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Unpaid cannabis regulatory fees continue to climb in Canada

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Unpaid regulatory fees owed by cannabis companies to Canada’s federal government jumped more than 200% from a year earlier, to almost 4 million Canadian dollars ($3.1 million) as of the end of March, MJBizDaily has learned.

The overdue fees have grown every year since 2019, as cannabis businesses licensed by the federal government struggle under the weight of taxes, fees, an intensely competitive market and poor business decisions.

For the 2022-23 fiscal year, the fees in arrears grew to CA$3.9 million, 225% more than the previous fiscal year’s CA$1.2 million, according to new figures shared with MJBizDaily by Health Canada.

The outstanding funds are only for the annual regulatory fee applied to licensees.

Proceeds from annual regulatory fees are used by the government to cover the costs associated with regulating the cannabis industry, such as paying hundreds of federal employees.

The annual regulatory fee generally amounts to 2.3% of a company’s gross revenue.

Canada’s cannabis excise tax, which is also applied to gross revenue, is separate from the annual fee.

Industry executives have criticized the government for what they say are excessive fees and taxes.

In fiscal 2021-22, for example, various levels of government collected more than CA$1.5 billion from the cannabis industry via excise tax, other taxes (such as sales taxes) and various fees.

Industrywide wholesale sales – the main source of revenue for most licensed cultivators – was only CA$3.1 billion that year.

In addition, government-owned marijuana wholesalers such as the Ontario Cannabis Store – which collectively represent the most profitable firms in Canada’s cannabis industry – have applied markups of up to 45% on private marijuana companies that buy their products for retail sale. (The OCS is lowering its markup on edibles from 45% to 25%.)

Those kinds of margins, when considered with taxes and fees, leave little for private business, industry executives say.

“We’ve seen in Smiths Falls, Ontario, and Olds, Alberta, the consequences of an administration of fees and taxes which makes our industry largely unsustainable,” George Smitherman, CEO of the industry group Cannabis Council of Canada, said during a news conference in Ottawa, Ontario, earlier this year.

Smitherman was referring to 800 employees in Smiths Falls who were let go by Canopy Growth as well as 85 jobs in Olds cut by Calgary, Alberta-based producer and retailer SNDL.

“Everywhere you look, someone’s put up a fee or a regulatory barrier or burden that in the collective sense is making it impossible for our sector to make the progress that was expected and sustainable in the long run.”

The growing amount of unpaid government fees accumulated by licensed producers is no surprise to Mitchell Osak, president of Toronto-based Quanta Consulting.

“Fundamentally, LPs are overtaxed and overcharged with fees in a very hostile operating environment,” he told MJBizDaily.

‘The financial rooster may finally be coming home to roost for many of them.”

Osak suspects many companies are likely months, if not weeks, from failing.

“The LPs don’t have the money to pay (the government) on time, when more mission-critical business needs like payroll are staring them in the face,” he said.

“Realistically, many of these fees won’t ever get paid to the government because the companies will go out of business.”

Osak said another factor might be fueling the growing amount of unpaid fees.

“Cost-cutting measures have led to the pruning of back-office staff as well as turnover,” he said.

“This has created a situation where fewer or less trained people have to do the same amount of financial management work.

“Payment delays in some companies simply comes down to accounts-payable processing or approval delays.”

Osak also said some licensed producers might be refusing to pay out of sense of grievance and anger with the government.

As a result, these fees do not have arrears because they must be paid ahead of time.

“These fees are charged to recover the costs incurred by Health Canada and the Royal Canadian Mounted Police to perform the service being requested,” a spokesperson for the health department told MJBizDaily via email.

The annual regulatory fee is intended to recover the remaining costs of administering the Cannabis Act and its regulations.

The fee is invoiced each fiscal year, which runs April 1 to March 31.

The fee is required to be paid by Sept. 30.

Insolvency filings

The insolvency filings of an increasing number of cannabis companies provides clues as to how much money Canada’s federal government is missing out on in the way of taxes and fees.

In April, Canadian cannabis producer Phoena Group was granted creditor protection.

The company’s list of unpaid creditors shows that it owes the Canadian government more than CA$2 million in unpaid fees and taxes.

In fact, the Canadian government was the company’s third-largest unpaid creditor, indicating that fees and taxes contribute a notable amount to cannabis businesses’ costs.

At the time of its insolvency, Phoena had amassed a total debt with the Receiver General for Canada and the Canada Revenue Agency of CA$911,893 and CA$870,506, respectively.

The unpaid creditor list showed that Health Canada was owed CA$95,799.

Trichome Financial Corp. also owed the Canadian government millions of dollars in unpaid fees and taxes when it obtained creditor protection late last year.

The unpaid creditor list showed the Canada Revenue Agency was owed CA$7.7 million and Health Canada was owed approximately CA$443,000.

When The Flowr Corp., another cannabis company, filed for creditor protection, its second largest debt was to the Canadian government via the Receiver General for Canada (CA$781,994).

Health Canada was owed $1,886.

Source: https://mjbizdaily.com/unpaid-cannabis-regulatory-fees-continue-to-climb-in-canada/

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Jio’s 1,600-Satellite LEO Constellation Gets Technical Green Light

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Reliance Jio has crossed a significant milestone in its space connectivity ambitions after its proposal to deploy a Low Earth Orbit (LEO) satellite constellation of around 1,600 satellites received a positive technical assessment from the Indian National Space Promotion and Authorisation Centre (IN-SPACe).

The evaluation, conducted jointly by IN-SPACe, the Indian Space Research Organisation (ISRO), and the Wireless Planning and Coordination (WPC) wing of the Department of Telecommunications, reportedly concluded that Jio’s proposed system meets the required technical standards and is comparable to leading global satellite broadband networks.

India’s Indigenous LEO Satellite Vision

Under the proposal, Reliance Jio plans to deploy between 1,600 and 1,650 satellites in Low Earth Orbit at an altitude of around 650 kilometres.

The planned constellation is expected to provide high-speed satellite connectivity across India, with approximately 32 satellites visible from any location at a given time. The company aims to roll out the network within the next two to three years, subject to regulatory approvals.

According to industry estimates, the satellite system could deliver 4.5 to 5 terabits per second (Tbps) of total data capacity, making it one of the largest satellite broadband projects proposed in India.

The project is expected to require an investment of $10–15 billion (approximately ₹95,000 crore to ₹1.42 lakh crore), reflecting the scale of infrastructure needed for satellite manufacturing, launches, ground stations, and user terminals.

Regulatory Process Moves Forward

Following the successful technical review, the proposal is expected to move into the next phase of regulatory approvals.

The government may now assist Jio in securing orbital slots, coordinating spectrum usage, and filing applications with the International Telecommunication Union (ITU), the global body responsible for managing satellite orbit and frequency allocations.

Obtaining orbital rights remains a critical step, as Low Earth Orbit has become increasingly competitive due to the growing number of satellite broadband projects being planned worldwide.

Officials also indicated that the proposed satellite architecture has been designed to coexist with future Indian LEO constellations, allowing multiple domestic operators to share orbital resources efficiently.

Broadband, Mobile Connectivity, and Strategic Applications

Jio plans to use the satellite network to provide a range of communication services, including satellite broadband, mobile backhaul, enterprise connectivity, and direct-to-device (D2D) satellite communication, particularly in remote and underserved regions where conventional telecom infrastructure is limited.

The company also intends to establish 20 to 22 ground stations across India to support network operations.

Apart from commercial telecommunications, officials have highlighted the project’s potential strategic importance. A domestically developed satellite constellation could strengthen India’s communication infrastructure, reduce dependence on foreign satellite operators, and support national security requirements.

Reports suggest preliminary discussions are underway regarding the possibility of integrating defence-related payloads into some satellites, enabling both civilian and strategic use.

Major Step for India’s Space and Telecom Sectors

Industry analysts view the technical clearance as an important milestone in India’s expanding private space ecosystem. If Jio secures the remaining regulatory approvals and international orbital clearances, the project could become the country’s first large-scale indigenous LEO satellite broadband network.

The initiative also aligns with India’s broader efforts to expand digital connectivity while strengthening its presence in the global satellite communications market.

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Alleged Crores Pharma Scam Mastermind Arrested from Surat

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After evading law enforcement for nearly 13 years, an accused linked to a large-scale pharmaceutical fraud case has been arrested by Delhi Police from Surat, Gujarat. The suspect is alleged to have orchestrated a series of financial scams involving fake identities, forged documents, and dishonoured cheques used to procure high-value pharmaceutical raw materials.

Authorities say the accused, identified as Himmat Singh Lodha, is believed to have defrauded multiple pharmaceutical companies in Delhi of goods worth approximately ₹98 lakh before disappearing and remaining underground for years.

Fake Business Deals and Dishonoured Cheques Used in Fraud

Investigators claim the accused posed as a legitimate pharmaceutical trader and placed bulk orders for expensive drug ingredients, offering post-dated cheques as payment security.

In one documented case from 2013, he allegedly obtained around 550 kilograms of Gliclazide, a diabetes-related pharmaceutical ingredient, valued at over ₹26 lakh. When suppliers attempted to encash the cheques, they were reportedly returned with the remark “account closed.”

Following the transaction, the accused allegedly vacated his office and rented residence and disappeared without settling payments. He was later declared a proclaimed offender in 2016 after repeatedly failing to appear before court proceedings. Authorities had also issued a reward for information leading to his arrest.

Multiple Identities and Repeated Fraud Pattern

Police investigations further link the accused to another cheating case dating back to 2012, where he allegedly used a fake identity, “Kailash Jain,” to obtain a large consignment of Ambroxol HCL, a pharmaceutical compound used in cough medications. The value of that consignment was estimated at around ₹72 lakh.

Officials believe the accused followed a consistent modus operandi—posing as a credible businessman, securing high-value goods on deferred payment terms, and then disappearing after delivery while shutting down business operations.

Investigators suspect that forged business records, fake company credentials, and fabricated financial histories were used to build trust with suppliers and gain access to expensive raw materials.

Multi-State Surveillance Leads to Arrest in Surat

A special Crime Branch team tracked the accused through coordinated surveillance efforts across multiple cities, including Mumbai, Ahmedabad, and Surat. After nearly a month of technical monitoring and intelligence gathering, officials located and arrested him from a residential area in Surat.

Authorities also revealed that the accused had been involved in property-related activities while staying under the radar to avoid detection.

Growing Threat of Corporate Identity Fraud

The case highlights a rising trend of organised financial fraud targeting industries that rely heavily on trust-based transactions and deferred payments. Experts note that criminals increasingly exploit gaps in corporate verification systems by using fake GST registrations, temporary offices, and forged documentation to appear legitimate.

Cybercrime and financial fraud specialists warn that such schemes are becoming more complex with the widespread availability of digital business tools, making it easier to create convincing but fraudulent corporate identities.

Experts Urge Stronger Due Diligence in High-Value Transactions

Experts, including former IPS officer and cybercrime specialist Prof. Triveni Singh, emphasize the need for stricter verification procedures in commercial dealings. He noted that relying solely on paperwork or digital business profiles can expose companies to significant financial risk.

Authorities and industry experts recommend physical verification of business operations, bank account validation, and detailed background checks before engaging in high-value or deferred-payment transactions—particularly in sectors like pharmaceuticals, where single consignments can involve transactions worth crores.

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EU Pressure Builds on Google as Regulators Face Calls for Massive Fine Over Search Practices

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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.

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