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CRA has banned canopy growth by nearly half a million dollars

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Ontario-Based on cannabis company canopy growth You are dealing with a $500,000 fine from the Canada Revenue Agency. CRA claims that the company began production of offshore plants in 2020 without obtaining the appropriate license to do so. Canopy is appealing the $434,611 fine in federal court, arguing that they had all the appropriate paperwork in order.

To keep up with demand after-legislationThe company He established a subsidiary of the company in early 2019 and applied to Health Canada For an outdoor farm. Health Canada delayed its response and finally gave approval in June of that year.

Growing cannabis flowers intended for the medical marijuana market are displayed at OrganiGram in Moncton, NB, on April 14, 2016. THE CANADIAN PRESS / Ron Ward

However, Canopy launched the Offshore Farm project in the summer of 2019. Under Canadian cannabis laws, one must also apply for a separate cannabis license from the Canada Revenue Agency. The CRA approved the Canopy license after 30 days.

One year later, the CRA sent Canopy a letter informing him of a $434,611 fine. They claimed that Canopy began growing hemp outdoors prior to obtaining CRA approval.

CRA . fine

The CRA fine is based on its estimate of the market value of the outdoor crop for 2019. Canopy claims the crops were destroyed and nothing was brought from the outdoor farm to market. Canopy also claims that Health Canada’s cannabis license allowed them to grow and that the CRA license does not prevent them from growing for non-market use.

CRA does not agree.

“Receiving and growing a vegetative cannabis plant prior to obtaining a cannabis license under[the Excise Act]is a violation of[the Excise Act],” reads an excerpt from a letter sent by the Communications Regulatory Agency and quoted in court documents.

Canopy appeals the fine.

At least one legal expert on cannabis is not convinced that their appeal will work. Trina Fraser told National Post.

“They will have a hard time proving that when you see the phrase ‘cannabis license’ in this section (of the Excise Act), it could mean a cannabis license issued by Health Canada,” Fraser said.

“The CRA letter did not include any conditions, restrictions, or restrictions regarding the production of cannabis products,” Canopy argued.

The call

In its appeal, Canopy is asking the federal court to either cancel the fine entirely or reduce its value. The company insists it did nothing illegal.

CRA and Canopy Growth both declined to comment because the case is still ongoing. However, Canopy has confirmed that the 2019 fine will be paid in full to avoid further penalties with late payments.

Between 2019 and 2020, it was CR It issued 22 cannabis-related fines totaling $1.3 million. The CRA wants to remind cannabis producers that one must wait for approval by Health Canada and the CRA before starting to grow.

The fine comes at a bad time for canopy growth. The company reported a net loss of $115 million in the fourth quarter of 2021. Declining cannabis sales across Canada are partly to blame, as well as increased competition in the industry.

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