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Internal cannabis trade barriers could be eliminated now

Published on April 4, 2025 by Pat Bulmer

Photo: Adobe Stock/the oz.

If Canada’s political parties are serious about reducing internal trade barriers to counteract Donald Trump’s tariffs, they could start with cannabis.

Inter-provincial barriers have become a big issue since the US president declared economic war on Canada. Prior to the election call, new Prime Minister Mark Carney put Chrystia Freeland on the file. Premiers have talked up removing barriers.

Cannabis producers face some of the hardest-to-explain regulatory hurdles.

They must, for example, place a different excise stamp on their products for each territory and province. That’s potentially 13 stamps for the same product.

And as we’ll see shortly, a stamp is about more than just putting a sticker on a package.

“It creates unnecessary complexity in the supply chain, costing licensed producers time and money,” said Paul McCarthy, president of the Cannabis Council of Canada, in an email to the oz.

“A single, national stamp would reduce a lot of bureaucracy for the industry,” he said in a follow-up interview.

“People are talking really about how do we remove internal trade barriers in Canada in light of this trade war that we have with the United States? How do we kind of support ourselves or help ourselves to do business with each other inside of the country? Well, this is a perfect example of just that,” he said.

Paul McCarthy is president of the Cannabis Council of Canada.

The stamp is more than just a sticky piece of paper, explains a video produced by C3, as the organization calls itself.

“To comply with current regulations, each province and territory has a unique stamp that is applied to cannabis products. There are 13 different excise stamps, 13 times for each product, and all manufacturing facilities produce many different products … This creates unnecessary complexity in the process,” the video says.

“If products are reallocated to a different province, which happens frequently, existing stamps must be carefully removed and replaced with new ones … Employees must also save the removed stamp for the Canada Revenue Agency.

“If product doesn’t completely sell out, producers must determine whether to go through this process all over again, removing and applying stamps. It’s often more cost effective to destroy the product,” the video says.

“Going to a single stamp saves licensed producers overnight millions of dollars and a ton of time and an effort in how they manage their inventory and how they ship the product,” said McCarthy.

“The only reason why there’s 13 and there’s one for each province and territory is because there’s somebody who dreamed that up inside of government,” he added.

Federal Liberals intent to explore a national cannabis stamp

In its fall economic statement, the previous Liberal government declared its “intent to explore a transition from cannabis excise duty stamps specific to each province and territory to a single, national stamp.”

Canadians were advised to stay tuned to the next budget for more information.

“This would make it easier for regulated cannabis producers to ignite new business opportunities in other provinces,” the statement said.

Many people cheered that half-promise, but McCarthy ripped into the government in a news release for failing to help the industry.

“Did you know why they thought it was great? Because it was the first time that they’d seen cannabis in an economic statement or budget in years,” he said.

The excise stamp and excise taxes, which the industry says are unsustainable, are issues his group plans to push — “we’re going to release shortly our platform” — but McCarthy doesn’t expect to get traction on the campaign trail.

“At this moment, everybody is focused around one thing and that is the relationship with the United States and let’s call it what it is, it’s a trade war. And I suspect that that’s going to be the ballot-box question. And I suspect that the parties are not going to talk about all that much else other than that.”

However, once a government is in place, “we’re really going to be focused on as soon as the new government is in, targeting those people who are responsible for these files and trying to get change that way.”

McCarthy has has over 20 years of experience in the public sector a public servant and senior political adviser, his C3 biography says.

Cannabis Council of Canada to lobby new government

“The current excise tax is 10% of the value of the product or a dollar per gram, whatever the greater. We are asking to remove the latter part of that equation and move to a simple 10% tax,” he wrote in his email.

When the tax was created, “cannabis was selling for approximately $10 per gram. Today, licensed producers sell their cannabis to the distributors, the provinces and territories, for approximately $3 per gram,” he said.

“I did a survey of my members around August 2024 and found that their effective tax rates … they’re paying approximately 34%. Thirty-four per cent and higher is just crazy. You can’t you can’t run a proper business and make money at those margins.

“So this is absolutely the top issue, getting a change to the excise tax because it’s not set up in a way that allows licensed producers to be financially viable.”

McCarthy became the head of the industry group about a year ago. While there are many issues to address, he’s concentrating on the excise tax, excise stamps and the illicit market.

“The third thing that we are going to be focused on this year and coming in this election is the eradication of the illicit market. I’m going to be aggressive on this. We need to eradicate the illicit market. Now, you’re never going to get it to zero, but you can get it to functional zero.”

There are credible estimates that illicit cannabis accounts for 25-40% of the market, McCarthy said. “In B.C., where you are, they think that 40% of the market is still illegal.

“It’s the elephant in the room. And government needs to get serious about this. You can’t have a properly functioning legal, regulated market when criminal forces control the single biggest share of that market.”

The oz. sent online messages and emails to the major political parties asking for their positions on excise taxes and stamps. After a week and follow-up messages, none have responded.