It has everything to do with a centralized marketer that can put out any grade product it wants, and consumers can either buy it at the price they say or switch to margarine/vegoil.
https://www.theglobeandmail.com/life/food-and-wine/food-tren...
Expensive inputs further encourages substitutions, especially when the expensive input wasn’t great.
Individual people may not respond well to incentives, but industrial buyers sure do.
Further it isn't expensive. Large quantity butters purchases, including special higher fat versions that aren't generally on grocery stores, are an insubstantial percentage of the cost of making a croissant.
https://vancouversun.com/news/local-news/canadian-croissant-...
But again, the reason croissants are generally horrendous in Canada is because people just don't care. If people don't care you end up with the weird bready-things that are marketed as croissants. This is a bit of a personal peeve having just gotten back from Belgium/France a couple of months ago, and being spoiled by every hotel having extremely good croissants.
The debate over supply management is revisited at every election, and overwhelmingly Canadians buy into the notion that supply management has benefits in certain industries.
As an aside -- it's cheaper to buy milk and butter in Toronto, Montreal, Vancouver, and virtually every other urban center in Canada than in San Francisco, NYC, LA, or any other large US center. US dairy dumps their excess on secondary markets like Detroit, and it's always the "Windsor versus Detroit" sort of comparison that we hear parroted.
The lack of butter croissants has nothing to do with it, as an aside. We simply have a mediocre croissant palate in Canada, so the general market variety are horrendous.