The Globe and Mail reports in its Monday edition that cannabis business leaders are calling on the federal government to make an urgent review of the excise tax laws applied to their industry, saying the flat-fee tax structure is detrimental as cannabis prices decline. The Globe's Irene Galea writes that they say the tax structure reflects assumptions about the industry made before legalization that have now been proven wrong. The key assumption relates to the price of cannabis per gram, which had been expected to sell for around $10. The excise tax for dried cannabis was set as either 10 per cent or a $1 flat fee per gram -- whichever amount was higher. With cannabis now selling for much less than the anticipated $10 per gram, the excise tax levied at the moment of manufacture, rather than at retail, is taking a much larger chunk of producers' profits. They now commonly pay between 20- and 45-per-cent tax, instead of the 10 per cent initially expected, said George Smitherman at the Cannabis Council of Canada. If the excise tax structure was updated to reflect this reality, he said, cannabis producers would be able to lower their prices to match the illegal market, while keeping a larger portion of the profits.
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