Edibles will soon be taxed on THC content
OTTAWA Cannabis oils, edibles and concentrates will be taxed based on the quantity of tetrahydrocannabinol (THC), the psychoactive component in cannabis, rather than by weight, starting in May.
The Liberal government says the new rules are meant to simplify how these taxes are calculated, and ease compliance issues that producers have encountered with respect to cannabis oils. The taxes apply to medicinal and recreational pot products.
Dried cannabis flower and cannabis oils, which were legalized for recreational use last October, are currently subject to a 10-per-cent excise tax on each gram or gram-equivalent, or $1 per gram — whichever is higher — regardless of THC content.
But the Liberal government’s 2019 budget is proposing that edible cannabis, cannabis extracts and cannabis topicals, all of which are new lines of pot products that are set to become legal this fall, will be taxed based on how much THC they contain. The government is proposing a THC-based excise duty rate of one cent per milligram of total THC.
Products containing cannabidiol (CBD), the non-psychoactive component in cannabis, and trace amounts of THC are exempt from the excise tax.
This could provide an incentive to producers to increase the variety of CBDbased products that come to market this October.
Pot excise tax revenue is split between the feds and provinces or territories; the former collects 25 per cent of revenue, and the latter collects the remaining 75 per cent. The new THCbased duty rate will be distributed in that same ratio.
Only pharmaceutical cannabis products that have a Drug Identification Number are exempt from taxes.
But some producers say that any kind of medical pot products should not be subject to an excise tax. Edmonton-based licensed producer Aurora Cannabis Inc., for example, pays the excise tax on behalf of patients, which it says has cost more than $2 million in lost revenue over the past three months.
Tuesday’s federal budget appears to have slightly eased the tax burden of patients with a prescription for medical cannabis — they will now be eligible for a medical expense tax credit.