In November 2017, the federal government announced a proposal to apply an excise/sin tax to both non-medical and medical cannabis after legalization. The excise tax is proposed to be applied at the rate of $1/gram or 10% of the product price (whichever is greater of the two) in addition to the pre-existing GST/HST sales tax.

On February 27th, the federal government further solidified their plan in their 2018 budget (see pg. 177). Although lots of details are still uncertain, we broke down what the latest announcement potentially means for patients. We know many are disappointed with this news and will continue strongly advocating for the elimination of tax.

Announcement Highlights  

  • The proposed excise tax framework will generally apply to cannabis products that contain THC
  • Low-THC, CBD oils (under 0.3% THC) will not be subject to the excise tax
  • Pharmaceutical products on prescription (with a DIN) and derived from cannabis will be exempt.
    • This refers to prescription cannabis-based medicines like Sativex (which currently are zero-rated/exempt from tax anyway).
  • Work will be undertaken by Health Canada to evaluate the drug review and approval process so that Canadians in need have better access to an array of medicinal options.
  • The Government will also examine options for establishing a rebate program to retroactively reimburse Canadians an amount in recognition of the federal portion of the proposed excise duty that was imposed on equivalent products prior to them being given a Drug Identification Number.
    • It is currently unclear what this means for patients and how it would be applied. We are working to get further details. 
  • Sales tax (GST/HST) will continue to apply

This is not yet implemented and may still change. The government has stated they intend to bring these changes into effect upon the implementation of non-medical cannabis legalization. 

Full details can be found in Budget 2018 (pg. 177) and in Tax Measures: Supplementary Information (pg. 40).

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