New Taxes on Higher THC Edibles

New Incremental Taxes the Government is Putting on Higher THC Edibles

Adjusting the Rules for Cannabis Taxation New classes of cannabis products, namely edible cannabis, cannabis extracts, and cannabis topicals, will be permitted for legal sale under the Cannabis Act later this year. The Government is proposing that the excise duty framework for cannabis products be amended to more effectively apply the excise duty on these new classes of cannabis products, as well as to cannabis oils, which are already legally available for sale.
This proposed change will result in the framework better reflecting recommendations from the expert Task Force on Cannabis Legalization and Regulation and feedback received from the cannabis industry. For most products, namely fresh and dried cannabis, and seeds and seedlings, there will be no changes to the current excise duty framework. However, for cannabis edibles, cannabis extracts (which will include cannabis oils), and cannabis topicals, excise duties will be imposed on the quantity of tetrahydrocannabinol (THC) contained in a final product. 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.

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. The proposed measure will come into effect on May 1, 2019, and will not affect the federally administered co-ordinated revenue-sharing agreements reached with most provincial and territorial governments, and is not expected to materially change the overall projected excise duty revenues presented in Budget 2018.

New Taxes on Higher THC Edibles: Breaking News

When it comes to cannabis, Budget 2019 has only focussed on how an excise tax will be applied to the new future classes of cannabis products; edibles, extracts and topicals,

This means no relief for those who use cannabis for medical purposes – it still remains the only class of medical product that has an excise tax.

 

 

The tax on these new class of products (and existing oils) will be based on the THC amount.  The rate is calculated $0.01 per milligram of THC.  Interestingly, according to the government, it should not significantly change the overall projected excise tax revenues at the existing rate of $1 per gram as specified in the last Budget (2018).

This approach to taxing the THC amount is perplexing, it fails to recognize that there is a legitimate need for THC when it comes to cannabis use for medical purposes and it will not make reporting this information easier for producers (even though the government claims that it will).

The current exemptions regarding a 0% excise tax for: cannabis products that contain 0.3% or less of THC  and pharmaceutical products that contain cannabis with a Drug Identification Number; are still in place.

These measures will come into force on May 1, 2019.

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