Widespread opposition to medical cannabis tax now includes dispensary association

Numerous stakeholders are upset at government announcement of additional taxes on medical cannabis

The Canadian Association of Medical Cannabis Dispensaries (CAMCD) is one of the latest stakeholder groups to decry the federal government’s recently announced plan to begin taxing medical cannabis purchases when the recreational legalization regime comes into effect in July.

CFAMM, the Canadians for Fair Access to Medical Marijuana, have also started a campaign to raise awareness around how this will impact medical cannabis users.

During a press conference last week, Prime Minister Trudeau outlined the current draft of Canada’s tax plan for recreational cannabis sales. The plan can be summarized as an excise tax of up to $1 per gram, or 10% of the price of the product, plus GST/HST at the usual 12 per cent.

But advocacy groups were quick to criticize the plan, which is currently set to apply not only to recreational cannabis, but also to medical purchases within Canada’s existing ACMPR framework. The latest such group is CAMCD, who issued a statement today expressing concern that the new tax could make cannabis less accessible to patients.

“It would appear that the GST and proposed excise tax on medical cannabis will act very much like an indirect subsidy to big pharma by making medical cannabis less affordable for many patients, especially those in the greatest need,” said CAMCD president Jeremy Jacob.

A provision within the Excise Tax Act allows for tax obligations to be waived on a number of prescription drugs, but cannabis is not among them. This means under the current regulations, medical cannabis is already subject to GST/HST.

The concern expressed by patients in the statement from CAMCD is that by imposing the additional excise tax (which, assuming a base price of $8 per gram, amounts to a roughly 12.5 per cent increase in overall purchase cost), the federal government would force patients on already strained budgets to return to tax-free pharmaceutical treatments, along with all the concurrent side effects many of those patients initially sought to reduce by switching to cannabis.

The CAMCD statement also draws attention to recent studies linking access to legal cannabis with decreases in opioid deaths and prescription drug dependence, going on to suggest that rather than medical cannabis being taxed, it should be discounted to reflect its demonstrated reductive effect on government healthcare spending.

CAMCD cites a report by Health Affairs in the US, which found that based on the savings from decreased prescription fulfillment in states where medical cannabis was legal in 2014, total savings to Medicaid that year would have approached $1 billion USD if cannabis was legal in every state.

Prior criticisms

Earlier criticisms of the Liberal government’s tax plan came from the Arthritis Society and Canadians for Fair Access to Medical Marijuana (CFAMM). In a joint statement, the groups called for medical cannabis to be treated the same way as other prescription medications, adding that applying the excise tax to medical cannabis unfairly disadvantages patients.

“Patients have a fundamental right to have access to affordable medicine,” said Jonathan Zaid, founder and executive director of CFAMM.

The rationale behind applying equal taxation to recreational and medicinal cannabis was defended by Bill Blair, expressed as concern that a lower tax on cannabis-based medicine would act as incentive for exploitation by non-medical users.

But Cam Battley, executive VP at Aurora Cannabis, called Blair’s claim “a knock on the professionalism of the physicians in Canada.”

“No Canadian physician who values his or her license is ever going to write a prescription for medical cannabis for somebody that they know is faking or seeking consumer cannabis on a discount,” said Battley.

“What the federal government is doing with respect to cannabis on a broad basis,” Battley also said, “is very positive, very sound public policy. This is not.”

What’s next?

In the 2016 ruling on the case of Hedges vs the Queen, the decision was made that tax exemptions under the Excise Tax Act do not apply to cannabis, as only drugs that are sold legally can be exempted from GST.

This could mean that when cannabis is sold legally it might qualify for exemption under existing excise tax law. It’s unclear whether that will remain the case if recreational cannabis taxes still extend to medical purchases in the final draft of the regulations.

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1 comment

  1. Maxcatski Reply

    The only legal way to avoid paying tax on cannabis is to grow your own. Except now that is not possible for many people since Health Canada cannot keep up with the applications.

    My renewal application was received by Health Canada on August 11th. My certificate expired October 20th 2017.

    I called Health Canada to follow up and was told that my application was received and looked fine. I was also told that it is not legal for me to keep my plants once my certificate expires.

    I also understand that my new certificate will be issued from the expiry date of my old certificate. The expiry date of my new certificate will be August 4th, the date of my medical appointment. Let's hope I get it in time to be able to get a crop off before it expires again!