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Pot tax hurting patients?

Cannabis industry players welcomed the change in the Federal Budget to tax edibles, extracts, oils and concentrates based on the amount of tetrahydrocannabinol rather than weight, as it could ease pricing for some products and potentially boost product availability.

However, licensed producers and a patient advocate group say they are disappointed that medical cannabis will continue to be taxed, despite a campaign calling on Ottawa to exempt patients.

Organigram's chief executive officer Greg Engel said under the new framework, prices for some of these next-generation cannabis products, depending on potency of THC, could see some relaxation.

"Ultimately for the consumer, they're only going to be paying ... for what is in the final product, not how it was produced," he said.

The Liberal government on Tuesday laid out its 2019 budget which proposed that cannabis edibles, extracts, topicals and oils — which Ottawa has said will be legalized by no later than October of this year — be subject to excise duties based on the total quantity of tetrahydrocannabinol, or THC, in the final product, rather than by weight of the cannabis used as an input.

Since Canada legalized cannabis for adult use last October, dried cannabis flower and cannabis oils are subject to an excise tax of one dollar per gram or 10 per cent of the final retail price, whichever is higher. The tax rate is higher on flowering material, and lower on non-flowering material, such as stem.

But for the next generation of cannabis products, such as edibles, Ottawa has proposed an excise duty of one cent per milligram of total THC. Cannabidiol or CBD, the active ingredient found in cannabis and hemp that does not produce a high, is exempt from the excise tax.

The Cannabis Council of Canada's executive director Allan Rewak adds that this taxation change would also make it more economical for licensed producers to use low-grade, low-THC cannabis in their inventory that is not suitable for sale to produce edibles and other products once legalized.

Under the old regime, licensed producers were incentivized to use high-potency plants rather than this low-grade unfinished inventory as it would require large volumes to yield enough THC and would be taxed accordingly, he added.

"Now, with this revision... we can utilize all that grade-three trim, hemp product, all of that wonderful material, in a viable way," he said. "And allow us to ease the supply crunch by getting more high-grade dried flower to the people who want to consume it via combustion."

Engel said despite the incentive, many producers were sending much of their high-grade bud to consumers due to high demand, and using trim and other leftovers for extracts and oils.

The tax change also simplifies licensed producers' accounting, said Michael Armstrong, a professor at Brock University. Rather than having to track the different inputs for each product throughout the manufacturing process for tax purposes, it will only require testing what ends up in the final product, he added.

"It will be easier to verify in an audit, as a lab test could confirm the THC content in the bottle," Armstrong said.

While this tax tweak was generally heralded as a positive step, the lack of change for medical patients was met with disappointment.

"Removing the excise tax for medical cannabis is a very important step we have not seen yet," said Peter Aceto, chief executive of CannTrust, adding that the licensed producer has 66,000 patients who rely on cannabis as medicine and "the cost can be prohibitive."

Canadians for Fair Access to Medical Marijuana said it appreciates the government's move to reduce taxation on certain products, but basing taxation on THC content continues to stigmatizes those who rely on the psychoactive ingredient to treat conditions such as Parkinson's Disease and multiple sclerosis.

Max Monahan-Ellison, a spokesman for the patient advocacy group, said while the stereotype is that THC is deemed to be for a "high" and CBD is used for therapeutic purposes, it is much more complex for a medical user.

Taxes can increase the cost of medical cannabis by as much as 25 per cent, depending on the province, making it difficult for patients to manage their treatment costs, he added.

Many licensed producers such as Organigram and CannTrust are absorbing the excise tax for medical patients.

Last month, CFAMM launched an official campaign to call on the government to remove all taxes on medical cannabis. This wasn't reflected in the latest budget, but the organization is hopeful that there is still opportunity for change with the federal election approaching.

"There just shouldn't be tax on medicine, because it ends up hurting patients in the long run," he said.



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Chuck tarp auction indicator

Chuckwagon drivers and sponsors are hoping for the best as clouds of political and energy industry uncertainty gather ahead of the Calgary Stampede canvas auction tonight.

The success of the annual event is considered a bellwether for the Calgary-based oil and gas industry, as many of the sponsors who pay to have their company names on the 36 rigs competing in the 10-day July tribute to cowboy culture are energy industry players.

Champion driver Kurt Bensmiller, who won the chuckwagon derby for the fourth time in five years in 2018, says the calling of an Alberta election on Tuesday creates more uncertainty for an economy battered by recent commodity price volatility and slowing oilfield activity.

The current NDP government introduced controversial oil production curtailments in January and is investing in crude-by-rail capacity to fill a shortfall in export pipeline room.

Bensmiller also took the prize for the highest tarp price of $130,000 last year as a total of $3.2 million was bid at the auction.

"I'm hoping with the economy the way it is, if we stay close to what it was last year or even the average comes up a bit as a whole, the driver group will be pretty excited about that," he said in an interview.

"I've talked to a few (prospective sponsors) and they expressed interest in me so I'm not really on pins and needles."

The top money bid last year came from Versatile Energy Services, Ltd., a private oilfield services company based in the resort town of Sylvan Lake in central Alberta.

Versatile president Kent Stormoen said he plans to be at the event tonight but declined to make any predictions for results given the province's current uncertain times.

"The industry still isn't rolling like we expect it to but (the sponsorship) did help with the exposure of our company," he said.

"I think there's a lot of uncertainty with the provincial election coming now and the new federal budget that's come out."

Stampede spokeswoman Kristina Barnes said Wednesday the number of bidders who have pre-registered for the auction is at more than 130, a bit behind last year's pace, while adding many bidders register just before the event.

The record year for overall tarp auction results came in 2012, when bidders pledged just over $4 million — including the highest bid of $300,000 by oilfield services firm Tervita Corp. At the time, oil prices were hovering above US$100 per barrel versus recent prices of around US$60 per barrel.

About 80 per cent of the canvas auction proceeds go to the drivers and the rest is used for prize money, safety and other chuckwagon initiatives.

 



Wholesale sales up

Statistics Canada says wholesale sales climbed 0.6 per cent to $63.5 billion in January to mark a second consecutive monthly gain.

Economists had expected an increase of 0.5 per cent, according to Thomson Reuters Eikon.

Wholesale sales rose in five of the seven subsectors tracked by Statistics Canada, led by the machinery, equipment and supplies subsector and the personal and household goods subsector.

Sales in the machinery, equipment and supplies subsector rose 1.9 per cent to $13.3 billion, while the personal and household goods subsector rose 2.5 per cent to $8.9 billion.

The motor vehicle and parts subsector saw the largest decline in dollar terms in January as it fell 2.1 per cent to $10.6 billion.

Wholesale sales in volume terms increased 0.7 per cent in January.



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Old Boys' club persists

A labour leader in Manitoba has resigned from her job over what she says have been sexist remarks and dismissive treatment by some of her male colleagues in the labour movement.

Basia Sokal surprised about 50 people at a Winnipeg Labour Council meeting Tuesday night when she announced she was resigning as president after two years on the job. The council is an advocate on municipal labour issues in the city and is part of the Canadian Labour Congress.

"In the last 12 months alone, I have seen and heard and been experiencing some of the worst things that you could ever imagine," Sokal told the crowd.

"I've got about six pages of things that have been said to my face ... and I just want to mention that these were all said by brothers — brothers in the movement, brothers of labour."

Some men made comments about her breasts, Sokal said. Others told her to just agree with what she was being told.

"'You women are all the same. If you don't like what is going on, why don't you just leave?'" she said one man told her.

She did not mention anyone's name.

It became clear, Sokal said, that she was expected to keep her opinions to herself and defer to others.

In an interview Wednesday, she said she took her concerns to the Canadian Labour Congress last spring and was told there would be some sort of followup. She also spoke to officials at Manitoba NDP headquarters about one man who was on a party committee, she said.

Sokal was directed to the federal party, she said, which told her in February it was still looking into the matter but had been busy with other things.

Sokal said she felt she was running out of options.

"There are several people ... higher up in the labour movement, that knew what was going on," she said.

"The systems don't allow for change."

Kevin Rebeck, president of the Manitoba Federation of Labour, said he was surprised by Sokal's resignation and suggested that workplaces need to improve.

"Those are serious issues. They're unacceptable. They're wrong in the labour movement. They're wrong in any kind of work environment."

The Canadian Labour Congress did not immediately respond to a request for comment.

Sokal said she would like to see changes in the labour movement, starting with a more inclusive environment.

"I want to see different voices at the table and not just the typical Old Boys club that it actually continues to be."



First female boss at CPR

Canadian Pacific Railway has selected the first woman to head the board of directors of the country's second-largest railway.

Isabelle Courville, 56, has been designated to replace Andrew Reardon at the Calgary-based company's annual meeting in May, according to a proxy circular.

An independent director since 2013, Courville is one of four women on CP's nine-member board. The former Hydro-Quebec executive is also currently a member of the boards at SNC-Lavalin and Laurentian Bank.

She received $303,504 in compensation from CP Rail last year — half to be paid in cash, the rest in share-based awards. As chairman, Reardon received $514,344 in total compensation in 2018.

CP Rail CEO Keith Creel received $12.5 million in compensation last year, down from $20.1 million in 2017, the year he was appointed president and CEO.

The decrease was mainly the result of a reduction in option-based awards.



Rivals will snap up SNC staff

The chief executive of SNC-Lavalin Group Inc. says he never cited the protection of 9,000 Canadian jobs as a reason it should be granted a remediation agreement to avoid a criminal trial on allegations the company paid millions of dollars in bribes to obtain government business in Libya.

In an interview with The Canadian Press, Neil Bruce said Wednesday if the engineering firm is convicted and barred from bidding on federal contracts here at home its workers would end up working for the Montreal-based company's foreign rivals.

"There would be a reduction with us but these are talented folks. They'll get a job," Bruce said.

"This thing that somehow they're going to be unemployed is not true because they are highly qualified, highly experienced people."

Bruce's comments come as a political storm in Ottawa continues over allegations that Prime Minister Justin Trudeau, his senior staff and others improperly pressured former attorney general Jody Wilson-Raybould to end a criminal prosecution of SNC-Lavalin.

Trudeau and his staff have said their only concern was for SNC-Lavalin's 9,000 jobs, which might be at risk if the company were convicted and then barred from bidding on federal contracts for up to 10 years

The affair has so far cost Trudeau two cabinet ministers, his principal secretary and the country's top public servant, although he continues to insist no one did anything wrong.

Bruce said about 75 per cent of the company's rivals have concluded deferred prosecution agreements in their host countries and are free to work in Canada.

Meanwhile, Bruce said he still doesn't know why the director of the Public Prosecution Service of Canada and former attorney general Jody Wilson-Raybould were not open to granting a remediation agreement.

He said SNC-Lavalin employees feel bruised and battered by the last six weeks since a report surfaced that government officials pressured the former attorney general to grant the company a deferred prosecution agreement.

"And I think fundamentally that's unfair on our employees who had nothing to do with what went on seven to 20 years ago."

While he's not surprised that politicians would make hay out of this issue during an election year, Bruce said he's concerned that policy-makers haven't been as willing as other countries to defend home-grown companies and their workers.

He said there's no plans to move the company's headquarters from Montreal, adding competitors are envious of its shareholder base that is 82 per cent Canadian and led by the Caisse de depot which has helped fund its acquisition of British engineering firm Atkins.

"We see ourselves as Team Canada. We are a global champion, one of few. There's not many and we're proud to be Canadian."



Rogers sells flagship mags

Rogers Media will sell its seven consumer print and digital publications, including Maclean's and Chatelaine, to St. Joseph Communications — a privately owned printing and publishing company with a collection of local and national magazines.

St. Joseph will offer jobs to all current employees of Rogers Media Publishing, as part of the deal announced Wednesday..

"We are pleased to add these renowned titles to our portfolio of award-winning media brands and to welcome their dedicated staff into the St. Joseph family," Tony Gagliano, St. Joseph's executive chairman and CEO, said in a statement.

The deal includes both the French and English editions of Chatelaine, Today's Parent and Hello! Canada, as well as the digital publications Flare and Canadian Business, which no longer have print editions.

They will join Toronto Life, Weddingbells, Mariage Quebec, Fashion Magazine and more specialized titles such as Quill & Quire and local titles in Vancouver, Calgary, Ottawa and Toronto.

The transaction comes after months of unconfirmed reports that Rogers Media, an arm of Rogers Communications Inc., had been negotiating to sell its remaining consumer publications.

Financial terms weren't disclosed Wednesday. The deal is expected to close next month.

Rogers Media's exit from magazine publishing comes as parent Rogers Communications — one of Canada's largest telecommunications companies — repositions its media business, which includes the Toronto Blue Jays baseball team, the Sportsnet specialty TV channel as well as radio and local TV stations.

"It was a difficult decision, but one we believe is right as we accelerate our strategic vision and reposition our media business for the future," Rick Brace, president of Rogers Media, said in a statement.

"We are extremely proud of these iconic magazine brands and all the employees who have delivered high-quality content for decades and helped shape Canadian culture and conversation."

A spokeswoman for Rogers Media said it has about 2,650 full-time employees overall, including 125 full-time employees in publishing.



TSX, U.S. markets lower

Losses in the materials sector weighed on Canada's main stock index in late-morning trading, while U.S. stock markets also moved lower.

The S&P/TSX composite index was down 16.32 points at 16,171.78.

In New York, the Dow Jones industrial average was down 85.17 points at 25,802.21. The S&P 500 index was down 8.78 points at 2,823.79, while the Nasdaq composite was down 11.07 points at 7,712.88.

The Canadian dollar traded for 74.99 cents US compared with an average of 75.23 cents US on Tuesday.

The May crude contract was up 35 cents at US$59.64 per barrel and the April natural gas contract was down 4.6 cents at US$2.83 per mmBTU.

The April gold contract was down US$3.30 at US$1,303.20 an ounce and the May copper contract was up 0.10 of a cent at US$2.92 a pound.



Empty mall needs shoppers

Ten months after tenants started moving into the still mostly empty New Horizon Mall just north of Calgary, its first anchor tenant is being announced this week.

That means the grand opening originally scheduled for October could take place — at last — this spring, says Eli Swirsky, president of The Torgan Group, which developed the Asian bazaar-style centre in conjunction with its partner, MPI Property Group.

The Calgary anchor tenant is The Best Shop, which operates a store described as a "Chinese Walmart" in Toronto's Pacific Mall, a similar shopping centre opened by The Torgan Group about 20 years ago.

Negotiations are nearing completion for an unnamed second anchor store, which Swirsky said is in food merchandising but not a restaurant or grocery store.

"It took two years with Pacific Mall to get to full occupancy and I think we're going to match the same. I think those two anchors are going to provide a major momentum for other tenants to come in," said Swirsky in an interview.

Unlike most shopping centres in Canada, about 70 per cent of New Horizon Mall's retail space has been sold to individual investors who have the option of leasing to others or operating their spaces themselves. The rest of the space — about 80,000 square feet — is being held by the developer for anchor tenants.

The mall began allowing tenants to set up their shops in May of 2018 but only nine of its 517 spaces were occupied by last September. It says The Best Shop's opening will take the total number of shops to 73.

According to the mall, the store's products will include mahjong tables and an extremely small washing machine that sells for around $100, plus brands such as Haier and Midea that are popular in China but relatively unknown in Canada. It will be the second outlet in Canada.

Best Shop is getting about eight months of free rent and financial help with improvements on its 15,000-square-foot space, Swirsky said, adding the mall is also offering to help unit owners cover the costs of bringing in tenants to occupy spaces they own.



EU fines Google $1.7 billion

European Union regulators have hit Google with a 1.49 billion euro ($1.68 billion) fine for abusing its dominant role in online advertising.

It's the third time the commission has slapped Google with an antitrust penalty, following multibillion-dollar fines resulting from separate probes into two other parts of the Silicon Valley giant's business.

The EU's competition commissioner, Margrethe Vestager, announced the results of the long-running probe of Google's AdSense advertising business at a news conference in Brussels on Wednesday.

"Today's decision is about how Google abused its dominance to stop websites using brokers other than the AdSense platform," Vestager said.

The commission found that Google and its parent company, Alphabet, breached EU antitrust rules by imposing restrictive clauses in contracts with websites that used AdSense, preventing Google rivals from placing their ads on these sites.

Google "prevented its rivals from having a chance to innovate and to compete in the market on their merits," Vestager said. "Advertisers and website owners, they had less choice and likely faced higher prices that would be passed on to consumers."

AdSense is an older Google product that lets web publishers such as bloggers place text ads on their websites, with the content of the ads based on results from search functions on their sites. Microsoft filed an EU antitrust complaint about the service in 2009 and the EU Commission formally launched its probe in 2016, although it said at the time that Google had already made some changes to allow affected customers more freedom to show competing ads.

Last year, Vestager hit the company with a record 4.34 billion euro ($5 billion) fine following an investigation into its Android operating system. In 2017, she slapped Google with a 2.42 billion euro fine in a case involving its online shopping search results.



Disney shakes up media

Disney has closed its $71 billion acquisition of Fox's entertainment business, putting "Cinderella," ''The Simpsons," ''Star Wars" and "Dr. Strange" under one corporate roof.

The deal is likely to shake up the media landscape. Among other things, it paves the way for Disney to launch its streaming service, Disney Plus, due out later this year. It will also likely lead to layoffs in the thousands, thanks to duplication in Fox and Disney film-production staff.

By buying the studios behind "The Simpsons" and X-Men, Disney aims to better compete with technology companies such as Amazon and Netflix for viewers' attention - and dollars.

Disney needs compelling TV shows and movies to persuade viewers to sign up and pay for yet another streaming service. It already has classic Disney cartoons, "Star Wars," Pixar, the Muppets and some of the Marvel characters. With Fox, Disney could add Marvel's X-Men and Deadpool, along with programs shown on such Fox channels as FX Networks and National Geographic. Fox's productions also include "The Americans," ''This Is Us" and "Modern Family."

The deal helps Disney further control TV shows and movies from start to finish - from creating the programs to distributing them though television channels, movie theatres, streaming services and other ways people watch entertainment. Disney would get valuable data on customers and their entertainment-viewing habits, which it can then use to sell advertising.

Disney CEO Bob Iger said in an earnings call in February that Disney Plus and other direct-to-consumer businesses are Disney's "No. 1 priority."

Cable and telecom companies have been buying the companies that make TV shows and movies to compete in a changing media landscape. Although internet providers like AT&T and Comcast directly control their customers' access to the internet in a way that Amazon, YouTube and Netflix do not, they still face threats as those streaming services gain in popularity.

AT&T bought Time Warner last year for $81 billion and has already launched its own streaming service, Watch TV, with Time Warner channels such as TBS and TNT, among other networks, for $15 a month.

In addition to boosting the Disney streaming service, expected to debut next year, the deal paves the way for Marvel's X-Men and the Avengers to reunite in future movies. Though Disney owns Marvel Studios, some characters including the X-Men had already been licensed to Fox.



Women still earn less

Canadian women are paid 25 per cent less than men and the gap widens further when it comes to bonuses and profit sharing, according to a new study.

The research commissioned by ADP Canada concluded that based on self-reported figures, Canadian women say they earn on average $49,721 per year compared to $66,504 for men.

The online survey conducted by Leger Research also found there were more females at the lower end of the pay spectrum, as 26 per cent of women reported earning less than $30,000 compared to just 14 per cent of men.

Women also earn nearly one-third less than men when it comes to additional compensation such as bonuses and profit sharing, with women reporting an average of $3,912 compared to men at $5,823.

The perception of pay equity also differed between females and males, with 62 per cent of women saying that they believe compensation is equal at their workplace compared with nearly 80 per cent of men saying so.

The online poll of 815 Canadians in full-time and part-time roles was conducted between Feb. 1 and 4 using Leger's online panel.

According to the polling industry's generally accepted standards, online surveys cannot be assigned a margin of error because they do not randomly sample the population.



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