Laughing Dragon Studios, a full-service 2D animation company based in Montreal, shut its doors on Friday after 23 years in business—primarily because of recent tax credit caps established by the provincial government. 

CEO Ryan Sohmer announced the news on Laughing Dragon’s LinkedIn page: “It was a decision that was forced on us due to many circumstances outside of our control, chief among them the [Quebec] government’s decision to cut our industry off at the knees.”

Sohmer is referring to a decision made in May 2024 to cap the province’s 25% tax credit for animation and VFX at 65% of eligible expenses. Prior to this change, all eligible labor costs were covered, including the costs of contracts with service providers for VFX and animation. Without this tax credit support, Quebec’s animation industry has been severely affected. And Laughing Dragon isn’t the only casualty. ON Animation Studios, also based in Montreal, shut its doors in February.

But the impact has been felt at an individual level, too. In September 2024, the Quebec Film and Television Council reported that more than half of the province’s animation/VFX industry—roughly 4,000 people—had lost their jobs in the previous 20 months. 

Laughing Dragon Studios had more than 100 employees on staff at last count, according to its website. The company has done plenty of service work, including Disney’s feature film Disenchanted (pictured) and Apple TV+ series Central Park. But it had also been working on a slate of originals such as Skatebirds, an animated series in development with iconic skateboarder Tony Hawk. 

“While my heart is hurting, it’s almost impossible to look back at the last 23 years and not smile,” said Sohmer. “Through hard work, through laughter and love, the team at LDS never ceased to amaze and amuse. Whether you were here for a year, or 15, you understood this place was special; and you made sure to leave your mark.”