Village Farms International Enthusiastically Supports Standing Committee’s Recommendations for New Cannabis Excise Duty Model

– Company Also Supports Enforcement of Past Due Excise Duty Payments –

VANCOUVER, British Columbia and ORLANDO, Fla., Feb. 29, 2024 (GLOBE NEWSWIRE) -- Village Farms International, Inc. (“Village Farms”) (NASDAQ: VFF) enthusiastically supports recommendations on changes to the current Cannabis Excise Duty model released this week by the Canadian House of Commons Standing Committee on Finance. Those recommendations include adjustment to the excise duty formula for cannabis so that it is limited to a 10% ad valorem (proportionate to value) rate.

When the Cannabis Excise Duty model was first adopted, it envisioned a retail selling price of cannabis much higher ($10-plus per gram) than is currently prevalent in today’s market, such that the $1 per gram duty would have effectively been aligned to a 10% ad valorem tax rate. The reality of a much lower than anticipated price per gram has resulted in licensed producers reporting effective excise duties 100-250% higher than originally intended¹. This dynamic has created a cost structure that threatens the industry’s long-term viability and achievement of the primary goal of the Cannabis Act – the establishment of a safe, legal industry that keeps profits out the hands of the illicit market.

Village Farms strongly believes that the Standing Committee’s recommended adjustment to the excise duty would benefit the industry, including enabling licensed producers to invest more in innovation, support the creation of well-paying jobs, and provide better access to capital to further invest in sustainable industry growth. These benefits, together with enforcement, would further the conversion of illicit sales, which some estimates say represent as much as 50% of the current total market².   

Related to excise duty payments, Village Farms also notes recent reports with respect to the Canadian Revenue Agency’s (CRA) collection enforcement of the growing past due excise tax balances. As a company with cannabis revenues throughout Canada, Village Farms fully supports these actions to ensure a level playing field for licensed producers to contribute to a fiscally responsible industry, including the payment of income tax.

The Finance Committee recommendations, published in its report, Shaping our Economic Future: Canadian Priorities are expected to be considered for legislation by Parliament for Canada’s Fiscal 2024 (commencing April 1) Federal Budget and could potentially be implemented before legislation is formally passed. The report is available to the public here: Committee Report No. 16 - FINA (44-1) - House of Commons of Canada (ourcommons.ca).