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
A Tipping Point for Cannabis: President Trump Champions CBD & Cannabis Science on Truth Social
When the President of the United States shares a video about the life changing potential of hemp derived CBD on his personal social media platform, it is more than news, it is a cultural shift.
For decades our government lied to us about cannabis. It demonized the plant, waged war on its users, and filled prisons while allowing pharmaceutical companies to flood the nation with addictive and deadly drugs. For over a century we have been fighting uphill, not just for legalization, but for truth, for science, and for the right to heal ourselves naturally.
Now in 2025, the most powerful political figure on Earth is using his own voice and platform to talk about the endocannabinoid system and the science backed benefits of CBD. That is monumental. It is validation for everyone who has fought, been arrested, been silenced, and been dismissed for telling this truth. The President’s video post is already being described as a pivotal moment in cannabis history, and President Trump CBD Cannabis Science Truth Social is trending across platforms as advocates celebrate the breakthrough.
The Science Behind the Endocannabinoid System
The video begins by introducing something most people, including many doctors, still know little about, the endocannabinoid system. Discovered in the 1990s, the ECS is a network of receptors and signaling molecules that works as the body’s master regulator, coordinating communication between major systems like the nervous, immune, cardiovascular, and digestive systems.
The roots of this discovery go back much further. CBD was first isolated in 1940 by American chemist Roger Adams, but it was Dr. Raphael Mechoulam, an Israeli organic chemist, who fully elucidated the chemical structure of CBD and identified its stereochemistry in the 1960s. His pioneering work not only opened the door to modern cannabinoid science but also earned him the title “Godfather of Cannabis Research.” It was this foundation that led to the identification of the endocannabinoid system itself decades later, revealing how cannabinoids interact with our physiology on a fundamental level.
The ECS is now widely recognized as a vital part of human biology, with extensive research supported by the National Institutes of Health. When functioning properly, the ECS acts like the conductor of an orchestra, ensuring every section plays in harmony. As we age, the system weakens. That imbalance is linked to inflammation, chronic pain, cognitive decline, sleep problems, and many other conditions associated with aging.
Mainstream medicine often addresses these issues with pharmaceutical band aids, dangerous and addictive drugs that treat symptoms rather than root causes. Lifestyle changes such as diet and exercise help, but they only partially support the ECS and do so slowly over time.
Hemp Derived CBD: A Game Changer for Aging
Here is where the science gets exciting. As the video explains, the ECS can be restored much more quickly with hemp derived CBD. Strengthening this system naturally helps the body regain balance, reducing pain, improving sleep, lowering stress, slowing disease progression, and even extending healthy lifespan.
It is not theoretical. One in five seniors is already using CBD to manage pain, arthritis, cancer symptoms, sleep disorders, Alzheimer’s, and more. Despite decades of research and acknowledgment from institutions like the National Institutes of Health, most physicians receive no training on the ECS. There are still no FDA standards for CBD products on the market. If that were the case for any other class of medicine, it would be considered malpractice.
The World Health Organization has confirmed CBD’s excellent safety profile and non addictive nature in its critical review report. The result is that millions of older Americans are suffering unnecessarily when a safe and natural solution exists.
Hemp derived CBD is a powerful first step in restoring balance to the endocannabinoid system, but it is only part of the picture. Research shows that full spectrum cannabis extracts, which include a broader range of cannabinoids and terpenes, can work even more effectively. Complete concentrated cannabis oil, containing the full spectrum of natural endocannabinoids, may deliver the most profound results for certain patients. Expanding access to these therapies will be essential if we want to unlock the full healing potential of this plant.
The Economic and Social Impact
The video cites a powerful figure. A PricewaterhouseCoopers analysis estimates that fully integrating cannabis into the healthcare system could save the United States nearly 64 billion dollars annually. These savings reflect reduced pharmaceutical dependency, fewer hospitalizations, improved chronic disease outcomes, and enhanced quality of life for aging Americans. You can read more about PwC’s research on healthcare innovation here.
It is a financial argument, but it is also a moral one. Why should our elders endure pain, anxiety, and cognitive decline when nature has given us tools to help them live longer, happier, and healthier lives?
A Call to Action: Finish What the Farm Bill Started
The message concludes by crediting the 2018 Farm Bill, championed by President Trump, for legalizing hemp and laying the groundwork for today’s CBD market. The Farm Bill was just the first step.
Now the call is for bold next moves.
- Educate doctors about the endocannabinoid system
- Include CBD under Medicare coverage
- Provide clear federal standards for CBD quality and dosing
These steps would constitute the most significant senior health reform in modern history, one that would transform aging and cement a powerful legacy for any administration that makes it happen.
What This Means for Future Cannabis Medicine
For those of us who have been in the cannabis community for decades, this is not just another news story. It is a signal that our movement is winning. A conversation that was once criminalized and censored is now being amplified by the President of the United States on his own platform.
It means the science is undeniable. It means the truth can no longer be buried. It means the wall of prohibition is cracking, not just legally, but culturally, scientifically, and politically.
It also means that everything we have been fighting for at 420 Magazine since 1993, education, access, healing, and justice, is finally moving full steam ahead. The President Trump CBD Cannabis Science Truth Social moment is proof that science and policy are finally converging.
Business
New Mexico cannabis operator fined, loses license for alleged BioTrack fraud
New Mexico regulators fined a cannabis operator nearly $300,000 and revoked its license after the company allegedly created fake reports in the state’s traceability software.
The New Mexico Cannabis Control Division (CCD) accused marijuana manufacturer and retailer Golden Roots of 11 violations, according to Albuquerque Business First.
Golden Roots operates the The Cannabis Revolution Dispensary.
The majority of the violations are related to the Albuquerque company’s improper use of BioTrack, which has been New Mexico’s track-and-trace vendor since 2015.
The CCD alleges Golden Roots reported marijuana production only two months after it had received its vertically integrated license, according to Albuquerque Business First.
Because cannabis takes longer than two months to be cultivated, the CCD was suspicious of the report.
After inspecting the company’s premises, the CCD alleged Golden Roots reported cultivation, transportation and sales in BioTrack but wasn’t able to provide officers who inspected the site evidence that the operator was cultivating cannabis.
In April, the CCD revoked Golden Roots’ license and issued a $10,000 fine, according to the news outlet.
The company requested a hearing, which the regulator scheduled for Sept. 1.
At the hearing, the CCD testified that the company’s dried-cannabis weights in BioTrack were suspicious because they didn’t seem to accurately reflect how much weight marijuana loses as it dries.
Company employees also poorly accounted for why they were making adjustments in the system of up to 24 pounds of cannabis, making comments such as “bad” or “mistake” in the software, Albuquerque Business First reported.
Golden Roots was fined $298,972.05 – the amount regulators allege the company made selling products that weren’t properly accounted for in BioTrack.
The CCD has been cracking down on cannabis operators accused of selling products procured from out-of-state or not grown legally:
- Regulators alleged in August that Albuquerque dispensary Sawmill Sweet Leaf sold out-of-state products and didn’t have a license for extraction.
- Paradise Exotics Distro lost its license in July after regulators alleged the company sold products made in California.
Golden Roots was the first alleged rulebreaker in New Mexico to be asked to pay a large fine.
Source: https://mjbizdaily.com/new-mexico-cannabis-operator-fined-loses-license-for-alleged-biotrack-fraud/
Business
Marijuana companies suing US attorney general in federal prohibition challenge
Four marijuana companies, including a multistate operator, have filed a lawsuit against U.S. Attorney General Merrick Garland in which they allege the federal MJ prohibition under the Controlled Substances Act is no longer constitutional.
According to the complaint, filed Thursday in U.S. District Court in Massachusetts, retailer Canna Provisions, Treevit delivery service CEO Gyasi Sellers, cultivator Wiseacre Farm and MSO Verano Holdings Corp. are all harmed by “the federal government’s unconstitutional ban on cultivating, manufacturing, distributing, or possessing intrastate marijuana.”
Verano is headquartered in Chicago but has operations in Massachusetts; the other three operators are based in Massachusetts.
The lawsuit seeks a ruling that the “Controlled Substances Act is unconstitutional as applied to the intrastate cultivation, manufacture, possession, and distribution of marijuana pursuant to state law.”
The companies want the case to go before the U.S. Supreme Court.
They hired prominent law firm Boies Schiller Flexner to represent them.
The New York-based firm’s principal is David Boies, whose former clients include Microsoft, former presidential candidate Al Gore and Elizabeth Holmes’ disgraced startup Theranos.
Similar challenges to the federal Controlled Substances Act (CSA) have failed.
One such challenge led to a landmark Supreme Court decision in 2005.
In Gonzalez vs. Raich, the highest court in the United States ruled in a 6-3 decision that the commerce clause of the U.S. Constitution gave Congress the power to outlaw marijuana federally, even though state laws allow the cultivation and sale of cannabis.
In the 18 years since that ruling, 23 states and the District of Columbia have legalized adult-use marijuana and the federal government has allowed a multibillion-dollar cannabis industry to thrive.
Since both Congress and the U.S. Department of Justice, currently headed by Garland, have declined to intervene in state-licensed marijuana markets, the key facts that led to the Supreme Court’s 2005 ruling “no longer apply,” Boies said in a statement Thursday.
“The Supreme Court has since made clear that the federal government lacks the authority to regulate purely intrastate commerce,” Boies said.
“Moreover, the facts on which those precedents are based are no longer true.”
Verano President Darren Weiss said in a statement the company is “prepared to bring this case all the way to the Supreme Court in order to align federal law with how Congress has acted for years.”
While the Biden administration’s push to reschedule marijuana would help solve marijuana operators’ federal tax woes, neither rescheduling nor modest Congressional reforms such as the SAFER Banking Act “solve the fundamental issue,” Weiss added.
“The application of the CSA to lawful state-run cannabis business is an unconstitutional overreach on state sovereignty that has led to decades of harm, failed businesses, lost jobs, and unsafe working conditions.”
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