The Cannabis Council of Canada has announced it is suspending its advocacy operations, a move that reflects its member companies' loss of hope that the federal government is willing to address their concerns.
Industry Loses Confidence in Government
Outgoing council president Paul McCarthy conveyed the industry's frustration in a letter to Finance Minister François-Philippe Champagne, stating that licensed cannabis producers no longer believe the government is committed to getting tax and regulatory policies right. The letter foreshadowed this week's announcement.
According to Statistics Canada, the legal cannabis sector has grown into an advanced manufacturing industry with sales of $5.5 billion in the 2024/25 fiscal year, a six percent increase year over year. However, the only entities profiting are federal and provincial governments, which collected $2.5 billion in taxes, and black market operators, who still control nearly one-third of sales.
Financial Struggles of Major Producers
Canopy Growth, one of Canada's largest producers, exemplifies the industry's challenges. In its fiscal year ending March 2026, it reported sales of $346.8 million, up 18 percent, but paid $62.2 million in excise taxes and recorded a net loss of $262.9 million. The company also incurred a $67-million restructuring charge.
Paul McCarthy noted that the legal cannabis industry was created by Ottawa and remains dependent on federal policies. Yet the government's approach, as seen in a 2024 expert panel review, prioritizes public health objectives over industry growth. The panel acknowledged that concerns about excise tax levels were valid but stated that government activity should not aim to increase cannabis consumption.
Excise Tax Burden Unsustainable
The excise tax structure is a key issue. Originally set at $1 per gram or 10 percent of the value of dried or fresh cannabis, whichever is greater, the rate was based on an expected selling price of $10 per gram. However, increased competition drove prices down to $3 to $4 per gram, while the excise rate remained unchanged. The federal finance committee recommended removing the $1-per-gram stipulation and limiting the tax to 10 percent of transactions, but no action has been taken.
The Cannabis Council's suspension of advocacy marks a significant shift, as the industry appears to have given up on engaging with Ottawa to reform policies that many consider unsustainable.
