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.
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.
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.
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.
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.
Canopy has clearly had its own issues: it recorded a $67-million restructuring charge in its last fiscal year.
But the legal cannabis industry was created by Ottawa, and its destiny remains conditioned by the federal government.
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.
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.
On that score, it has done a pretty good job.
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.
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.
But that recommendation was not heeded.
Besides high taxes, the government burdens the industry with red tape. In the fall economic statement in 2024, Ottawa said it was exploring the transition from separate provincial and territorial excise duty stamps to a single national stamp, a move the industry calculated would save $100 million in unnecessary costs. Ontario indicated its support for the move. But it still hasn’t happened.
In his letter to the finance minister, council president McCarthy called it “a sign that even straightforward reform can languish indefinitely for want of federal coordination.”
But the industry’s biggest issue is one of omission, rather than commission.
Liberalization saw police resources shift from cannabis prosecutions, which have dropped by 95 per cent in recent years.
The lack of enforcement means that the illicit sector still accounts for nearly one-third of sales. A growing black market exists on reserves, where a number of First Nations have claimed the right to develop their own laws. Provinces such as Nova Scotia have vowed to clamp down on unlicensed operators over concerns about untested products and the involvement of organized crime.
But governments are understandably wary about stirring up a hornet’s nest. The 2025 federal budget suggested discussions are already underway that might offer a way out — by allowing First Nations to keep excise taxes raised on reserves from the sale of gas, tobacco, alcohol and cannabis — but again, action has not been forthcoming.
One point of light for Canadian producers is overseas sales of medicinal cannabis, which doubled to $650 million in 2025.
But here again, companies find they are driving with the brakes on. The Cannabis Council says that Canada’s international trade commissioners, whose role is to boost Canadian exports, are not allowed to advocate for cannabis products, the legacy of the stigma with which the industry is held in official circles.
That is crazy. This is an industry that employs 227,000 people and contributed $16 billion to GDP in 2024.
Canada needs a whole-of-government review that looks at ways to improve the financial viability of an industry in which this country has a competitive advantage.
As McCarthy told Champagne: “Canada should be setting the global standard for how a regulated market can displace illegal activity, prioritize public health, create jobs, generate tax revenue, attract investment and build export capacity.”
The fact the industry is curtailing its own lobbying activity is a measure of how little confidence it has in this government taking action to build on what has been, on balance, a success story.
National Post