‘In peril:’ Cannabis growers say government policies snuffing them out

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Authorities tax coverage is a doubtlessly deadly buzz kill for Canada’s authorized hashish growers, members of the fledgling trade stated Wednesday.

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They are saying a latest wave of layoffs amongst marijuana producers, together with the lack of 85 jobs introduced this week at Calgary-based producer SNDL, portends dismal for a sector stifled by state charges and levies that embody a 37 % federal excise tax. embody.

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“We must be wholesome for the entire system to thrive … (authorized) Canadian hashish is in danger,” stated Mandesh Dosanjh, CEO of BC-based Pure Sunfarms.

“Whereas there are lots of questions on how we constructed this sector, we return to the unique authorities mandate which stated considered one of their mandates was to maintain taxes low to maintain product out of the arms of the youth and fight the unlawful market . .”

Dosanjh stated final 12 months his enterprise pocketed simply 28 cents on the greenback in income it generated, including that his operation was a transparent drawback not solely to unlawful growers but additionally to the tobacco and alcohol trade paying a lot decrease excise obligation.

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In one other blow to Alberta’s pot trade, Edmonton-based Aurora Hashish stated final June it was shedding 12 % of its workforce in a restructuring effort after saying it was closing three of its amenities.

And final week in what the trade is looking an enormous awakening, Cover Growers of Smith Falls, Ont. introduced that it was shedding 800 staff, or 35 % of its workforce, and shutting its 1 Hershey facility.

“What’s taking place just isn’t consolidation, it is carnage … it is favoring unlawful operators,” Dosanjh stated.

The licensed growers stated that just about 5 years after leisure hashish bans resulted in Canada, 50 % of the marketplace for their product continues to be held by unlawful gamers.

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Legalization’s early promise to encourage licensed producers to enter the market has not been fulfilled by the federal government and has led to over-expansion of the trade and a glut of merchandise that has pushed down costs because the sector struggles with inflation, producers say .

“Sure, there was oversupply and overbuilding within the trade, however that was on the idea that extra shoppers would transfer to authorized channels,” stated Margaret Brodie, performing CEO of Vancouver-headquartered Rubicon Organics.

“As a result of there was no repression or affect on the unlawful sector, it was very troublesome for firms that had been taxed.”

Seventy % of the 300 licensed growers in Canada are in default on paying taxes, stated George Smitherman, president of the Hashish Council of Hashish, which represents that sector.

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“If there was ever a canary in a coal mine … it is actually a sign of how robust it’s on the market,” he stated, including it was within the federal authorities’s curiosity to ease the stress on producers .

A lot of the ache of those layoffs is felt in smaller communities the place a lot of the rising operations are positioned, say the producers.

A regulatory tax of two.3 % levied on producers however not the tobacco or alcohol sectors has additionally proved a stumbling block to prosperity, costing the trade $100 million final 12 months, Smitherman stated.

The pressing name for tax reduction comes forward of an impending federal price range and amid a legislative overview of the Hashish Act’s affect on financial, social and environmental dynamics, together with encroachment on the unlawful trade.

The overview was launched final September and is because of present a report on its findings 18 months after that.

Canada’s hashish trade has additionally been extremely important of regulatory insurance policies they are saying are based mostly on a lingering stigma that limits their advertising capabilities and more and more impacts downstream retailers, Smitherman stated.

“Greater than 200 of these shops have already closed in Ontario, forecasts of as much as 500 this 12 months and a whole bunch extra non-public shops in provinces like Alberta,” he stated.

BKaufmann@postmedia.com

Twitter: @BillKaufmannjrn