(File photo)

Pot industry welcomes decreased edibles tax, but unhappy medical tax remains

Taxes can increase the cost of medical cannabis by as much as 25 per cent

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.

READ MORE: Average price of cannabis in Canada goes up 17% post-legalization

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.

Armina Ligaya, The Canadian Press


Like us on Facebook and follow us on Twitter.

Just Posted

Surrey moves to ban sleeping overnight in RVs, motorhomes on city streets

Proposal comes amid complaints about homeless people living in recreational vehicles

$50,000 reward for ‘extremely violent’ South Surrey murder suspect renewed

Offer for information on Brandon Teixeira to remain in effect through April, 2020

Surrey restaurant owner who pointed handgun at staff loses court appeal

Jawahar Singh Padda tried to get his 30-month sentenced reduced

White Rock senior ‘just sick’ about lost rings

Wedding, engagement bands discovered missing on Oct. 7

Surrey cold-case murder is Crime Stoppers’ ‘Crime of the week’

Police have yet to arrest a suspect in the April 24, 2011 murder of Devon Allaire-Bell, 19, in Newton

VIDEO: First all-female spacewalk team makes history

NASA astronauts Christina Koch and Jessica Meir did work on International Space Station’s power grid

Zantac, the over-the-counter heartburn drug, pulled in Canada, U.S.

Health Canada also investigates possible carcinogen in some ranitidine drugs

B.C. public safety minister says cannabis edibles not in stores til January

Mike Farnworth says he wants regional issues considered when it comes to licensing

Greta Thunberg calls for climate action in Alberta, but doesn’t talk oilsands

Swedish teen was met with some oil and gas industry supporters who came in a truck convoy

Scheer denies spreading ‘misinformation’ in predicting unannounced Liberal taxes

Conservative leader had claimed that a potential NDP-Liberal coalition could lead to a hike in GST

Council asks to limit cruise ship visits to Victoria harbour

Mayor says motion is not meant to curtail current visits or limit local cruise industry expansion

Chilliwack man pleads guilty in crash that killed pregnant woman

Frank Tessman charged under Motor Vehicle Act for accident that killed Kelowna school teacher

Kawhi Leonard, former Toronto Raptor, welcomed back to Vancouver at pre-season game

Fans go wild at pre-season game between L.A. Clippers and Dallas Mavericks at Rogers Arena

Greens and NDP go head to head on West Coast; Scheer takes fight to Bernier

Trudeau turns focus to key ridings outside Toronto after two days in Quebec

Most Read