Pre-rolls are ready for their time in the spotlight, you might want avoid having your provincial provider undercut your prices, and we ask what is the price of selling cannabis, apparently we’re not smoking as much, we look for excise reform despite the lack of support, Rubicon increase their floor space and on Cultivar Corner, brought to you by Up In Smoke, a successful pheno hunt brings a direct delivery exclusive, from Salt Spring The Magi – Island Zeus
Pre-rolls are ready for their time in the spotlight, you might want avoid having your provincial provider undercut your prices, and we ask what is the price of selling cannabis, apparently we’re not smoking as much, we look for excise reform despite the lack of support, Rubicon increase their floor space and on Cultivar Corner, brought to you by Up In Smoke, a successful pheno hunt brings a direct delivery exclusive, from Salt Spring The Magi – Island Zeus.
Salt Spring Magic - Island Zeus
Puff, press play, and colour it - Kushana Stoneridge
00;00;01;22 - 00;00;08;29
Ian
From a studio high above the clouds of the Okanagan Valley. This is the cannabis potcast.
00;00;09;01 - 00;00;19;09
Ian
Exploring the world of Canadian cannabis culture. One toke at a time. Here is your host and Bud tender Gary Johnston.
00;00;19;11 - 00;00;47;23
Gary Johnston
And that's a perfect opportunity for me to say welcome to the Cannabis potcast. For the next 30 or 40 minutes or so. We are going to be spending time talking about planted. I seem to have some passion for, and I think you might have the similar interest and that is cannabis. Now, before we get too much further, let me remind you this podcast is intended only for those of legal consumption aid in your jurisdiction, and is intended purely for entertainment and perhaps educational purposes.
00;00;47;28 - 00;01;14;18
Gary Johnston
You should always consume your cannabis responsibly. In this episode, pre-rolls are ready for their time in the spotlight. They are picking up like crazy. You might want to avoid having your provincial provider undercut your prices, and we ask what is the price of selling cannabis? Apparently, we're not smoking as much. We look for excise tax reform, despite the lack of support and Rubicon increases that growing space on Cultivar Corner.
00;01;14;26 - 00;01;43;23
Gary Johnston
Brought to you by Up in Smoke. We have a fino hunt, a successful fino hunt that resulted in a direct delivery exclusive from Salt Spring Island. The Magi. This is Island Zeus. All of that and more on episode 198 of the Cannabis potcast. And of course, before we get too much further, thank you for being here. I appreciate you being a listener of the Cannabis potcast.
00;01;43;23 - 00;02;13;10
Gary Johnston
Thank you so much for being here. Let me also thank my patrons from Patreon. Thanks to Tony, Rob, Gage, Lloyd, Roger, Justin, I thank you each and every month. Thank you so much for your support. And to Tony. He's still off looking for some more weed. And now let's get to our first story. And for this story we're going to the business of cannabis.com Canada announces plans to reform cannabis excise tax in 2025.
00;02;13;11 - 00;02;38;09
Gary Johnston
This was written by Ben Stevens. Canada is set to explore a new excise tax system for cannabis businesses next year. Welcome and long awaited efforts to cut red tape. In his fall 2024 poll economic summit published this week, the federal government announced new plans to explore a transition from cannabis excise duty stamps specific to each province and territory to a single national stamp.
00;02;38;12 - 00;03;07;21
Gary Johnston
Now, the current system requires producers to navigate 13 separate provincial and territorial excise stamps, a logistical headache that industry leaders argue add significant cost and administrative burdens. Canada's excise tax on cannabis would sit at a dollar per gram, or 10% of a producer selling price, whichever is higher, has long been the Achilles heel of its adult use industry, leading to a thriving illicit market and a growing trend of Canadian producers selling products abroad to increase profits.
00;03;07;24 - 00;03;35;19
Gary Johnston
It has also caused a huge backlog in payments, with reports suggesting that the middle of 2023, some $200 million, was owed to the Canada Revenue Agency in excise tax. As Business of Cannabis reported in March, Canada's House of Commons Standing Committee on Finance recommended a change in excise tax. The committee propose that the tax be limited to 10% ad valorem, a percentage of the wholesale selling price of the cannabis product.
00;03;35;21 - 00;03;58;11
Gary Johnston
Weeks later, the government published a long awaited final report on its review of the Cannabis Act, which made 54 recommendations on how to improve the country's adult use market, including making changes to the excise rate. However, in April, hopes of tax relief for Canada's cannabis industry were derailed as the country's federal budget 2024 revealed. Excise taxes would not be changed.
00;03;58;14 - 00;04;29;08
Gary Johnston
Signs that reform could be on the cards for next year, with the economic statement suggesting more detail will roll out in budget 2025, is therefore very welcome news for Canadian businesses. But the harmonized stamp is seen as a positive development. It doesn't address the industry larger concerns about the federal excise tax rate itself. Producers argue that the high tax burden, combined with operational costs, threaten the viability of legal businesses, particularly small and micro producers.
00;04;29;15 - 00;04;46;18
Gary Johnston
So let's hope there is some well, who knows how it's going to be with the election coming up and and what we're going to end up on the other side of it. I sure hope that it comes up for discussion to address this, regardless of who gets through.
00;04;46;20 - 00;04;50;27
Ian
The cannabis infused studio in the clouds. This is the cannabis potcast.
00;04;51;00 - 00;05;18;17
Gary Johnston
And for this story we're going to the ounce dot ca. This was written by Pat Bulmer. Pre-Rolls will overtake flower as the number one selling cannabis category in 2025. In Canada, a new report predicts. The 2024 Canadian Pre-Roll market report was prepared for pre-roll supply company Custom Cones USA. The report uses data collected by headset, which gathers sales statistics from more than 3500 retailers.
00;05;18;20 - 00;05;53;05
Gary Johnston
Well, the cannabis market is plateauing in Canada. Pre-Roll sales continue to grow slightly despite a drop in overall cannabis revenue in the Canadian market in 2024. Pre-Roll sales continued to grow, helping balance losses and other product categories, and are poised to become the top sales category in the country, eclipsing Even flower with Multi-Packs driving growth. That change at the top will happen this year, with the cannabis market maturing, pre-rolls have proven to be the strongest and most adaptable category, said Harrison Bard, co-founder and CEO of Custom Cones.
00;05;53;07 - 00;06;24;23
Gary Johnston
Consumers are choosing convenience, consistency and quality, especially in Canada, where multi-packs and infused options are driving sales. If these trends continue, 2025 will mark the first full year that pre-rolls dominate the Canadian market, the report said. The Canadian cannabis market has topped out. The Canadian cannabis market is transitioning from a rapid expansion to stabilizing maturity, with revenue dropping for the first time in the national legal markets history and unit sales dropping 0.5% as well.
00;06;24;25 - 00;06;56;03
Gary Johnston
Pre-Rolls were the top seller in Canada for six months of last year and finished the year only 0.25% behind flower as the dominant category with an $11 million gap in sales. Pre-Roll sales grew by 5.6% last year in Alberta, Saskatchewan increase was 9.5% and sales growth was smaller in B.C. and dropped slightly in Ontario. Overall, the sales increase in Canada at 1.24% was small, but sales in other cannabis categories, including flower, declined, the report said.
00;06;56;06 - 00;07;24;00
Gary Johnston
Only edibles and vape pens saw larger unit sales increase in 2024 over the previous year, although edibles revenue were down. Growth in the pre-roll market in 2024 was led by the hybrid single strain segment, with sales increasing 8.3%. Infused connoisseur products also grew 6.5%. Mainstream products saw the highest year over year jump in sales at 19%, but with a smaller market share.
00;07;24;03 - 00;07;47;02
Gary Johnston
Looking at the top 50 products at 2024, 23 were infused. Another 17 were hybrids, up two from last year, indicating remained stable at five products, while sativa products lost half of their presence in the top 50, falling to just five products. Pre-Roll sales were higher in warmer months, the data showed. General admission is the top pre-roll brand in Canada, report said.
00;07;47;04 - 00;08;16;26
Gary Johnston
Followed by Shred Black, 40 cannabis, Jeter and Redken. Canadians like their pre-rolls in multipacks, Multi-Packs garnered 85% of the Canadian pre-roll market share, compared to about 50% in the U.S.. Of the top 50 products sold in the Canadian pre-roll market, 96% were Multi-Packs. Only two individual pre-rolls landed in the top 50. It had also showed that in the latter half of 2020, for 444, pre-roll products were released into the market.
00;08;17;02 - 00;08;46;08
Gary Johnston
Flower came second with 425 new products, followed by vape pens at 141. Concentrates, edibles and beverages followed with a combined 84 new products. The average item price for free rose in Canada was $18.43. Alberta prices were about the same as the Canadian average. B.C. was higher at 1931. In Ontario, pre-rolls sold for an average price of $18.12. And there you go.
00;08;46;08 - 00;08;55;03
Gary Johnston
That's the latest update on the cannabis market. And it looks like pre-rolls are taken off.
00;08;55;05 - 00;09;20;25
Gary Johnston
And for our next story we're going to the Calgary Journal Dossier. This was written by Juliana Adair. When Canada legalized cannabis in 2018, the goal was to create a thriving legal market where small cannabis producers could find success alongside larger companies. But six years later, many small producers say they're struggling, facing taxation strictly relations and retail challenges that make profitability difficult.
00;09;20;27 - 00;09;42;17
Gary Johnston
It's not one thing that kills you in this business. It's everything, said Guy drew, founder of Grass Monkeys and Alberta based cannabis facility. The heart of this issue is the excise tax system, a government imposed tax on specific goods and services. When legalization launched, the tax was sent of the greater of either at $1 per gram or 10% of the sale price.
00;09;42;18 - 00;10;07;09
Gary Johnston
A system designed when cannabis was selling for $10 per gram, as competition pushed prices down to about $3 per gram. The tax didn't change, and producers say it now eats up roughly 34% of their revenue. One of the highest tax burdens of any industry in Canada. Paul McCarthy, president of the Cannabis Council of Canada, says that unlike most industries, cannabis producers pay this tax before they sell their products.
00;10;07;12 - 00;10;27;28
Gary Johnston
If you talk to anyone in the consumer packaged goods business, forget cannabis, forget controlled substances, just somebody who in the business of making products and selling them, and you tell them that they're selling their products at 30% or higher. Effective tax rate. The first question you get is how are you making money? And the short answer is you don't.
00;10;28;00 - 00;10;54;01
Gary Johnston
Beyond taxation, small producers also deal with extensive regulations, particularly around the provincial excise stamp system. Every cannabis products must have a province specific excise stamp. If a producer miscalculated demand in one province, they must manually remove and replace each provincial stamp to redirect their stock. McCarthy argues that this process creating excess waste, costing time, money and resources well.
00;10;54;01 - 00;11;25;01
Gary Johnston
Health Canada and the Canada Revenue Agency already track shipments through other means. While cannabis industry groups argue that these regulations place an unnecessary burden on small producers, Health Canada maintains that its framework was designed to ensure public safety and regulatory compliance. Health Canada said in a statement it enables a diverse, competitive cannabis industry composed of small and large businesses and has taken steps to reduce administrative burdens, including a recent proposal to increase production limits for micro producers.
00;11;25;03 - 00;11;51;23
Gary Johnston
Meanwhile, illegal producers bypass any regulatory hurdles allowing them to sell cannabis for far cheaper. As a result, licensed businesses are forced into a price war, with some selling below production costs to stay competitive. This really hit hard for Jarrow. The cheapest ounce of legal cannabis sales for around $80 in Alberta. But Jarrow says that once you account for excise taxes and regulatory fees, producers make as little as $8 per ounce.
00;11;51;25 - 00;12;15;19
Gary Johnston
It's the biggest problem in the industry. Nobody is pricing things at a level where they can actually make money, Jarrow said. I wish I'd never gotten into the business. Drew says retail pay to play schemes add another layer of difficulty. In many provinces, cannabis stores require producers to pay unofficial fees just to get their products on shelves, a practice insiders say is widespread despite being illegal.
00;12;15;21 - 00;12;43;00
Gary Johnston
Large corporations can afford to undercut the legal market, making it even harder for small producers to compete. The Cannabis Council of Canada has produced several policy reforms, including adjusting the excise tax, removing the excise stamp system, and increasing enforcement against illegal sellers. Health Canada has acknowledged some of these concerns, but many in industry argue that without the tax relief and retail reform, small cannabis producers will continue to struggle.
00;12;43;03 - 00;13;02;06
Gary Johnston
Many of Alberta's independent cannabis producers say they are in survival mode, waiting to see if regulatory changes come before they're forced out of the industry entirely. Okay. This is not looking better for a for a positive outcome. Oh boy, we sure have to fix some stuff in this industry for this to get better.
00;13;02;07 - 00;13;13;11
Ian
THC, CBD Terpene profiles. What's in me? Oh, please explain to me. Cultivar Corner
Cultivar Corner Oh Yeah Cultivar Corner
00;13;18;03 - 00;13;22;03
Ian
Please explain this stuff to me.
00;13;22;05 - 00;13;47;04
Gary Johnston
Welcome to Cultivar Corner. Brought to you by Up in Smoke at 258 West Broadway in Vancouver. And online at It's Up and smoke.com. Check it out today for more exclusive delights like this one today. This is a new fino hunt from Salt Spring Island. The mad joy. This is a new exclusive island, Zeus. And of course, if you were 19 years of age or older and live in B.C., you can check it out.
00;13;47;07 - 00;14;20;05
Gary Johnston
Only it's up in smoke.com menu and have it sent to you, especially if you're 19 years of age or older. And this is a very exclusive one. We've got some products and hopefully you're going to get a chance to try it all. Whole island Zeus. Absolutely amazing. As I first picked up this bag and I got it sent to me and I started wondering what the aroma behind this is now again, let me go to the it's up in smoke menu.
00;14;20;11 - 00;14;40;21
Gary Johnston
And by the way, it's up in smoke has a new menu or a new website. They've had an all kinds of stuff and they've even added a section for the podcast. So you can check out the podcast on there. So this is Salt Spring, Magic Island, Zeus, God Bird okay. If you know hunters, this is an easy one.
00;14;40;21 - 00;15;03;20
Gary Johnston
This is God Bud grown the Magi way meaning grown to term hang dried, cold cured and fresh packed. What more can I ask for? There's only a limited amount of this one, so we brought some in and we all loved it. And now we get a lot. Again, if you're reading this on the podcast, we love you and we live to bring you those happy eyes.
00;15;03;22 - 00;15;30;04
Gary Johnston
I can't tell you how much joy I got in seeing that on this description for Islands. Zeus. Thank you very much, Matthew. I appreciate that Island Zeus, aka God Bud, was bred in Canada from a mix of purple, skunk, Hawaiian and a mystery strain known only as God. And before you ask, chirping information is not available and you know that reference is put in for me.
00;15;30;07 - 00;15;46;29
Gary Johnston
So a note from Josh. We stole this from Reddit on Salt Spring. An old timer named Bruce brought some of his cats over to my mom's backyard 3 or 4 years ago, so that they could all gross him out door for their medical uses. This particular plant didn't flowers, so we suspected an indoor variety. It was labeled purple.
00;15;46;29 - 00;16;07;23
Gary Johnston
Gardner. John took a cutting of it, and it stayed in our library for a couple of years before we flowered it out and realized that this was a very old God bud, the kind we used to call Zeus back in the late 1990s, early 2000, before the new king god Bud took over. We've saved a number of varieties from the gardens of old timers on the island and the island.
00;16;07;23 - 00;16;30;17
Gary Johnston
Zeus is perhaps the best one we have found so far. Shout out to Joe for keeping this one alive. And that is your island, Zeus, and let me give you the details on this one. So now we know there's no chirping information, but we do have the. And this is the interesting piece of this 21% right where we want it to be.
00;16;30;20 - 00;16;54;04
Gary Johnston
And and let's take a look at this flower before I've got some joints, I've got a joint rolled I've got my mighty already to go. And let's take a look. And so this is a light green flower. And I really like the structure of the buds. They are very unique buds. So they're long and lean. And it got some really nice buds in here.
00;16;54;06 - 00;17;19;26
Gary Johnston
And when we look at the buds the structure them all they're just so well structured. And of course cold cured. No non irradiated. And I look for the trichomes and they are proven everywhere. So let's get down to it. Let's get into the let's get crafty warmed up. I've got a joint rolled. We're ready to go.
00;17;19;28 - 00;17;43;07
Gary Johnston
And, again, this is a exclusive, for direct delivery. So it's the only place that you can get it. And if you want to get it, you should probably be getting it pretty soon. So let's take a take. This is Salt Spring Island, a fino hunt. This is island juice.
00;17;43;09 - 00;17;49;01
Gary Johnston
Oh, nice.
00;17;49;04 - 00;18;02;20
Gary Johnston
Smooth. I always like a nice, nice, smooth. Smoke. Obviously hitting down on the indie side for the gun, bud. Now, that's where we're planning to go.
00;18;02;22 - 00;18;27;05
Gary Johnston
Or a nice smooth taste. Now, what am I picking up on some of this? There's definitely some mixing in there. Again, I can't see what there is, but it's kind of what I feel. As we get that joint going. And now I'm looking at the ash, I've got to well over a half an inch. Almost three quarters of an inch.
00;18;27;08 - 00;18;59;21
Gary Johnston
Nice gray ash, no black comedy. And they're very, very tasty at it. 21%. Let's see how this affects me and how quickly we can get there. We'll see. Okay. My mighty is up to speed. Let's put the joint down. Him. A move to Island Zeus through the mighty.
00;18;59;23 - 00;19;12;14
Gary Johnston
Oh, so that's almost some of that. Some of that cookie, coming in with a God mode.
00;19;12;16 - 00;19;33;15
Gary Johnston
Oh, very nice, very nice taste. Some some, we could have see, I don't know what it is, but it is a nice taste.
00;19;33;17 - 00;20;00;21
Gary Johnston
Oh. Very nice. And, of course, we're looking for that nice indica that kind of gets us where we want to be. And, this Matthew is very excited when this product came in, and it's. And it's also cool to see the new changes on the website. If you haven't checked it out, you'll see that there was a podcast page where you can check out all the previous episodes of the podcast.
00;20;00;23 - 00;20;13;05
Gary Johnston
That's kind of cool. I'm happy about that. Oh, and now I'm starting to feel some of this.
00;20;13;07 - 00;20;39;14
Gary Johnston
So we're not in the 28, 29 and 30s. We're down on the 21% and some of the other stuff we have done at the 21, 22% has been really nice. And I'm expecting that to happen out of this with the island Zeus. So let's finish up the joint here.
00;20;39;17 - 00;21;12;19
Gary Johnston
Okay. Now again, in terms of the taste, I don't know what I'm tasting, but I love the taste of it. It's a real, earthy. There's, I'm think there's going to be some gas in here. There's going to be some earthiness in that, it's going to have a lot of components of an indica. And when Gary gets the happy eyes coming in, then we'll know we have reached Nirvana.
00;21;12;21 - 00;21;42;22
Gary Johnston
All right, let's get the mighty back up to speed. And we're into the half way through the joint. So I got a second ash hanging on there, and that is beautiful. No black on there whatsoever. So really looking forward to it. This again? I can't tell you the terpene profile. But what I'm tasting is delightful.
00;21;42;25 - 00;21;57;22
Gary Johnston
Oh, and there they come. My. There we go. My mighty is back up to temperature.
00;21;57;24 - 00;22;06;16
Gary Johnston
Okay. And now the taste. It's coming out of the mighty.
00;22;06;19 - 00;22;19;25
Gary Johnston
Oh, yeah. There's definitely some mercy I'm gonna suggest as some carry off lean somewhere in there as well.
00;22;19;27 - 00;22;28;23
Gary Johnston
And, I love the happy eyes.
00;22;28;26 - 00;22;47;17
Gary Johnston
Now. Oh, this is really nice. It's not coming on like gangbusters. But I am really feeling the 21%.
00;22;47;20 - 00;23;18;18
Gary Johnston
Oh, yeah. And I get another one of them through the vaporizer. Oh all those delicious taste. Oh. So if you have been looking for an old school God bud. Oh yeah. Now here come my happy eyes. This is the part of Cultivar Corner that I absolutely love where I start to achieve some fruition as they say.
00;23;18;20 - 00;23;43;18
Gary Johnston
And of course remember Cultivar Corner is brought to you by up in Smoke at 258 West Broadway in Vancouver and online at It's Up in smoke.com. This is a direct delivery exclusive. We are picking up from sold spring, Magic Island Seuss. Remember, if you're 19 years of age or older and live in BC, you can have it sent to you.
00;23;43;20 - 00;23;49;27
Gary Johnston
Oh, and you could have some happy eyes like I have.
00;23;50;00 - 00;24;16;13
Gary Johnston
Okay. When Matt called me up, he was pretty excited about this new Fino hunt. From the folks at Salisbury. Bought a bunch of it. It's available for you. I'm quite enjoying it. I am a very happy camper. And, of course, when we come back, it has gotten a little deeper, so I got through the first joint.
00;24;16;13 - 00;24;49;20
Gary Johnston
I've gone into my second dosing capsule, and my happy eyes are. They're just feeding a lot of lovely for you and and a general sense of, little body stone. This is going to be a fine, fine day. And I'm not on solid Spring Island. This works well, wherever you are. All right. And if you'll let me add a little further to this, I love how deep this is gotten.
00;24;49;23 - 00;25;03;23
Gary Johnston
So it moved more into a body stone. Really? Latte euphoria is still happening. My happy eyes are there. This, island Zeus, a god Bud, I am really loving it.
00;25;03;26 - 00;25;10;21
Ian
Sharing stories about good weed while trying good weed. This is the cannabis potcast.
00;25;10;23 - 00;25;31;28
Gary Johnston
And let me give out a shout out to Jen. Miss Rubicon, as you probably know, her, had a chance to sit back down and, chat with Jen for a while. We had a great visit a little while ago. I appreciated all of the opportunity to sample some product. I've got some. What have I? I got some blue dream in my in my vape pen.
00;25;31;28 - 00;26;05;23
Gary Johnston
I got some comatose. Oh, that's really nice. And look forward to a cultivar corner coming up on fire. OG, I really appreciated, getting together with Jen and, hearing about what you're all about. And then what you need to hear is that she has created a persona, a, yes, a persona. A Stoneridge stoner stories with Q Stoneridge.
00;26;05;25 - 00;26;35;25
Gary Johnston
Now, if you haven't heard about her yet, you should check it out. Do a search for her and to find out what she's all about. You can go directly to the site. Who? Shanna stoner, page.com. Just as it sounds. You'll figure it out. She is also created a number of coloring pages. Beautiful, beautiful art that you can color while you listen to incredible stories like her first one.
00;26;35;27 - 00;27;02;14
Gary Johnston
It's the first stoner story from Kushina Stoneridge, Indica Jones and the magic of the Weed Wizard. I've been working my way through it. It's pretty interesting. And then the coloring, they're pretty, pretty cool pictures. You may want to find out more about that. So thank you very much, Jen and Miss Rubicon. Tremendous videos that she's doing on Instagram.
00;27;02;16 - 00;27;32;04
Gary Johnston
If you haven't picked up on those, you should. And listen for the next episode of Kushina Stone Ridge. But on the other side of it, I wanted to pick up on a story from Rubicon, which of course, is who Jen works for. Rubicon organics is acquiring a 47,500 square foot facility in Hope, BC. The company announced it has reached a deal to buy the facility from Med Pharm Labs for 4.5 million, subject to conditions.
00;27;32;07 - 00;27;56;04
Gary Johnston
The purchase is expected to close in the second quarter of 2025. Acquiring the whole facility is a milestone for Rubicon Organics and further strengthened our premium production capacity, said CEO Margaret Brody in a news release. The company estimates annual production capacity of the Hope facility to be up to 40 500kg, and expects Rubicon Organics first Harvest in 2025.
00;27;56;06 - 00;28;25;26
Gary Johnston
Meadow farm, in its own release, said Rubicon will acquire assets including some equipment, the land and building Meadow Farm stopped using the facility last year after it acquired medical cannabis provider Vivo Cannabis. Rubicon organics also received certification for its Delta BC greenhouse that would allow it to start making large exports of medical cannabis. We're ready to meet the big rising demand for high quality medical cannabis products with initial export planned in 2025, said Brody.
00;28;25;29 - 00;29;04;10
Gary Johnston
Obtaining the certification provides documented evidence that Rubicon Organics has met strict international standards for quality and consistency in the cultivation, harvest and primary processing of cannabis needed for export. For cannabis inputs to certain jurisdictions, including Israel, Europe and Australia, he said. Rubicon brands include homestead, Simply Bare Organic 1964 and wildflower. And there you go. That's some some good news from Rubicon expanding their their realm, and they're growing some pretty good weed.
00;29;04;16 - 00;29;12;24
Ian
Exploring the world of Canadian cannabis culture one toke at a time. This is the cannabis potcast.
00;29;13;02 - 00;29;40;26
Gary Johnston
And for this story, we're going to CBC.ca. And Jock Porter's is the author. On an easy, hard to find backroad Machete hack sits a monument to what might have been, at least according to Jonathan Wilson, a massive cannabis production plant providing local product and local jobs. It never got there. Wilson is the CEO of Crystal care, a Japanese owned cannabis company and one of many that sprang up in the wake of the federal government's legalization of the drug in 2018.
00;29;40;29 - 00;30;02;02
Gary Johnston
Six years later, he closed a scaled down version of the 50 800 meter square plant. Frustrated by government taxation and pricing that he said choking the nascent industry to death, there was absolutely no sign that there was going to be any reform, any help at all, Wilson said. In an interview. We just couldn't get to a point where we were able to make money.
00;30;02;04 - 00;30;31;02
Gary Johnston
Initially, construction problems and other challenges forced Crystal cura to operate a smaller production plant within the partially built one, and it seemed to work. The company had sales in several provinces and operated a retail store at the facility that was popular with buyers wanting to avoid government owned stores. People who might otherwise have bought cannabis illegally. But a crushing excise tax and aggressive price markups by the provincially owned cannabis NB stores squeezed crystal clear to the breaking point, Wilson said.
00;30;31;05 - 00;31;01;24
Gary Johnston
He shut down last August the excise tax agreed to by Ottawa and the provinces when cannabis was legalized is either 10% of a sale or $1 per gram, whichever is higher. In practice, the latter rate always applies, and Wilson says it gobbled up 35% of the company's revenues on top of sales tax, regulatory fees and other costs. Wilson is not alone, according to Harrison Jordan, a Toronto lawyer specializing in controlled substances such as cannabis, alcohol and tobacco.
00;31;01;26 - 00;31;29;24
Gary Johnston
There's many issues facing the industry, he said. Excise is not the only one, but it is a significant one. Wilson estimates the excise tax on cannabis is nine times higher than the equivalent tax on wine, and six times higher than that on beer. In a 2023 report, the Competition Bureau of Canada said cannabis producers consider the excise tax a major barrier to competition that makes profitability and viability in the industry very challenging.
00;31;29;26 - 00;31;53;27
Gary Johnston
Under the federal provincial agreement, the provinces get three quarters of the excise tax. For New Brunswick, that meant $14.1 million in revenue last year, but that amount was eclipsed by the 22.7 million collected via the second financial measure that frustrates Wilson. The markup on prices by cannabis NB, the government owned chain of retail stores using the federal Access to Information law.
00;31;54;02 - 00;32;29;07
Gary Johnston
Wilson obtained a September 23rd briefing note to then Finance Minister Chrystia Freeland that said markups were causing producers financial distress and had gone beyond what was envisioned in 2018. It remains the case that after five years of legalization, there are no licensed producers of legal cannabis products that are consistently profitable, the briefing note said. It explained that under the original federal provincial agreements, markups were intended to be reasonable and only cover operating costs and capital expenses, and to generate a normal rate of return comparable to the private sector.
00;32;29;09 - 00;32;58;25
Gary Johnston
The document singles out Ontario, Quebec and New Brunswick for markups so high their store profits are higher than their excise tax revenue. Wilson said crystal cures contract with cannabis envy prevents him from revealing what cannabis NB paid Crystal care for its products and what the markup was, but he said the company was paid 40% less in New Brunswick than it was my retail stores in Nova Scotia and Prince Edward Island because those provinces charged lower markups and can pass on more of the final price to producers.
00;32;58;28 - 00;33;25;22
Gary Johnston
When the New Brunswick government announced in 2017 that NB liquor would operate cannabis retail stores in the province. CEO Brian Harman said the priority was not profits, but keeping cannabis away from children and undercutting the illegal market. But an April 23rd mandate letter from the previous provincial Progressive Conservative government, also obtained by Wilson, directed cannabis NB to maximize profit and net income to the province.
00;33;25;24 - 00;33;46;28
Gary Johnston
Wilson says that's at odds with Ottawa's original intent to keep the price as low as possible to lure customers away from the illegal market. I think a lot of people missed that. The federal government for the entire time was really never about revenue generation, said David Brown, a British Columbia journalist who covered the cannabis industry. It was about protecting public health and public safety.
00;33;47;01 - 00;34;10;06
Gary Johnston
He said illegal dispensaries began to decline after legalization, but there's anecdotal evidence that they're starting to ramp up again, including on First Nation reserves, where they operate in a legal gray area. Price is obviously a big part of why they're able to come back. The statement noted that the market share for legal cannabis is now 70%. Wilson says that figure is hard to see access.
00;34;10;09 - 00;34;37;02
Gary Johnston
If you're six years in and we still have an illicit market, has 30% penetration or more because we don't know exactly how deep it is. That's unacceptable, completely unacceptable. He said the federal government and the provinces should agree to reduce markups or to rework the taxation agreement. So the excise tax is always 10% of sales. The New Brunswick Finance Department referred questions from CBC News to Cannabis NB, which did not respond.
00;34;37;04 - 00;35;00;26
Gary Johnston
Wilson said the new hold government has been unresponsive. Everything we brought forward with data and facts and logic has just been either ignored or dismissed really completely. I struggle with the facts, not about our individual business, that we have a struggling economy, that we're talking about crime and public health, and you have an industry already there, ready, willing and able to help when no one seems to want to give them the time of day.
00;35;00;28 - 00;35;13;03
Gary Johnston
That's the part that's most disappointing, and that's a little disappointing as well. Oh my, my. Oh, it'll get better.
00;35;13;05 - 00;35;34;08
Gary Johnston
We've done it once again. We have made it to the end. Thank you so much for being here. I truly appreciate it. And if you go to buy me a coffee.com/cannabis potcast, if you like what you hear and you feel so inclined, you're welcome to buy me a doobie. Now let's get to our worst dead jokes. And they are pretty bad.
00;35;34;08 - 00;36;09;01
Gary Johnston
But now I've realized how to pull them out. So we've got this under control. What do lawyers wear to court? Lawsuit. What did one wall say to the other wall? I'll meet you at the corner. I'll just stop after. Do. Why did ducks make great detectives? They always quack the case. And finally, what sound do porcupines make when they hug after consuming cannabis?
00;36;09;03 - 00;36;20;07
Gary Johnston
Ouch. And that's it from the guy in the clouds. That's it for episode 198 of the Cannabis potcast.
00;36;20;09 - 00;36;28;19
Ian
From the cannabis infused studio. High above the Okanagan Valley. This was the cannabis potcast.