New Excise Tax Structure for Cannabis Concentrates Reflects Industry Wishes

Article by Solomon Israel, Leaf News

CANNABIS LEGAL TORONTO 20181017 New excise tax structure for cannabis concentrates reflects industry wishes The tax on edibles, beverages will be based on the amount of THC products contain By: Solomon Israel The new excise tax regime will apply to concentrated cannabis products including ingestible oils. (Chris Young) Two branded cannabis oil products, bearing the new officially approved logos and health warnings, stand on display at a Leafly pop up store in Toronto on Wednesday, October 17, 2018, as they mark the first day of legalization of cannabis across Canada. Chris Young

A special excise tax regime for the next wave of legal cannabis products reflects the wishes of Canada’s licensed cannabis industry, according to two industry lobbyists.

The current excise tax applies to dried cannabis bud and cannabis oils meant for oral ingestion, and is paid by cannabis producers when they deliver their products to distributors. The products are taxed at the higher of two possible rates: $1 per gram, or 10 per cent of a product’s wholesale price. That revenue is then divvied up between the federal government and provincial governments.

But legal concentrated cannabis products expected to go on sale later this year — cannabis-infused edibles and beverages, as well as products such as vape pens — will get their own special excise tax scheme, as revealed in this week’s federal budget.

Instead of taxing those products based on the weight of cannabis that goes into them, or their price, cannabis concentrates will be taxed based on the amount of total THC they contain. Ingestible cannabis oils will be taxed in the same manner, beginning May 1.

Each milligram of THC contained in those products will be subject to an excise duty of $0.01. A cannabis manufacturer that makes an edible containing 10 mg of THC, for example, would pay 10 cents worth of excise tax duty on that product when it’s sold to a distributor.

The new excise tax regime for cannabis concentrates shows Ottawa is listening to the cannabis industry, said consultant and lobbyist Ivan Ross Vrana, national director of the cannabis practice at Hill+Knowlton Strategies.

Read the full article here.

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