Article by Emma Spears, Daily Hive
Legalization Day in Canada has come and gone in a pretty Canadian manner – polite, cheerful cannabis enthusiasts forming orderly lines at retail outlets (or online), with none of the widely-predicted reefer madness or workplace apotcalypses.
But while recreational consumers in many provinces enjoyed the novelty of going to the weed store or smoking in the street with impunity, medical users are facing the onset of a new budgetary challenge.
Since the legalization of recreational cannabis came into force on October 17, medical and recreational cannabis are subject to an excise tax, which can add upwards of 10% to each sale.
Here’s what you need to know about federal cannabis taxation, including how it will affect medical consumers in Canada and which licensed producers (LPs) are coming forward to absorb the excess cost on behalf of their patients.
What is excise tax?
Per the federal government, “under the taxation framework, a federal excise duty is paid by a licensed cannabis producer when the cannabis products they package are delivered to a purchaser (for example, a provincially authorized distributor/retailer or final consumer).”
The tax is to be charged regardless of whether the cannabis is used for recreational or medical purposes. Colloquially referred to as a “sin tax,” excise taxes are charged in Canada on all alcohol and tobacco – and now cannabis – products sold within the country.
Prescription medication in Canada is not taxed, so why is cannabis the exception?
Almost all prescription drugs are zero-rated in all provinces, meaning they are not subject to GST, HST or PST/QST/RST.