The Canada Income Company has fined hashish corporations CA $ 1.three million since its grownup launch
The Canada Revenue Agency (CRA) has fined cannabis-related fines totaling Canadian dollars ($ 1 million) since adult marijuana was legalized in October 2018, according to Marihuana Business Daily.
The nearly two dozen penalties for violating the excise tax law include a heavy levy of approximately CA $ 500,000 that collects taxes and administers tax law for the Canadian government, according to the CRA.
The heavy fines were imposed because Health Canada, the country’s leading cannabis regulator, has so far decided not to punish marijuana producers despite serious violations of regulations such as illegal cultivation and sale.
Instead, the agency has used various other approaches, including warnings and license suspensions.
In the case of the rating agency, the most common reasons for assessing a penalty were:
- Production without an excise license.
- Excise stamp not taken into account.
- Insufficient books and records.
- The purchase of cannabis by an excise licensee from an unlicensed person.
The rating agency would not disclose the names of the companies on the grounds of confidentiality.
The agency also declined to break down the fines by category, as it “could lead to the potential identification of taxpayers, which would violate the confidentiality provisions of the Excise Tax Act,” a spokesman told MJBizDaily.
The rating agency is responsible for managing the excise tax framework for cannabis products.
Canada’s Excise Tax Act contains various provisions on administrative penalties where a company is found to have violated the law.
Fines or fines can be imposed if it is determined that the law has been violated, according to the rating agency.
According to MJBiDaily, no cannabis-related penalties were imposed in 2018 – the year Canada legalized adult cannabis.
In 2019, the first full calendar year for recreational cannabis sales in Canada, 15 fines totaled CA $ 769,426.
The highest fine imposed that year was CA $ 507,660.
That means the average fine for the 14 other violations was CA $ 18,697.
Seven penalties totaling CA $ 527,798 were imposed in 2020.
The largest fine in 2020 was CA $ 434,611.
With the exception of the largest fine, the average penalty for the six other violations in 2020 was CA $ 15,531.
Seemingly minor violations, such as lost excise stamps, can result in substantial fines as these penalties are imposed on any stamp that cannot be taken into account.
No fines for Health Canada
The rating agency’s fines mark a different approach to Health Canada when it comes to regulatory enforcement.
Rather than penalizing large companies, Health Canada used a combination of warning letters, phone calls, and license suspensions, according to the department’s latest compliance report for fiscal year 2018-19.
The compliance report – the first to cover the first few months of legalization in Canada – shows no fines imposed.
“To date, Health Canada has not imposed an (administrative fine),” a department spokesman previously told MJBizDaily.
“In the vast majority of cases, regulated parties take voluntary action to correct violations once they are informed of the regulatory requirements,” she continued.
“In other cases, other enforcement tools such as warning letters, license suspensions or revocations are found to be most effective in the circumstances.”
Health Canada versus CRA
Shane Morris of Morris and Associates Consulting, based in Ottawa, asks why the CRA fines companies while Health Canada doesn’t.
“Ultimately, the minister can decide when to take action and when not to take action,” he said in a telephone interview.
“It is interesting, however, that two departments regulate the same industry and have different approaches to the regulatory instruments and their application.”
Morris expects licensees to exercise their responsibilities more cautiously under the requirements of the rating agency than under the requirements of Health Canada, “because that is where the actual potential monetary risk lies”.
“Given the number and size of the rating agency’s fines in the cannabis space, you can see that they are clearly taking a different approach to enforcing and promoting compliance than Health Canada, which appears to be taking a softer approach.
“We know this because, in the opinion and responsibility of Health Canada, there have been a number of serious regulatory violations in the industry and yet they have not imposed any administrative sanctions.
“It would be interesting to see when and for what reason fines are imposed.”
Matt Lamers is the international editor of Marijuana Business Daily based out of Toronto. He can be reached at [email protected].