John Ivison: Cannabis producers give up trying to get Ottawa to stop smothering their business

A cannabis production facility in Regina in 2022. Photo by KAYLE NEIS/Regina Leader-Post/Postmedia/File

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The Cannabis Council of Canada has announced it is suspending its advocacy operation, apparently because its member companies have given up hope that the federal government is prepared to listen to them.

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In a letter to Finance Minister François Philippe Champagne that foreshadowed this week’s announcement, outgoing council president Paul McCarthy said the country’s licensed cannabis producers have lost confidence that the government is committed to getting its tax and regulatory policies right.

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Cannabis in Canada is no longer the cottage industry that emerged from liberalization in 2018. According to Statistics Canada, it is a growing. advanced manufacturing sector, with sales of $5.5 billion in 2024/25, up six per cent year on year.

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The problem is the only people making any money are the federal and provincial governments that received $2.5 billion in taxes for the year — and the black marketeers, who still control nearly one-third of sales.

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Canopy Growth, one of the country’s largest producers, offers a typical financial snapshot. In its more recent fiscal year, to the end of March 2026, it recorded sales up 18 per cent to $346.8 million, paid $62.2 million in excise taxes and recorded a net loss of $262.9 million.

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Canopy has clearly had its own issues: it recorded a $67-million restructuring charge in its last fiscal year.

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But the legal cannabis industry was created by Ottawa, and its destiny remains conditioned by the federal government.

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The feeling in the nation’s capital seems to be that, having conceived the sector, its obligations extend to conducting the odd legislative review and raking in the taxes.

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A government-commissioned expert panel review in 2024 typified the government’s approach to an industry it still seems to perceive is slightly grubby and not quite legitimate. While acknowledging that industry concerns about the level of excise tax paid were well founded, it said government activity had to be consistent with public health objectives “and not aim to increase the amount of cannabis consumed.” In other words, the government’s role should be to constrain the industry’s growth.

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On that score, it has done a pretty good job.

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The government originally thought that producers would sell the product for around $10 a gram and set an excise rate of $1 a gram, or 10 per cent of the value of dried or fresh cannabis plants, whichever was greater. However, the influx of new entrants saw the price drop to $3 to $4 a gram.

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The excise rate was not lowered and remains at a level the industry considers unsustainable. When the federal finance committee looked at the issue, it recommended adjusting excise duty by removing the $1-a-gram stipulation and limiting the tax to 10 per cent of transactions.