Business
Canadian government among top unpaid creditors of failed cannabis businesses
Canada’s federal government accounts for a growing share of the unpaid debts racked up by failed cannabis companies, lending credence to claims the nation’s nascent adult-use industry is suffering from pricey fees and heavy taxation.
A review of recent insolvency filings by MJBizDaily found that the Canada Revenue Agency, the federal tax collection body, and Health Canada, the national department in charge of regulating cannabis production, are commonly among the biggest unpaid creditors for insolvent marijuana producers.
In the 2021-22 fiscal year, various levels of government collected more than 1.5 billion Canadian dollars ($1.2 billion) from the cannabis industry via excise tax, other taxes (such as sales taxes) and various fees, including the annual regulatory fee.
However, the amount of unpaid federal excise tax and fees has skyrocketed.
Licensed producers owed the Canada Revenue Agency (CRA) CA$192.7 million as of March 31, 2023, while unpaid regulatory fees jumped to almost CA$4 million.
“It’s increasingly clear that, for many cannabis companies, insolvency is the result of a formula where taxes and fees squeeze out such a big proportion of the overall price,” George Smitherman, CEO of the industry group Cannabis Council of Canada, told MJBizDaily.
Fierce competition, a glut of product and falling wholesale prices are also weighing on the industry.
The latest example of outstanding debts owed to the federal government is Vancouver, British Columbia-based cannabis producer Tantalus Labs.
In June, Tantalus filed a Notice of Intent for Restructuring in a British Columbia court.
A review of Tantalus Labs’ creditors list shows that the Canadian government accounts for more than half the licensed producer’s unsecured debts.
Of the CA$8.4 million that Tantalus owed to 92 creditors, CA$4.5 million was due to the Receiver General for Canada, the body responsible for accepting payments owed to the federal government.
The producer also owed Health Canada CA$388,490.
Together, the two government bodies make up 58% of Tantalus’ debt, an indication that fees and taxes contribute a significant amount to cannabis businesses’ costs.
It’s a similar story for other recent insolvent producers.
Last month, Concord, Ontario-based cannabis company Aleafia Health entered creditor protection after the failure of its attempt to merge with U.S. multistate marijuana operator Red White & Bloom Brands.
The company had racked up unsecured obligations totaling CA$29.7 million.
The Canadian government was by far the biggest unpaid creditor, being owed CA$15.8 million, or well more than half the company’s outstanding debt. Most of that was owed to the CRA.
When cannabis producer Phoena Group was granted creditor protection earlier this year, the Canadian government was shown to be the company’s third-largest unpaid creditor.
Vaughan, Ontario-based Phoena – formerly called CannTrust – had amassed a debt owed to the government totaling CA$1.8 million. The money was owed to the Receiver General for Canada, the CRA and Health Canada.
Why so much debt?
Michael Armstrong, an associate business professor at Brock University in St. Catharines, Ontario, said one explanation for the increase in debts owed to the government is that businesses can get away with it.
“If you are running a cannabis company and you realize you don’t have enough money to pay all your debts,” he said, “then you’re going to ask, ‘Who can we put off?’
“It seems that companies are realizing they can procrastinate on the excise taxes and other government fees.”
Armstrong suggested the growing proportion of debt owed to the federal government partly reflects high taxes and fees charged specifically to cannabis businesses.
If the industry were already firmly established, the taxes and fees wouldn’t necessarily be higher than they should be.
But he said they might be too much for businesses to bear given the current state and maturity of the industry.
October will mark the fifth anniversary of Canada’s adult-use cannabis industry.
“It’s a brand-new industry that’s still trying to figure out how many stores (and cultivators) we need to compete against each other and against the (illicit) market,” he said.
Armstrong noted that prices have come down substantially in the regulated market, where significant margin has been taken off the table since 2018, when the cannabis excise tax was rolled out.
“So the margins they’re taking the mostly fixed taxes and fees out of doesn’t leave much for the industry, whereas back in 2018 the margin was much bigger,” he said.
“Someday, perhaps in the future when the margins aren’t so pressed, maybe those tax takes will turn out to be appropriate.”
‘Unleash the hounds’
The number of licensed cannabis producers unable or unwilling to pay their excise duty to the Canadian government has soared in recent years.
Almost three-quarters of the 305 LPs required to pay the duty had an outstanding debt with the CRA as of March 2023.
The number of LPs with outstanding excise debt was:
- 12 in 2019.
- 33 in 2020.
- 68 in 2021.
- 141 in 2022.
- 213 in 2023.
Facing a tidal wave of delinquent payees, the CRA earlier this year began stepping up pressure on cannabis producers with outstanding excise payments.
The pressure included “legal warning” letters.
Smitherman, of the Cannabis Council of Canada, suggested the government ought to adapt its excise tax to the reality facing the industry.
“The government’s response to the growing evidence of unpaid taxes and fees has been to unleash the CRA hounds rather than pay any concern to the formula that caused a lot of the problem in the first place,” he said.
Focus on fees
Not all cannabis executives believe the excise tax applied to sales is unreasonable.
Norton Singhavon, CEO of Kelowna, British Columbia-based Avant Brands, said the excise is fine and the industry should instead be targeting various fees levied by Health Canada, such as the annual regulatory fee.
“All the fees Health Canada scrapes along the way are where the (potential) savings are for businesses,” Singhavon said in a phone interview.
Singhavon doesn’t believe the excise tax is the cause for so many business failures.
“I think most of these companies have bigger problems,” he said.
“For the vast majority, (the excise tax) doesn’t change their financial situation.
Singhavon noted that some cannabis companies are succeeding in the face of high fees and taxes.
He noted the third-quarter results of Cannara Biotech, a Montreal-headquartered cannabis producer, which reported positive free cash flow and net income for its third quarter.
He also said his company, Avant Brands, reported positive free cash flow and a small loss for the recent quarter.
“It’s still an early stage industry. It’s meant to be challenging,” Singhavon said.
“It’s meant to be hard. It’s not a gimme.”
Source: https://mjbizdaily.com/canadian-government-among-top-unpaid-creditors-of-failed-cannabis-businesses/
Business
EU Pressure Builds on Google as Regulators Face Calls for Massive Fine Over Search Practices
A growing coalition of European industry groups is intensifying pressure on regulators to take decisive action against Google over allegations of unfair search practices that could reshape competition rules across the region’s digital economy.
Investigation Under Digital Markets Act Gains Momentum
The case is being examined by the European Commission under the European Union’s landmark Digital Markets Act (DMA), introduced to curb the dominance of major technology platforms and ensure fair competition.
Launched in March 2024, the investigation focuses on whether Google has been prioritising its own services in search results, potentially disadvantaging rival businesses that rely on online visibility to reach customers.
Industry Groups Demand Swift Action
Several prominent European organizations have jointly urged regulators to conclude the probe without further delay. They argue that prolonged investigations allow alleged anti-competitive practices to continue, putting European companies—especially startups—at a disadvantage.
Signatories include the European Publishers Council, the European Magazine Media Association, the European Tech Alliance, and EU Travel Tech.
In a joint statement, these groups warned that delays in enforcement are affecting innovation, profitability, and growth prospects for regional businesses competing in digital markets.
Google Denies Allegations
Google has rejected claims of bias, stating that its search algorithms are designed to deliver the most relevant and useful results to users. The company has also proposed adjustments to address regulatory concerns.
However, critics argue that these changes are insufficient and fail to address the core issue of market dominance.
Potential Billion-Euro Penalties
If found in violation of the DMA, Google could face significant financial penalties. Under EU rules, fines can reach a substantial percentage of a company’s global turnover, potentially amounting to billions of euros.
Regulators may also impose corrective measures requiring changes to business practices, which could have long-term implications for how digital platforms operate in Europe.
Wider Implications for Big Tech
The case highlights ongoing tensions between European regulators and major U.S. technology firms. In recent years, the EU has taken a more aggressive stance in enforcing competition laws, aiming to create a level playing field for local businesses.
A final ruling against Google could set a major precedent, influencing future enforcement actions and shaping the regulatory landscape for global tech companies operating within Europe.
As scrutiny intensifies, the outcome of the investigation is expected to play a critical role in defining the future of digital competition across the European Union.
AI & Technology
Amazon Faces Potential Criminal Trial in Italy Over €1.2 Billion Tax Evasion Allegations
Milan: U.S. tech giant Amazon is facing the prospect of a major legal showdown in Italy, after prosecutors in Milan formally requested a court to move forward with criminal proceedings over alleged tax evasion totaling approximately ₹12,500 crore (€1.2 billion).
The case targets Amazon’s European division along with four senior executives, marking one of the most significant tax-related investigations involving a global e-commerce platform in Europe.
Trial Push Despite Multi-Million Euro Settlement
The move comes even after Amazon reached a financial settlement with Italian tax authorities in December, agreeing to pay around ₹5,500 crore (€527 million), including interest, to resolve part of the dispute.
Typically, such settlements lead to the closure of criminal investigations. However, Milan prosecutors have opted to proceed, signaling a tougher stance on alleged corporate tax violations.
A preliminary hearing is expected in the coming months, where a judge will decide whether to formally indict the company and its executives or dismiss the case.
Allegations of VAT Evasion Through Marketplace Sellers
At the center of the investigation are claims that Amazon’s platform enabled non-European Union sellers to avoid paying value-added tax (VAT) on goods sold to Italian consumers between 2019 and 2021.
Prosecutors allege that the company’s marketplace structure allowed thousands of foreign vendors—many reportedly based in China—to operate without fully disclosing their identities or tax obligations. This, authorities argue, led to substantial VAT losses for the Italian government.
Under Italian law, online platforms facilitating sales can be held partially liable if third-party sellers fail to comply with tax requirements, a key point in the prosecution’s case.
Italian Government Named as Affected Party
In their filing, prosecutors identified Italy’s Economy Ministry as the injured party, citing significant financial damage resulting from the alleged tax evasion.
Legal experts say the outcome of the case could have wide-ranging implications across the European Union, where VAT systems are harmonized and similar compliance rules apply to digital marketplaces.
Multiple Investigations Add to Pressure
The VAT probe is just one of several legal challenges facing Amazon in Italy. The European Public Prosecutor’s Office is reportedly examining additional tax-related issues covering more recent years.
Meanwhile, Milan authorities are pursuing separate investigations into alleged customs fraud linked to imports from China and whether Amazon maintained an undeclared “permanent establishment” in Italy—potentially exposing it to higher tax liabilities.
In a separate regulatory action, Italy’s data protection authority recently ordered an Amazon unit to stop using personal data from over 1,800 employees at a warehouse near Rome.
Amazon Denies Allegations
Amazon has consistently denied wrongdoing and indicated it will strongly contest the allegations in court if the case proceeds. The company has also warned that prolonged legal uncertainty could impact investor confidence and Italy’s appeal as a destination for international business.
Broader Impact on Europe’s Digital Economy
If the case moves to trial, it could become a landmark moment for the regulation of global e-commerce platforms in Europe. Governments across the region are increasingly scrutinizing how digital marketplaces handle tax compliance, especially in cross-border transactions.
With online retail continuing to expand, regulators are under mounting pressure to ensure that multinational platforms and third-party sellers adhere to the same tax rules as traditional businesses.
Aviation
IndiGo Crisis Exposes Risks of Monopoly: What If Telecom or E-commerce Collapses Next?
Airports across India witnessed scenes of distress and confusion as thousands of passengers were stranded due to IndiGo’s massive flight disruptions. Families with medical emergencies, funerals, and personal crises were left helpless as the airline cancelled hundreds of flights without adequate communication or support.
Passengers described desperate situations — a mother pleading for sanitary pads for her daughter, a woman unable to transport her husband’s coffin, and others stranded while trying to reach family funerals or hospitals. “It was like a lockdown at the airport,” one passenger said, describing the panic that unfolded as IndiGo’s mismanagement crippled operations nationwide.
Root Cause: IndiGo’s Market Monopoly
The turmoil, industry experts argue, stems from IndiGo’s monopolistic control over India’s domestic aviation market. The airline operates nearly 2,100 flights daily and holds around 60% market share — meaning every second plane flying within India belongs to IndiGo.
This dominance has given the company unparalleled influence. When IndiGo falters, the entire aviation system suffers. Passengers are left with few alternatives, as other airlines lack capacity to absorb stranded travellers. The result: skyrocketing ticket prices, chaos at terminals, and total dependence on a single private operator.
Aviation pioneer Captain G.R. Gopinath, founder of Air Deccan, criticised the government’s inaction, noting that on some routes, IndiGo’s economy fares surged to ₹1 lakh. He compared the situation to a hostage crisis, writing that the airline “held the system ransom” and forced regulators to defer new safety rules meant to protect pilots and passengers.
Government Intervention and Regulatory Weakness
The crisis erupted after IndiGo failed to comply with the Flight Duty Time Limitations (FDTL) — rules introduced by the DGCA in January 2024 requiring adequate rest for pilots. Despite having nearly two years to adapt, IndiGo blamed the rule for operational disruptions, citing a shortage of pilots.
Under mounting public pressure, the government stepped in, temporarily relaxing FDTL norms and capping airfare hikes. Officials claimed the move was to protect passengers, but analysts say it exposed the state’s vulnerability to corporate monopolies. “The government had no option but to yield,” said one aviation policy expert, pointing out that ignoring safety regulations for short-term relief could have long-term consequences.
The crisis also rekindled memories of the June 2025 Air India crash near London, which claimed over 240 lives. Experts warn that compromising pilot rest and safety standards to maintain flight schedules could risk another tragedy.
If Telecom Giants Fail: A National Paralysis
The article raises a troubling question — what if a similar crisis struck the telecom sector, where Jio and Airtel together control nearly 80% of subscribers and serve over 780 million users?
If both networks failed simultaneously, the repercussions would be catastrophic. Internet shutdowns would halt UPI transactions, online banking, OTP verifications, video calls, OTT streaming, and emergency communications. Critical services such as airports, hospitals, stock exchanges, and small businesses — many of which rely on WhatsApp and digital payments — would come to a standstill.
In essence, a telecom breakdown could paralyse India’s digital economy, exposing the nation’s dependence on a duopoly.
E-commerce Monopoly: Another Fragile Ecosystem
The same risk looms over the e-commerce sector, where Amazon and Flipkart dominate nearly 80% of the market. A disruption similar to IndiGo’s could cripple daily life — halting delivery of groceries, medicines, and essential goods, freezing refunds and customer support, and leaving small sellers without platforms to trade.
Local retailers, freed from competition, might exploit shortages by inflating prices. Such a scenario underscores the perils of market centralisation in sectors critical to everyday living.
A Wake-Up Call for Regulators
The IndiGo crisis, analysts say, is a warning shot for policymakers and regulators. A single company’s operational failure exposed systemic weaknesses in India’s infrastructure and consumer protection mechanisms.
As the aviation regulator DGCA investigates and IndiGo works to restore normalcy, the broader lesson remains clear: unchecked monopoly power in any essential service — whether air travel, telecom, or e-commerce — poses a direct threat to economic stability and citizen welfare.
Without stronger competition laws, redundancy frameworks, and regulatory oversight, India risks repeating this crisis across multiple sectors — each time with millions of citizens paying the price.
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