar (78 cents)-minimum-per-gram excise tax, while reforming the alternative percentage-based per gram tax.

It calls on the government to apply that percentage-based excise tax based on “different tax tiers” for micro-cultivators, “craft-scale standard growers,” “small to medium cultivation enterprises” and “large cultivators.”

Micro-cultivation licenses are a class of cannabis production license for small growers in Canada, but the campaign does not specify how the other proposed tax tiers would be defined.

Dan Sutton, the founder and CEO of medium-sized British Columbia-based cultivator Tantalus Labs, is the public face of the campaign.

“We’ve got a pretty small team, considering the size of our output. … We’re about as efficient as a cannabis company can be,” Sutton told MJBizDaily.

“And we still have trouble making ends meet at the end of every month, because of this excise tax. … What about the small guys that are just doing cultivation, and then they have to sell to a processor that marks up their product?”

Sutton said the Stand For Craft campaign is backed by more than 50 cannabis cultivators.

It includes a form letter for those businesses to send to government stakeholders, whom Sutton said includes:

  • Cannabis regulator Health Canada.
  • The federal and provincial finance departments.
  • The Canada Revenue Agency tax authority.
  • Federal and provincial cannabis policymakers.
  • Provincial cannabis wholesale and distribution boards.

“I think when we are open and honest that we are struggling financially, it’s a call to action for others to be open and honest,” Sutton said.

“The more conversations I had with micro-producers and small craft growers, the more I realized that this wasn’t an occasional thing that was happening – it was every single company, every single team is going through these same challenges.”

Canada’s excise duty on dried cannabis flower is either CA$1 per gram or 10% of the value of the gram, whichever is greater.

Different excise duty rules apply to cannabis oil and other derivative products such as edibles, extracts and topicals, based on THC content.

Sutton said he’s speaking out about excise taxes for cannabis flower “simply because that’s my primary business, and that seems to be the widest swath of companies that are trying to survive in this space.”

However, he added, “the entire excise (tax) regime does need reform.”

Cannabis excise tax proceeds are split between Canada’s federal and provincial governments, with the provinces receiving 75%.

Further taxes are applied to cannabis when it is purchased by retail consumers.

The Canadian government also charges cannabis producers special fees to recover regulatory costs.

Solomon Israel can be reached at