Canada Strong for all? Not for the cannabis sector

In April, the United States began the process of moving cannabis off Schedule I—a shift that could accelerate banking reform, improve investment conditions, and further legitimize the sector eight years after Canada legalized cannabis.

For most of the last decade, the world saw Canada as the model for how legal cannabis could work. The problem is that the rest of the world is no longer standing still.

Canada remains the only G7 country with a fully legal cannabis market at scale with real infrastructure, export capacity, and a regulatory framework other nations study closely. However, first-mover status does not mean permanent advantage. Capital flows to markets with smart, competitive policy. As the U.S., United Kingdom, Germany, Australia, and others evolve, Canada’s lead is narrowing. The question is whether we are prepared to let that advantage—and the jobs and domestic growth that come with it—slip away.

According to the Canadian Chamber of Commerce’s Business Data Lab, legal cannabis supported more than 227,000 jobs and contributed roughly $16-billion to GDP in 2024, generating about $29-billion in total economic output despite a policy framework that undermines competitiveness while strengthening the illicit market. In the U.S., legal cannabis sales are projected to exceed US$49.7-billion in 2026 as federal policy moves toward normalization. Canadian firms now face the prospect of competing against a vastly larger and increasingly investable American industry not only domestically, but in emerging international medical and consumer markets as global legalization expands.

A 2025 Abacus Data poll found that 59 per cent of Canadians see cannabis as an important economic contributor, while 58 per cent want Ottawa to make it easier for the industry to grow. Canadians have granted cannabis its social licence, yet policymakers still hesitate to treat it as a mainstream economic driver despite a broader government focus on productivity, investment, and internal trade.

The approach is hard to square with how other regulated industries are treated. Cannabis already operates under stricter marketing and public health rules than alcohol, despite evidence linking alcohol to greater health and social harms. Meanwhile, policymakers routinely celebrate alcohol producers as engines of jobs, tourism, and exports. Legal cannabis producers—including companies producing beverages, wellness products, and edibles—rarely receive the same enthusiasm.

The legal market is being squeezed by a tax and regulatory regime that makes it harder to compete. When legal operators are burdened with excessive costs and rigid rules, consumers look elsewhere. Weak policy for the legal market is, in effect, a subsidy for the illicit one.

Look at the federal excise system, a framework built pre-legalization on assumptions that never materialized. Prices fell and margins compressed, but the tax burden—approximately 35 per cent—remained fixed, limiting reinvestment and growth.

The province-specific excise stamp system is another costly inefficiency. It limits the movement of inventory across the country and adds an estimated $100-million in unnecessary industry costs despite existing tax reporting systems.

Given the government’s commitment to reducing internal trade barriers, maintaining this system is simply indefensible.

At a time when Ottawa is focused on economic resilience and trade diversification, legal cannabis represents a clear opportunity to advance both. Prime Minister Mark Carney has set a target of increasing non-U.S. trade by $300-billion by 2035, and global demand for medical cannabis—particularly across Europe and other emerging markets—represents a credible avenue for growth. Germany alone signals the scale of the opportunity: its medical cannabis market was valued at more than two-billion euros in 2025 and is projected to exceed 4.5-billion euros by 2028. Yet Canada cannot expect to seize that opportunity abroad while constraining the competitiveness of its producers at home.

The good news is that there are steps Ottawa can take right now to strengthen the cannabis sector’s competitiveness.

First, implement an excise-linked investment tax credit, allowing cannabis companies to convert a portion of excise paid into conditional, productivity driven reinvestment into Canadian operations such as research and development, automation, expansion, and export readiness.

Second, launch a federal-provincial-territorial review of the excise framework to better align it with market realities and support a competitive legal industry.

Third, eliminate the province-specific excise stamp system and move to a single national stamp, as was done with alcohol in 1982. A government serious about reducing interprovincial trade barriers should not be preserving one of its own.

Canada legalized cannabis, but legalization should not be the finish line. Stewardship, policy, and competitiveness matter greatly.

“Canada Strong for All” should include industries where we have a real chance to lead globally.

Cannabis is one of them.

James Yamanaka is CEO of Organigram Global.

The Hill Times