An attempt to cut profit taxes to 0% on cannabis cultivators and other income generating activities have been heavily rejected by States members, with one comparing the industry to the monorail promised to improve lives in The Simpsons.
Deputies Neil Inder and and Mark Helyar brought the amendment to the Assembly, hoping a pause on profit taxes for a period of five years would helping a growing industry to flourish.
£100,000 per year would’ve been lost from treasury takings had the amendment been adopted.
That cash would’ve only been lost from the cannabis clinics who dispense prescriptions on the island, and not local cultivators who are yet to turn a profit.
Several deputies raised concerns that foregoing corporation tax on struggling companies makes little sense given the fact that those taxes only apply when businesses turn a profit.
Pictured: Deputy Neil Inder wanted to fire up the nascent cannabis industry in Guernsey.
Deputy Inder, President of Economic Development, opened debate by providing the historical context of the local cannabis industry which commenced following the 2019 budget where “there were promises of immediate wealth, immediate growth, and immediate tax”.
He added that whilst the industry initially focused on CBD it then moved into the “higher value” medical product market facilitated through the Memorandum of Understanding with the UK Home Office.
Deputy Inder suggested that “the landscape is changing extremely quickly” and that the benefits of the industry to the local economy may have been “oversold at the time”.
He noted that local players in the industry wrote to express their support. One company earlier told Express that lower taxes would improve its ability to compete internationally.
In any event, Deputy Inder said license fees would continue to be charged alongside investment into local infrastructure and the requirement for assistance from the “construction, security and finance industries”.
Deputy Steve Falla, also a member of Economic Development, supported the proposal saying: “This amendment does provide us with an opportunity to support entrepreneurial activity… with a fair wind we will have an opportunity to gain some revenue from successes in the future”.
I had intended to support but as neither the proposer or seconder responded to my question in debate (re looking at viability of excluding from the exemption profits from retail of cannabis products) so I ended up abstaining (which I don’t often do.)
I had intended to support but as neither the proposer or seconder responded to my question in debate (re looking at viability of excluding from the exemption profits from retail of cannabis products) so I ended up abstaining (which I don’t often do.)— Gavin St Pier ???????? (@gavinstpier) November 1, 2022
Pictured: Deputy Gavin St Pier said his questions had not been answered in debate and therefore did not vote on the amendment.
Deputy Lyndon Trott questioned the wording of the amendment, wondering whether it would apply to retail activities. He added that he couldn’t see how its intended effects would “stimulate economic growth”
“If businesses aren’t profitable within five years, they are almost certain to fail,” he said, rejecting claims that securing proper operating certifications are a specific challenge for cannabis.
It’s “no walk in the park” for financial services just as it is in pharmaceutical industries, he concluded. Deputies Rob Prow and Sasha Kazantseva-Miller echoed that view.
“We’re already investing as the States of Guernsey into this industry,” said Deputy Kazantseva-Miller, pointing to the Bailiwick of Guernsey Cannabis Agency which is staffed by civil servants.
She highlighted laboratories, as seen in Jersey, and stronger state regulation as examples of levers which could provide more sustainable development for the cannabis industry through the existing tax take.
“Any business who has the prospect of their taxation being reduced will surely be supported,” she added.
Deputy Marc Leadbeater, also a director of a local cannabis company, argued that it could be years beyond the suggestion of the amendment that businesses will become profitable because of lengthy approval processes.
“Clinics are making a lot of money now on a monthly basis”, he said, pointing out that all those payments made by customers are being sent off island to UK-based entities.
Pictured: Deputies welcomed the chance to debate the issue in the Assembly yesterday.
Deputy Andy Taylor illustrated his inability to vote on the amendment by comparing the local situation to the plot of an episode of The Simpsons.
“Being the youngest member of the house, this will probably be lost on most people, but the reason for me voting against this is an episode of The Simpsons called ‘Monorail’,” he said.
“For those who don’t know, it's an episode where a gentleman from another town comes forward with a proposal to build a monorail and it will be the answer to all their problems
“No real answers to how it will solve their problems... but before they know it, they build a monorail. I can’t help but feel [the cannabis industry] is somewhat similar to that episode.”
He, like many others, contrasted labour costs in Canada to Guernsey, suggesting his coffee shop would be unable to compete in the international market.
Pour: Dyke, Falla, Gollop, Helyar, Inder, Le Tocq, Matthews, Queripel.
Contre: Aldwell, Blin, Brouard, De Lisle, De Sausmarez, Dudley-Owen, Fariclough, Ferbrache, Gabriel, Haskins, Kazantseva-Miller, Le Tissier, Leadbeater, Mahoney, Meerveld, Moakes, Murray, Oliver, Parkinson, Roffey, Soulsby, Taylor, Trott, Vermeulen.
Ne vote pas: St Pier.
Absent: Burford, Bury, Cameron, McKenna, Roberts, Snowdon.
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