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Aurora Cannabis Inc (2)
Symbol ACB
Shares Issued 198,120,055
Close 2021-10-01 C$ 8.97
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Globe says Canopy, rivals hear pot prices falling

2021-10-01 07:20 ET - In the News

See In the News (C-WEED) Canopy Growth Corp

The Globe and Mail reports in its Friday, Oct. 1, edition that prices of legal cannabis are falling as supply surges, spelling trouble for small pot producers, which are being squeezed between declining revenue and a tax structure that is taking an increasingly bigger bite out of their shrinking margins. The Globe's Patrick Brethour writes that when recreational weed was legalized three years ago, Ottawa put in place an excise tax that was the higher of $1 a gram or 10 per cent of the wholesale price. The structure of the tax hints at where regulators thought prices would end up -- hovering at $10 a gram, if not higher. That optimism has turned out to be dead wrong. Prices were indeed high in the early going, but have since dropped sharply. That has meant the $1-a-gram minimum tax is taking up a larger share of producers' margins. The Globe cites a small pot producer that today gets an average of just $4.50 a gram, meaning the excise tax now eats up 22 per cent of gross revenue. Adding to that tax burden are several Health Canada regulatory fees and, at a retail level, sales taxes. The tax burden is a problem afflicting the entire industry, but it is hitting small producers the hardest.

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