Our Terms & Conditions | Our Privacy Policy
Regulatory expert Denis Gertler’s opinion on how the new leader of Canada can support the country’s cannabis industry.
Dear Prime Minister Carney:
Congratulations on your recent election win! I appreciate your sense of urgency, passion for implementation and your pledge to improve this country’s economic resilience, and I understand you’re looking for new ideas (or at least open to them). So, in the spirit of pitching one to help realize our shared goal, I’d like you to consider cannabis as an overlooked Canadian industry. With growing exports and products regarded as the gold standard around the world, cannabis should be a prime candidate for your consideration.
Canada’s cannabis industry contributed $7.4 billion to our GDP in 2024 and $43 billion since legalization while supporting 80,000 jobs. However, we in the industry think Canada can do more to capitalize on our early-to-market advantage. Based on the restrictive way the industry is regulated, it seems clear that, up until this point, the federal government has not had a goal of creating a robust cannabis industry, and it is time for that to change.
We understand that the rationale for legalization was to protect children and youth from consuming cannabis— especially illegal weed which has repeatedly been shown to contain pesticides, metals and other contaminants. The regulatory regime that Health Canada and the provinces have implemented has helped ensure that authorized products aren’t sold to underage users. Unfortunately, the goal of eradicating the illicit market has not been achieved in nearly seven years of legalization, as illegal producers control between a quarter to half of the total market, according to recent reports.
This circumstance is often blamed on the high taxes, primarily the cannabis excise tax paid by the industry, which many licensed producers see as punitive and unsustainable. The excise duty on dried flower, the largest category and the most exposed to price compression, is $1 per gram or 10 per cent of a producer’s selling price, whichever is highest. As you know, excise duties are designed to be punitive instruments when applied to tobacco, gasoline and alcoholic beverages in order to offset harms these products bring by raising revenue levels. Although the same logic has been applied to cannabis, it doesn’t belong in this basket. There is a lack of research to demonstrate widespread harm, despite legitimate concerns about health effects for children and youth. As a key driver of low prices, illegal producers don’t pay excise duties or any other tax.
The burdens of the excise duty could be alleviated by shifting the federal regulatory approach from cannabis as a harm reduction play to one reframing it as a dynamic industry whose comparative advantages can be used to leverage greater revenue growth and employment.
Prime minister, the outline of a solution is already apparent. The Department of Agriculture and Agribusiness considers cannabis to be an agricultural crop, which it announced in the 2018 Canadian Agricultural Partnership (CAP). Because the CAP is co-delivered with the provinces based on their own programming, the eligibility of and benefits for cannabis cultivators have varied. In B.C., for example, cultivators’ access is severely limited by the industry’s exemption from provincial Farm Status. Removing this exemption would allow licensed growers to access lower tax rates and other benefits similar to growers of other crops. Your government should give serious consideration to making the department its business advocate for the industry and focal point for reforming federal and provincial cannabis policy.
The industry could also gain access to financial assistance, risk mitigation, farm insurance, debt mediation and export development programs. Its minister would become the industry’s chief spokesperson in Cabinet to ensure that the sector plays a role in reforming Canada’s economy, including the dismantling of interprovincial trade barriers. While cannabis products across the country are selectively listed by other provinces, access is strictly controlled by each. Provincial agencies run their own distinct distribution systems. For example, Québec has restricted access to a relatively narrow band of products in fewer than 100 government-owned outlets. Ontario allows the private sector to operate some 1,700 stores but tolerates retail deserts in municipalities that have not opted in to its retail framework. Each province has separate administrative policies and retail distribution practices. Some provinces have enabled farmgate outlets while others maintain barriers, such as B.C.’s $7,500 licensing fee. Progress towards replacing individual provincial excise stamps with a single, harmonized stamp is a step in the right direction but more can be done to reduce interprovincial barriers.
Other federal agencies, such as Export Development Canada, could play further roles. EDC already helps cannabis producers access international markets, provides trade commissioner services and could help companies scale exports through its trade accelerator and investment programs. Perhaps the most compelling argument for moving quickly in this direction is to capitalize on the success of medical exports. Our products are in demand, but competition is heating up. While we have the advantages of product consistency and reliable product safety to differentiate our offerings, this won’t be enough for continued success. Trading partners have noticed that we don’t provide reciprocal access to our domestic market. To avoid counter measures we need to open our doors to cannabis imports in a manner compatible with Canada’s broader stance on international trade.
International cannabis consultant Deepak Anand notes that Canadian companies are already exporting 2.0 products to the U.K. and Australia, but sales to Germany and other global markets are mostly confined to 1.0 products. Selling the full range of medical cannabis products is significantly more challenging due to regulatory obstacles and added complexities, particularly concerning GMP requirements. Current and future exporters would benefit from the full range of applicable supports.
Growth opportunities are not restricted to medical exports. Cannabis tourism is also an export industry where international travellers to Canada are concerned, and with more Canadians set to vacation at home, a potential magnet for domestic travel business. Although the provinces play a pivotal role in promoting travel and developing tourism infrastructure there is room to expand the federal role. All three government levels need to work together to facilitate cannabis-friendly lodging, farmgate sales, events and consumption options.
With a new focus on business, the Cannabis Act should be amended to make it easier to sell products. Your government can start by removing advertising and promotion restrictions which mainly confuse customers and make it difficult for businesses to compete with illicit suppliers. These regulations are a direct lift from tobacco legislation which have been justified by decades of research showing direct links between tobacco use and cancers, heart disease, respiratory illness, and other ailments. The story is different with cannabis, where the research record is inconsistent at best. In addressing health effects during its Legislative Review of the Act, Health Canada’s Expert Panel focused on children, youth and young adults. Their recommendations included monitoring use, preventing child poisonings, cannabis use prevention programming for young persons, establishing a youth advisory board, clarifying high-potency definitions and improving health and consumer information. These are all sensible ideas, but none support the continued stigma applied to cannabis. The panel agreed, stating that consumer education needs to be “fact-based, non-stigmatizing…regularly evaluated and adjusted accordingly”.
Another area where opportunity can be pursued is by enabling broader access to Cannabis Natural Health Products. Health Canada is wrapping up its consultation on a regulatory pathway for the authorization of health products containing CBD without a prescription. While pharmacies may eventually sell such products, the more salient issue is the level of THC in the hemp from which cannabidiol is derived. The currently prescribed 10 parts per million (ppm) is so low as to be ineffective. The Expert Panel recommended a threshold of 0.3 per cent which would bring us in line with the U.S. standard. According to Anand, the lower level presents a barrier to commercialization. Retaining the lower limit also inhibits the development of a low-dose THC market for beverages, a fast-growing U.S. product segment.
Prime minister, I hope I have conveyed the promise of Canada’s cannabis industry and its capacity to boost our economy. If you’re wondering how Canadians feel about the industry, a recent Abacus Data poll sponsored by Organigram revealed that nearly two-thirds see cannabis as a key pillar of our country’s economic future. As you’ve said of the moment, the time to act is now.
Denis Gertler is a regulatory consultant, board member and former government regulator.
Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.
Aggregated From –
Comments are closed.