Cannabis retailers face uphill climb

It’s been nearly six years since cannabis was legalized, but some local retailers say the current system of taxes and regulations are making it impossible for small retailers to survive.

Jeremy Jacobs, the owner of a legal pot shop in Vancouver, says the cannabis industry has been heavily regulated and taxed at all levels of government since legalization in 2018, making businesses here unprofitable.

“When there is a 40 per cent tax embedded into this industry, and you have 33 per cent to run your business with, the numbers just don’t add up,” he said.

“Two-thirds of our retail price is our wholesale costs, so we are working with 33 per cent gross margin.”

Jacobs says this could drive small mom-and-pop shops — like his — out of business.

“The government has this industry in a chokehold, and small business will die first,” he said.

“The big publicly-traded companies, they’ve got the resourcies to survive this tax regimen.”

Jacobs says they’ve had to take big steps to be able to keep paying the bills, including reducing inventory and cutting personal salaries.

Along with high tax burdens, Jacob says the cost of retail space in Vancouver and licensing fees make running a cannabis business in the city unfeasible.

“Our licence fee from our municipality is 10 times higher than a liquor store,” he said.

“We pay over $5,000 a year, and liquor stores pay just over $500.”

Jacob says without a reduction in taxes, it’s only a matter of time before he will have to close his shop.

“This industry — which was kept alive by small business — will be entirely owned by big businesses, and this is very contrary to the rhetoric we are hearing from the government, which is talking about helping Canadians,” he said.

“They are doing the opposite in the cannabis space.”