As if running a legal cannabis business in Canada wasn’t difficult enough, some producers are now discovering that even being the victim of a crime doesn’t spare them from government taxation.
An emerging concern across the industry is that licensed producers are being charged excise tax by the Canada Revenue Agency (CRA) on cannabis products that were stolen — before they ever had a chance to be sold.
Dylan King, CEO of British Columbia-based craft cannabis company Pistol and Paris, experienced this firsthand when his facility was robbed.
“In July 2023, we had a break-in at our facility [and they]stole 130 kg of cannabis. The thieves got away and it was me taking the hit because we weren’t insured at that time. It was a big loss for us,” he recalls.
In the aftermath, King did what many businesses would do: upgraded security and secured insurance for future protection. “We made the best of the situation by beefing up security and adding insurance on our product.”
But several months later, his company received a surprising bill — not from a vendor or supplier, but from the CRA itself.
“Fast forward about eight months, my accounting office got a bill from the CRA excise tax department for $130,000 for lost excise revenue,” he says. “I told my accountant there must be some sort of mistake. It wasn’t excised, it wasn’t packaged, it was just bulk cannabis and I hadn’t determined whether I was going to sell it internationally or in Canada.”
Despite the product never entering the retail stream, the CRA maintained that the company was liable. According to King, the agency’s position was based on the belief that the stolen cannabis was destined for the Canadian market.
Read the full article at StratCann
