The Canada Revenue Agency (CRA) says it has had to write off over $4 million in unpaid taxes owed by cannabis companies that cannot pay the excise tax.
The information was part of a response to Conservative MP Tako van Popta’s questions on how many in the cannabis industry owed tax, as first reported by Blacklock’s Reporter.
“To effectively manage the volume of outstanding debt, the CRA may administratively deem certain debts as uncollectible when it confirms that all avenues of collection have been pursued and exhausted,” the CRA said in its response in September, which was submitted to the House of Commons on Nov. 18.
“Since the inception of the Excise Tax on cannabis, and up to September 21, 2024, a total of $4,718,514 has been written off as uncollectible.”
Cannabis is subject to sales tax as well as excise tax. Excise tax must be paid by cannabis licence holders who package and sell the products or buy packaged products from another licensee to sell. The tax structure was put in place after Canada legalized cannabis for non-medical purposes through the Cannabis Act in 2018.
The CRA said all of the cannabis companies with tax debt that needed to be written off were in Ontario.
Popta also asked how many of the dealers with tax debt applied for bankruptcy. CRA said it did not collect that information.
The Cannabis Council of Canada, which represents licensed producers in the industry, said in a September 2023 excise tax survey report that marijuana businesses say they are over-taxed and that many “continue to remain unprofitable.” This followed the government’s announcement in Budget 2023 that it would allow excise taxes to be paid quarterly rather than monthly.
In a May 2023 report, the Competition Bureau said 66 percent of cannabis businesses had not paid their excise duties as of September 2022. “The total amount of unpaid cannabis excise duties has continuously been rising since legalization,” the bureau noted.
