Business
Unpaid cannabis tax in Canada balloons to almost CA$200 million
The amount of unpaid federal excise tax owed by Canada’s cash-strapped licensed cannabis producers more than tripled in the latest fiscal year from a year earlier as companies complain they’re getting buried by government fees and levies.
Federally licensed cannabis producers owed the Canada Revenue Agency 192.7 million Canadian dollars ($145 million) as of March 31, 2023, a more than threefold increase over the 2021-22 fiscal year’s CA$52.4 million.
Levy debt has been on a steep upward curve since Canada legalized cannabis in 2018.
Canada’s excise duty imposed on producers’ dried cannabis is either CA$1 per gram or 10% of the value of the gram, whichever is greater.
As of the end of March, the levy debt stood at:
- CA$147,425 in 2019.
- CA$4.4 million in 2020.
- CA$16 million in 2021.
“This massive and accelerated growth of total excise owing as well as total number of (licensed producers) in arrears is indicative of a sector-wide inability to survive under current excise tax policy,” Dan Sutton, CEO of British Columbia-based cannabis producer Tantalus Labs, told MJBizDaily in a phone interview.
Sutton has led a drive in recent years to try to convince the federal government to amend the tax.
Different excise rules apply to various cannabis derivatives and other products such as edibles.
The data obtained by MJBizDaily shows that federal tax debt is piling up at an increasing number of licensed cannabis producers.
In March 2020, only 68 regulated cannabis businesses owed an excise debt to the federal government.
One year later, that had shot up to 141 companies with excise debt.
As of March 2023, that figure had skyrocketed to 213 companies, or approximately 70% of the 305 licensees, required to pay excise duty.
Taxman upping pressure
As cannabis excise debt soars across Canada, the Canada Revenue Agency has been increasing the pressure on producers with outstanding payments.
One letter the agency sent to a licensed producer – and obtained by MJBizDaily – used the subject line: “Legal warning about your cannabis duty debt.”
The revenue service warned the business: “If you do not pay the full amount or respond to this letter within 14 days, we may enforce Cannabis Duty provisions of the Excise Act, 2001 without further notice.”
MJBizDaily asked the Canada Revenue Agency (CRA) how many legal warning letters had been sent to cannabis businesses regarding their outstanding levy debt.
“The CRA does not release information that could jeopardize the integrity of the tax system,” a spokesperson responded via email, adding:
“The Canada Revenue Agency is firmly committed to responsible enforcement in order to preserve the integrity of Canada’s tax system.
“The CRA’s collection policy is to resolve issues in a mutually satisfactory way.
“The CRA encourages taxpayers to contact us and to work with us to develop suitable payment arrangements based on their ability to pay.”
How did this happen?
Tantalus Labs’ Sutton argues Canada’s tax policy for cannabis was built around an “egregious miscalculation” of long-term wholesale price.
The excise formula was created by policymakers who expected wholesale prices for flower – the most popular consumer segment – to be at least CA$10 per gram.
Instead, actual prices are less than CA$1 in some cases, leaving almost no margin for licensed producers.
“The original estimation of CA$10 per gram wholesale price has never been close to reality, and LPs are buckling under the weight of a tax burden that often extracts 30% of top-line revenue,” Sutton said.
“Government has acknowledged the need for ‘recalibration’ as early as 18 months ago, but continued inaction has pushed the entire industry, especially small business, to a critical breaking point.”
Current wholesale prices are closer to CA$2.75 per gram or less, depending on the product, with some flower coming in under CA$1 per gram.
The lower price means that cannabis producers are paying an unexpectedly high excise tax – one that was based on a wholesale price nearly four times the current level of wholesale prices.
In 2022 alone, cannabis wholesale prices crashed by more than 40% as struggling cultivators chose to sell off their unsold marijuana instead of destroying it.
The average price per gram for bulk wholesale flower in 2022 was CA$1.06 a gram on the Canadian Cannabis Exchange (CCX), a live trading platform for B2B wholesale marijuana, a steep decline from an average price of CA$1.80 a gram in 2021.
Consumer prices have been in freefall since 2019, the first full year of legalization, as the Canadian market was flooded because of cannabis overproduction.
Windfall for government
Private-sector profits are few and far between, but governments of various levels have made a windfall from cannabis sales.
The total excise duty assessed by the CRA on cannabis producers swelled to CA$752.5 million in 2021-22, up by almost half from the 2020-21 fiscal year, when the federal government pulled in CA$514 million.
Canadian provincial and federal governments collected more than CA$1.5 billion in cannabis-related profit and tax revenue in fiscal 2021-22.
Over the same 12-month period, retail cannabis sales in Canada amounted to CA$4 billion.
That means, before any profit was made in the private sector, 38% of all cannabis-related revenue went to the federal or provincial governments.
The federal tax, three-quarters of which is shared with provinces and territories, isn’t the only way the government collects taxes and fees from cannabis businesses.
In the 2021-22 fiscal year, which went from April 2021 to March 2022, government-owned provincial cannabis authorities’ profits totaled CA$332.3 million, according to Statistics Canada figures.
That figure wasn’t available for 2022-23.
Other tax revenue from Canadian cannabis sales in 2021-22 were:
- Harmonized sales tax: CA$236.1 million.
- Goods and services tax: CA$110.7 million.
- Provincial/territorial sales tax: CA$110.8 million.
- Other provincial/territorial revenue: CA$9.8 million.
Still, Canadian governments at all levels are missing out on millions of dollars in unpaid taxes and fees when cannabis producers ultimately fail.
When Phoena Holdings, formerly known as CannTrust Group, filed for creditor protection in April, its fourth-largest unpaid creditor was the federal tax collection agency and was owed approximately CA$870,000.
Health Canada, the federal cannabis regulator, was owed almost CA$100,000.
The Town of Pelham, Ontario, where a cultivation facility was located, was owed CA$23,031.
Source: https://mjbizdaily.com/unpaid-cannabis-tax-in-canada-balloons-to-almost-ca200-million/
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.
-
Business3 years agoPot Odor Does Not Justify Probable Cause for Vehicle Searches, Minnesota Court Affirms
-
Business2 years agoNew Mexico cannabis operator fined, loses license for alleged BioTrack fraud
-
Business2 years agoAlabama to make another attempt Dec. 1 to award medical cannabis licenses
-
Business3 years agoWashington State Pays Out $9.4 Million in Refunds Relating to Drug Convictions
-
Business2 years agoMarijuana companies suing US attorney general in federal prohibition challenge
-
Business3 years agoLegal Marijuana Handed A Nothing Burger From NY State
-
Business3 years agoCan Cannabis Help Seasonal Depression
-
Blogs3 years agoCannabis Art Is Flourishing On Etsy
