The festival was set to open this week at Landmark's Paramount Theatre in Kelowna, B.C., but when word spread last week that it would be showing the bestiality documentary, angry citizens spoke out, organizing online petitions against the screening.
Soon after, theatre officials opted to cancel the festival.
"We have never agreed to, nor would we ever agree to, playing a film of this nature," Neil Campbell, the cinema chain's chief operating officer, said in a statement.
"We were very concerned to learn that we were associated with this movie when we had no previous knowledge of it," he said.
The 75-minute documentary, Donkey Love, has been screened in Australia and won Best Documentary at the Melbourne Underground Film Festival.
"Imagine this: You have the opportunity to go to a part of the world and discover a culture no one else, from outside of the country itself, has ever been or seen. You arrive only to discover a shocking truth: people here not only have sex with donkeys, they consider it a tradition and celebrate it as part of their culture," reads a description of the film on the festival's Facebook page.
"What would you do? Daryl and Tyler made a documentary."
Festival organizer Jeremy Heynen said filmmakers, who were scheduled to fly to Kelowna to attend the four-day festival this weekend, were "livid" and "beyond angry" about how the theatre chain and parts of the community have responded.
"Anybody that watches the film will see for themselves what these filmmakers intentions were - and it's not at all what it's being made out to be."
He said it would've been easier to screen the film in Vancouver or Toronto where a larger number of independent theatres means not having to deal with "cowardly, greedy corporations."
Heynen added he's been in contact with the RCMP over alleged death threats and harassing phone calls he's received from angry locals.
"I love my community and I was trying to do this to basically build a bridge between talented filmmakers from around the world and Kelowna."