Good afternoon. I'd like to begin by thanking the committee for the opportunity to be here today. As was mentioned, my name is Allan Rewak and I am the executive director of the Cannabis Council of Canada, or C3.
We serve as the national trade association for producers of medicinal cannabis approved by Health Canada, under the ACMPR, and very soon, Bill C-45, the Cannabis Act.
With me today, as mentioned, is our association's vice-chair Philippe Lucas, who will take the lead on all questions related to medicinal cannabis and the needs of the patients we serve.
C3's diverse membership represents approximately 85% of the cultivation of legal cannabis in Canada under the current ACMPR and reflects the full diversity and scale of our nascent legal industry. Today, in consultation around the upcoming federal budget, I'd like to express two key complementary but also mutually reinforcing recommendations.
First, as we build this new industry together, we believe we must ensure that the tax environment for both medicinal and recreational cannabis is conducive to building up an industry that can effectively compete against an illicit market.
Secondly, as we do this, we must ensure that medicinal patients, who really gave birth to our sector, are not unfairly penalized for accessing the medicine that has improved their quality of life.
In regard to the first issue, as I'm sure this committee is aware, all adult-use cannabis sold in Canada will be subject to both provincial and federal sales tax. Additional provincial tax measures will occur in certain provinces and we also will have a federal excise tax. On top of this, we will have a cost-recovery fee to assist Health Canada in regulating and measuring our industry. Taken together, this cascade of taxes presents an immense cost burden on an industry that requires very significant, upfront capital outlays to begin, and which is competing against an existent illicit market that is remarkably well funded and quite adaptable.
If our shared goal is to truly replace this illicit market, we must ensure that the tax burden does not make legal cannabis uncompetitive vis-à-vis the illicit marketplace. If we are to successfully defeat the illicit market, we must be able to directly compete against them for market share, price, availability and product selection, which will altogether be the deciding factor for the success of this new policy regime.
Today we're here to share our concerns around the growing tax burden that will affect the viability of licensed producers and also the success of public and private retailers in all provinces. We believe that as we move towards October 17, we must also, as we look at this issue, not forget the needs of our medicinal patients who are facing an ever-increasing escalation in the price of their medicine. This is a direct result of the Cannabis Act.
As CFAMM has told you today, from a patient perspective, cost has always been cited as a primary obstacle in accessing medicinal cannabis, and the burden of sales tax compounds this through the application of an excise tax. Ironically, while critically and chronically ill Canadians can get opioids or benzoids tax free, patients using cannabis at the direction and support of a medical professional will face an additional 10% sin tax on their medicine on October 18.
We know Canadians don't support this. A national poll, commissioned by both CFAMM and the Canadian Medical Cannabis Council in February 2018, found that over 60% of Canadians support removing the tax on medicinal cannabis, suggesting it should be zero-rated, just like all other prescription drugs. In fact, to the best of our knowledge, Canada is the only jurisdiction in the world—and there are 30 countries that are legalizing or have legalized medicinal cannabis—that does not have a differential tax rate fully implemented for medicinal and adult consumer-use cannabis. Notably, in our discussions with members of all political parties in the House and in the Senate, we have yet to find anyone who actively believes in an aggressive fashion that taxation on medical cannabis makes sense and would oppose the removal of excise tax as we move forward in fully developing this regime.
While our country is about to take the momentous step of legalizing cannabis for adult consumers, we urge you not to forget those 300,000 Canadian patients who benefit from its use for medicinal purposes. We believe that, as all other prescription drugs, no GST and certainly no sin tax should be targeted towards sick or suffering Canadians.
In closing, I would like to thank the members of this committee for the opportunity to be here today to voice our concerns primarily on the part of patients. With my colleague Mr. Lucas, I'd be pleased to answer any questions you may have after the other deputants have provided their remarks.
On a personal note, before we begin that, happy Thanksgiving to all of you.