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).
About Village Farms International
Village Farms leverages decades of experience as
a large-scale, Controlled Environment Agriculture-based, vertically
integrated supplier for high-value, high-growth plant-based
Consumer Packaged Goods opportunities, with a strong foundation as
a leading fresh produce supplier to grocery and large-format
retailers throughout the US and Canada, and new high-growth
opportunities in the cannabis and CBD categories in North America,
the Netherlands and selected markets internationally.
In Canada, the Company's wholly-owned Canadian
subsidiary, Pure Sunfarms, is one of the single largest cannabis
operations in the world, the lowest-cost greenhouse producer and
one of Canada’s best-selling brands. The Company also owns 70% of
Québec-based, Rose LifeScience, a leading third-party cannabis
products commercialization expert in the Province of Québec.
In the US, wholly-owned Balanced Health
Botanicals is one of the leading CBD brands and e-commerce
platforms in the country. Subject to compliance with all applicable
US federal and state laws and stock exchange rules, Village Farms
plans to enter the US high-THC cannabis market via multiple
strategies, leveraging one of the largest greenhouse operations in
the country (more than 5.5 million square feet in West Texas), as
well as the operational and product expertise gained through Pure
Sunfarms' cannabis success in Canada.
Internationally, Village Farms is targeting
selected, nascent, legal cannabis and CBD opportunities with
significant medium- and long-term potential, with an initial focus
on the Asia-Pacific region and Europe.
Cautionary Statement Regarding
Forward-Looking Information
As used in this Press Release, the terms
“Village Farms”, “Village Farms International”, the “Company”,
“we”, “us”, “our” and similar references refer to Village Farms
International, Inc. and our consolidated subsidiaries, and the term
“Common Shares” refers to our common shares, no par value. Our
financial information is presented in U.S. dollars and all
references in this Press Release to “$” means U.S. dollars and all
references to “C$” means Canadian dollars.
This Press Release contains forward-looking
statements within the meaning of the United States Private
Securities Litigation Reform Act of 1995, Section 27A of the U.S.
Securities Act of 1933, as amended, (the "Securities Act") and
Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and is subject to the safe harbor created by those
sections. This Press Release also contains "forward-looking
information" within the meaning of applicable Canadian securities
laws. We refer to such forward-looking statements and
forward-looking information collectively as "forward-looking
statements". Forward-looking statements may relate to the Company's
future outlook or financial position and anticipated events or
results and may include statements regarding the financial
position, business strategy, budgets, expansion plans, litigation,
projected production, projected costs, capital expenditures,
financial results, taxes, plans and objectives of or involving the
Company. Particularly, statements regarding future results,
performance, achievements, prospects or opportunities for the
Company, the greenhouse vegetable or produce industry or the
cannabis industry are forward-looking statements. In some cases,
forward-looking information can be identified by such terms as
"can", "outlook", "may", "might", "will", "could", "should",
"would", "occur", "expect", "plan", "anticipate", "believe",
"intend", "try", "estimate", "predict", "potential", "continue",
"likely", "schedule", "objectives", or the negative or grammatical
variation thereof or other similar expressions concerning matters
that are not historical facts. The forward-looking statements in
this Press Release are subject to risks that may include, but are
not limited to: our limited operating history in the cannabis and
cannabinoids industry, including that of Pure Sunfarms, Inc. (“Pure
Sunfarms”), Rose LifeScience Inc. (“Rose” or “Rose LifeScience”)
and Balanced Health Botanicals, LLC (“Balanced Health”); the legal
status of the cannabis business of Pure Sunfarms and Rose and the
hemp business of Balanced Health; risks relating to the integration
of Balanced Health and Rose into our consolidated business; risks
relating to obtaining additional financing, including our
dependence upon credit facilities; potential difficulties in
achieving and/or maintaining profitability; variability of product
pricing; risks inherent in the cannabis, hemp, CBD, cannabinoids,
and agricultural businesses; market position; ability to leverage
current business relationships for future business involving hemp
and cannabinoids; the ability of Pure Sunfarms and Rose to
cultivate and distribute cannabis in Canada; existing and new
governmental regulations, including risks related to regulatory
compliance and regarding obtaining and maintaining licenses; legal
and operational risks relating to expected conversion of our
greenhouses to cannabis production in Canada and in the United
States; risks related to rules and regulations at the US federal
(Food and Drug Administration and United States Department of
Agriculture), state and municipal rules and regulations with
respect to produce and hemp, cannabidiol-based products
commercialization; retail consolidation, technological advances and
other forms of competition; transportation disruptions; product
liability and other potential litigation; retention of key
executives; labor issues; uninsured and underinsured losses;
vulnerability to rising energy costs; inflationary effects on costs
of cultivation and transportation; recessionary effects on demand
of our products; environmental, health and safety risks, foreign
exchange exposure, risks associated with cross-border trade;
difficulties in managing our growth; restrictive covenants under
our credit facilities; natural catastrophes; the ongoing COVID-19
pandemic; and tax risks.
The Company has based these forward-looking
statements on factors and assumptions about future events and
financial trends that it believes may affect its financial
condition, results of operations, business strategy and financial
needs. Although the forward-looking statements contained in this
Press Release are based upon assumptions that management believes
are reasonable based on information currently available to
management, there can be no assurance that actual results will be
consistent with these forward-looking statements. Forward-looking
statements necessarily involve known and unknown risks and
uncertainties, many of which are beyond the Company's control,
which may cause the Company's or the industry's actual results,
performance, achievements, prospects and opportunities in future
periods to differ materially from those expressed or implied by
such forward-looking statements. These risks and uncertainties
include, among other things, the factors contained in the Company's
filings with securities regulators, including this Press
Release.
When relying on forward-looking statements to
make decisions, the Company cautions readers not to place undue
reliance on these statements, as forward-looking statements involve
significant risks and uncertainties and should not be read as
guarantees of future results, performance, achievements, prospects
and opportunities. The forward-looking statements made in this
Press Release relate only to events or information as of the date
on which the statements are made in this Press Release. Except as
required by law, the Company undertakes no obligation to update or
revise publicly any forward-looking statements, whether as a result
of new information, future events or otherwise, after the date on
which the statements are made or to reflect the occurrence of
unanticipated events.
Contact Information
Lawrence ChamberlainInvestor
RelationsLodeRock Advisors(416)
519-4196lawrence.chamberlain@loderockadvisors.com |
1 Cannabis Council of Canada. (2023). Excise Tax
Survey Results. C3-Excise-survey.pdf (cannabis-council.ca)
2 Deloitte Canada. (2023). Clearing the smoke:
Insights to Canada’s illicit cannabis market. Clearing the smoke:
insights into Canada’s illicit cannabis market | Deloitte
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