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'Canadian cannabis is in peril': Industry leaders call on feds to help

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Canadian cannabis business owners are calling for help from the federal government, saying high tax rates and strict rules have left their businesses struggling to survive.

Five Canadian cannabis sector CEOs joined a press conference, organized by the Cannabis Council of Canada, Wednesday on Parliament Hill to discuss the extent of layoffs and facility closures in the industry.

"You're hearing from producers here today because we as growers and manufacturers sit at the heart of the cannabis supply chain," said President and CEO of British Columbia company Pure Sunfarms, Mandesh Dosanjh. "We need to be healthy in order for the whole system to thrive but that's not reality. Producers stand here in peril. Canadian cannabis is in peril."

Canopy Growth Corp., one of Canada's largest cannabis producers, recently announced it would be laying off 800 workers – 35 per cent of its workforce -- and closing one of its facilities in Smiths Falls, Ont.

High excise taxes have been one of the biggest challenges for businesses, the CEOs said in Wednesday’s press conference, adding the 2.3 per cent excise tax rate has become too costly, particularly after a year of increased inflation rates.

Jonathan Wilson, CEO of New Brunswick company Crystal Cure, called for the federal government to reconsider the tax rate as he says it's not only pushing away current businesses but eliminating the path for new producers to enter and grow the sector.

"It's not only a significant burden for producers like us, but it's a barrier of entry for new producers to come into the legal market," Wilson said.

MARKET DISPARITIES BLAMED FOR SINKING PROFITS

Since the legalization of cannabis in 2018, there have been growing disparities between the legal cannabis sector and the illegal market, as well as the alcohol and tobacco industry, President of the Cannabis Council of Canada, George Smitherman, said.

"We're paying a regulatory fee, which was premised on a profitable industry, which tobacco and alcohol don't pay," Smitherman said Wednesday.

Additionally, strict rules on THC levels of certain products and high tax rates have taken a hit on investors and business owners as they say non-regulated stores have profited from not having to abide by the rules.

A 2022 report found that Canadians investing in cannabis businesses collectively lost more than $131 billion. Industry leaders said they built their business on the federal government's promises for a profitable industry but now that profits are shaking, they're hoping for immediate action.

"What happened to Smiths Falls can happen to any entity in Canada," CEO of Truro Cannabis, Leonard Walter, said. "There [are] federal and provincial regulations that both need to be worked on. There [are] solutions, we just need folks talking."

After a nearly 12-month delay, Health Canada announced in September 2022 it would be conducting a legislative review of the Cannabis Act.

Smitherman said while there has been data collected and surveys created to increase awareness on the problems in the industry, he hopes it'll be enough to be taken into consideration ahead of the 2023 budget. 

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