{"id":805636,"date":"2026-07-16T12:46:17","date_gmt":"2026-07-16T12:46:17","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/805636\/"},"modified":"2026-07-16T12:46:17","modified_gmt":"2026-07-16T12:46:17","slug":"ottawas-high-taxes-are-stunting-the-growth-of-legal-cannabis","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/805636\/","title":{"rendered":"Ottawa\u2019s high taxes are stunting the growth of legal cannabis"},"content":{"rendered":"

Almost eight years after Canada legalized cannabis<\/a>, the black market remains strong. One major reason: a tax structure that makes it harder for the legal industry to compete.<\/p>\n

A long overdue reform of that tax structure could move Canada closer to achieving the aims of legalization. The legal regime, laid out in 2018\u2019s Cannabis Act, was designed to<\/a> keep cannabis out of the hands of youth, prevent money from flowing to criminals and protect public safety through the creation of a regulated market. <\/p>\n

Progress has been made in pushing out illegal cannabis, with an estimated three quarters of sales now legal. Yet illegal dispensaries continue to operate in plain sight \u2013 the city of Toronto alone estimates it has 77<\/a>. Unauthorized online retailers and drug dealers continue to operate across the country. <\/p>\n

Legal growers and retailers are losing sales to black market producers, who don\u2019t need to adhere to production standards or follow requirements, such as making packages child-resistant. Health Canada tests show<\/a> that illegal cannabis is much more likely to contain dangerous heavy metals, such as arsenic, lead and mercury, as well as pesticides and microbial contaminants. Unregulated growers and sellers are often tied to other organized crime enterprises, with connections to illegal firearms<\/a> and human trafficking<\/a>. <\/p>\n

Increased enforcement against illegal vendors should be part of the solution, but the whole point of legalization was to have the power of market forces accomplish what police had been unable to do for decades: shut down the black market.<\/p>\n

The low prices the black market offers are attractive to some buyers, especially heavy users. It\u2019s not just the willingness to ignore the law that makes black market cannabis relatively cheaper \u2013 it\u2019s also the taxes on legal pot. <\/p>\n

Cannabis is subject<\/a> to a 10 per cent excise tax, or $1 a gram, whichever is higher. That made sense under an assumption that producers would sell their product for around $10 a gram, but after legalization, the price dropped dramatically, with the minimum tax accounting for a larger proportion of the overall price.<\/p>\n

Last year, the Ontario Cannabis Stores\u2019 average wholesale price<\/a> per gram of dried flower was just $3.75. That $1 tax was nearly 27 per cent of the wholesale price, nearly three times higher than the 10-per-cent threshold.<\/p>\n

Some provinces<\/a> add another layer to the excise tax, and federal and provincial sales taxes are also applied. The provincial cannabis agencies also add a markup when they distribute the product; in provinces where they run their own retail stores, they mark it up again. The total cut the government takes can end up at more than 40 per cent. <\/p>\n

Add it all up, and it\u2019s clear cannabis has become a lucrative source of revenue. Statistics Canada numbers show<\/a> that in 2024-25, $5.5-billion of legal cannabis was sold, with the federal and provincial governments raking in $2.5-billion from cannabis sales. <\/p>\n

Prior to legalization, many entrepreneurs dreamed of creating lucrative cannabis businesses. It turns out, Canada\u2019s most successful<\/a> cannabis companies are the ones run by the government, while most licensed producers and retailers haven\u2019t turned a profit. <\/p>\n

Taxation and regulation aren\u2019t the only reason for the industry\u2019s woes \u2013 intense competition and oversupply have driven down revenue, says Michael Armstrong, an associate professor at Brock University. However, the Competition Bureau has cited the excise tax as a significant threat<\/a> to the viability of small and mid-sized producers. <\/p>\n

Another quirk in the system driving up costs is the need for producers to attach a different excise stamp to their products, depending on the province and territory where it will be sold. The stamp shows the product was made legally and the excise tax has been paid, but it creates unnecessary complexity, forcing producers to jump through regulatory hurdles to remove stamps if the products don\u2019t sell in one jurisdiction. <\/p>\n

Having 13 different stamps is a needless interprovincial trade barrier. A single national stamp should be used, given that tax information is already remitted directly to the Canada Revenue Agency.<\/p>\n

Instead of using cannabis as a cash cow, governments need to lighten the tax and regulatory load to let the legal industry fully take root, and finally overshadow the black market.<\/p>\n","protected":false},"excerpt":{"rendered":"Almost eight years after Canada legalized cannabis, the black market remains strong. One major reason: a tax structure…\n","protected":false},"author":2,"featured_media":805637,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[194295],"tags":[901,888,902,879,877,903,49,48,876,895,896,891,878,875,46,549,295,894,887,914,880,881,893,889,890,884,904,885,909,910,912,907,911,905,20739,908,882,898,899,714,897,906,865,61,900,892,886,883,913],"class_list":["post-805636","post","type-post","status-publish","format-standard","has-post-thumbnail","category-ottawa","tag-alberta","tag-arts-news","tag-bc","tag-breaking-news","tag-breaking-news-video","tag-british-columbia","tag-ca","tag-canada","tag-canada-news","tag-canada-sports","tag-canada-sports-news","tag-canada-trafficcanada-weather","tag-canadian-breaking-news","tag-canadian-news","tag-economy","tag-education","tag-environment","tag-federal-government","tag-foreign-news","tag-globe-and-mail","tag-globe-and-mail-breaking-news","tag-globe-and-mail-canada-news","tag-government","tag-life-news","tag-lifestyle","tag-local-news","tag-manitoba","tag-national-news","tag-new-brunswick","tag-newfoundland-and-labrador","tag-northwest-territories","tag-nova-scotia","tag-nunavut","tag-ontario","tag-ottawa","tag-pei","tag-photos","tag-political-news","tag-political-opinion","tag-politics","tag-politics-news","tag-quebec","tag-sports-news","tag-technology","tag-travel","tag-trudeau","tag-us-news","tag-world-news","tag-yukon"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/805636","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=805636"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/805636\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/805637"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=805636"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=805636"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=805636"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}