Cannabis Council of Canada Welcomes the Findings of Deloitte Report and Calls for Change to the Excise Tax to Strengthen Canada's Legal Cannabis Industry

National Post

21-05-2025

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OTTAWA, Ontario — The Cannabis Council of Canada echoes the urgent need for excise tax reform as outlined in Deloitte's 2025 study on the Impact of the Cannabis Excise Tax.
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The report confirms what Canada's cannabis producers have long expressed: the current excise tax model is unsustainable and must be restructured to reflect the economic realities of the industry.
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'Canada likes to position itself as a global leader in legal cannabis – but since legalization in 2018, the federal government has failed this industry and the tens of thousands of hardworking Canadians it supports,' said Paul McCarthy, President of the Cannabis Council of Canada. 'With a new government in office, it's time for a fresh approach. The cannabis industry deserves the same attention and support as any sector of our economy.'
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Canada's cannabis industry is a major driver of economic growth – since legalization it has contributed over $43 billion to the national GDP, with approximately $7.4 billion contributed in 2024 alone. To keep that momentum going, key policy changes are needed to ensure the industry can grow, compete and innovate.
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The current excise taxation framework is completely misaligned with today's market realities. When it was introduced in 2018, cannabis sold for approximately $10 per gram. Today, producers are receiving as little as $3 per gram – yet the excise tax remains the greater of 10% of the product's value or $1 per gram. This has created a crushing and unintended tax burden that now is three times higher than what was originally envisioned. Instead of thriving, licensed producers are being pushed to the brink – many are unable to meet their tax obligations and are being forced out of the market, taking good jobs with them. If not fixed, Canada risks losing the very businesses it once championed through legalization.
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The Cannabis Council of Canada calls on the Government of Canada to eliminate the $1 per gram floor and instead apply a 10% ad valorem rate as proposed by the Standing Committee on Finance in 2024.
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The industry's challenges extend well beyond taxation. Since legalization, the previous government largely turned a blind eye to the persistent illicit cannabis market, allowing criminal actors to thrive at the expense of licensed businesses. This undermines the foundation of legalization and the promise of a safe, regulated cannabis industry. Illicit cannabis is estimated to make up between 25% and 40% of total sales in Canada – an unacceptable reality that demands urgent federal action. For the cannabis industry to thrive, the Government of Canada must act to eradicate criminal forces from the industry.
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Elements of a comprehensive strategy must include tackling illegal production, shuttering illegal storefronts and online sales, interdicting shipments of illegal product, and launching a public awareness and education campaign on the dangers of supporting the illicit market. Many consumers who purchase cannabis online do not realize they are purchasing illegal products, nor do they recognize how harmful these products can be. Not only do these transactions support other crimes, but they also pose a significant threat to public safety.
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The Cannabis Council of Canada (C3) is the national voice of the legal cannabis industry, representing Licensed Producers and Processors. C3 advocates for sensible cannabis policies that prioritize public health and safety, support economic growth, and promote social responsibility.
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