The federal government is easing regulations on the cannabis industry, offering $42.1 million in annual cost reductions as legal marijuana businesses struggle with mounting tax debts and insolvencies.
Blacklock's Reporter says the changes, set to take effect April 1, aim to reduce bureaucratic hurdles for cannabis retailers, wholesalers, and distributors.
“The cannabis industry is facing economic difficulties which threaten a key objective of the Cannabis Act — to provide for the legal production of cannabis to displace the illegal market,” the Department of Health wrote in a Regulatory Impact Analysis Statement.
Officials acknowledged that some rules were “overly burdensome or unnecessary” and could be relaxed without jeopardizing public health and safety.
The relief package includes easing licensing requirements for research, reducing mandatory employee security clearances, eliminating security alarms in storage areas, and scrapping mandatory annual reporting of advertising expenses.
The changes will lead to a “net reduction in costs” for businesses, according to the department.
Since Parliament repealed a 95-year ban on recreational cannabis in 2018, the industry has faced financial difficulties.
Bankruptcy records show 93 cannabis retailers, wholesalers, and distributors — including national chains — have filed for insolvency, many owing significant tax debts.
On February 5, Tricanna Industries Inc. of Mission, B.C., reported $3.2 million in liabilities, including $1.1 million owed to the Canada Revenue Agency, which had been considering “potential action” over unpaid excise taxes.
The Revenue Agency reported last year that the cannabis industry owed $269.8 million in taxes, with write-offs totaling $4.7 million as of September 21.
A 2023 Competition Bureau report found that 66% of licensed cannabis businesses were delinquent on their excise tax payments, and the total amount of unpaid duties had “continuously been rising since legalization.”
