Coming into effect on May 1, edibles, extracts, and topicals will be subject to excise duties at a proposed rate of one cent per milligram of total THC.
Under the current tax system, dried cannabis flower and cannabis oils are subject to duty rates of $1 per gram, or 10% of the sale price of a product.
The government claims that the proposed THC-based rate will help simplify the excise duty calculation for specific cannabis products and ease compliance issues that producers have encountered with respect to cannabis oils.
Tax Credits for Medical Cannabis Patients
While the 2019 budget fails to repeal the excise tax on medical cannabis—making cannabis the only class of medical product that has an excise tax—medical cannabis patients may find some relief through tax credits.
The 2019 budget proposes amendments to the Income Tax Act to reflect the current regulations for accessing cannabis for medical purposes. Qualifying medical expenses, including amounts paid for cannabis products, 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.”
“Eligible expenses for the medical expense tax credit will also include expenses for other classes of cannabis products purchased for a patient for medical purposes, once they become permitted for legal sale under the Cannabis Act.”
The budget also promises that certain low-THC products (e.g., cannabis oils) will also generally be subject to lower excise duties than before, providing further tax relief for cannabis products typically used by individuals for medical purposes.
In response to the 2019 Budget, the Canadians for Fair Access to Medical Marijuana (CFAMM) tweeted that they were “disappointed ” by the decision to retain both sales and excise taxes on medical cannabis as a whole.