According to the Canadian federal government’s 2019 budget, the next wave of cannabis products will be taxed according to their THC content.
Tetrahydrocannabinol (THC) is the main psychoactive component of cannabis. This is what gives weed users a high. High-THC cannabis is more associated with the recreational use of the drug, which has been legalized in Canada last year.
With this news, we can almost hear recreational users in Canada shouting NO!, or at least letting out a collective sigh.
Effective May 1, cannabis extracts, topicals, and edibles will be subject to excise duties. And the proposed excise tax rate is one cent per milligram of total THC content.
The current tax system provides that cannabis oils and dried cannabis buds are subject to duty rates of $1 per gram, or 10 percent of the products retail price.
The federal government claims that this proposed THC-based rate can help simplify the excise duty calculation for particular products, as well as ease compliance issues encountered by cannabis producers with respect to cannabis oils.
Tax credits for medical cannabis patients
Meanwhile, there’s some good news for medical cannabis users, despite medical cannabis still being the only class of medical products with an excise tax. Because, yes, the 2019 budget has failed to repeal this tax.
Medical cannabis patients may still find relief through tax credits as the 2019 budget proposes amendments to the Income Tax Act. These proposed changes reflect the current regulations for accessing medical cannabis. More specifically, qualifying medical expenses, including the costs of getting cannabis products, may be eligible for a 15-percent tax credit. This tax credit recognizes the effect of above-average medical expenses on an individual’s ability to pay tax.
What’s more, the budget promises that certain low-THC cannabis products will likewise be subject to lower excise duties than before. This will provide further tax relief for cannabis products that are typically used by patients for therapeutic purposes.