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Canada Will Tax Cannabis Products Based on THC-Content

canadian cannabis tax
Written by Alexandra Hicks

Changes are coming very soon to the Canadian cannabis tax system, and people aren’t particularly happy about it.

According to the Federal Government’s 2019 Budget, the next round of Canadian cannabis products will be taxed based on THC-content. Effective May 1, edibles, extracts, and topicals will be subject to excise tax at a rate of one cent per milligram of THC. This is in addition to the already imposed sales tax.

“Budget 2019 proposes that edible cannabis, cannabis extracts (including cannabis oils) and cannabis topicals be subject to excise duties imposed on cannabis licensees at a flat rate applied on the quantity of total tetrahydrocannabinol (THC),” the budget reads.

canadian cannabis tax
Edibles, extracts, and topicals will be subject to the new excise tax

Under the current tax system, Canadian cannabis products are taxed at $1 per gram, or 10 percent of the total sale price, regardless of THC levels. The government believes that taxing products based on THC content will simplify the excise process and “ease compliance issues” that producers have encountered regarding oils and extracts.

What has many people upset though, is the fact that even medical products are subject to the excise tax, making cannabis the only class of medical products that are taxed in this fashion. However, medical cannabis patients might be able to work with the country’s tax credit system.

The 2019 budget proposes some changes to the Income Tax Act which would allow cannabis to written off as a qualifying medical expense. Patients may be eligible for a 15% tax credit that “recognizes the effect of above-average medical or disability-related expenses on an individual’s ability to pay tax.”

Other eligible expenses for the medical tax credit will eventually include all cannabis products and related accessories, once they become legal under the Canadian Cannabis Act. October 17, 2019 is the current date that new cannabis products such as concentrates and edibles will be added to the list of approved items in the Cannabis Act.

The budget also promises that certain low-THC, high-CBD cannabis products will be subject to lower excise tax than they are under the current 10% system.

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About the author

Alexandra Hicks

Managing editor at Cannadelics and U.S based journalist, helping spread the word about the many benefits of using cannabis and psychedelics.