Consumers in Metro Vancouver were accustomed to buying cannabis products either as part of a medical authorization, from illicit dealers or from black-market retail stores. There was a sense that legalization could bring safer products thanks to stringent testing that ensured quality.
Retail-sector entrepreneurs in this province were, similarly, angling to be ready to navigate B.C. government laws and regulations, which allowed for a maximum of eight stores for each ownership group. Anand questioned the reliability of Statistics Canada data on how big black-market sales are because those surveys rely on respondents being honest about their use, and where they buy products.
He is set to attend a round-table meeting hosted by the independent-expert panel that recently released a large report on the state of the cannabis sector in Canada – dubbed Legislative Review of the Cannabis Act: What We Heard Report. One tax burden that Anand specifically highlighted as being wrong is B.C.'s 20-per-cent tax on cannabis vape products, which the government announced in 2019 and which went into effect in 2020. The problem with this tax is that it deters consumers from using legal vape sticks and legal vape concentrate and encourages them to go to the black market, Anand said.
Canadian taxes on licensed producers have been punitive enough that many have not been able to survive. Dan Sutton, who in January was CEO at Tantalus Labs, told BIV that his Vancouver-based licensed cannabis producer was teetering on the bring of profitability, with some months turning a profit while other ones racked up losses.
He worked out a scenario in B.C. where the cost to the wholesaler before the excise tax was $3.78 per gram. One dollar is then added as the excise tax and $0.09 is added to account for the 2.3 per cent Health Canada regulatory fee. The B.C. government would then add $0.73 as part of its 15-per-cent wholesale mark-up. The retailer would then add a likely $2.40 mark-up to make the product $8 per gram before the provincial sales tax is levied at the till.
Sutton no longer works in the cannabis sector and he said he is looking to find a job doing "anything but" cannabis-related work.Successful hospitality business operator and Donnelly Group CEO Jeff Donnelly's Dutch Love cannabis retail business is one example. It sought creditor protection in court in late 2022 and then sold four stores to Calgary-based pot retailer SNDL in a transaction valued at $7.8 million.
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