Canada’s plan to use a scaled tax to new hashish merchandise based mostly on THC content material might find yourself costing some sufferers extra money and take a toll on the competitiveness of companies, specialists say.
The proposed tax of 1 Canadian cent per milligram of complete THC will apply to hashish edibles, extracts and topicals once they’re allowed to enter the authorized markets in late 2019.
The proposed tax is a part of the federal government’s finances introduced to the House of Commons this week.
When the tax kicks in May 1, it should apply solely to hashish oil merchandise.
There shall be no change to the excise tax for dried hashish or seeds and seedlings.
The value of hashish edibles, extracts and topicals – for each grownup use and medical – will usually rise with THC content material.
“Certain low-THC products – such as 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 finances states.
However, Deepak Anand, board member for Canadians for Fair Access to Medical Marijuana (CFAMM), stated higher-THC merchandise will find yourself costing medical sufferers extra money.
“There are people using high-THC to treat certain conditions, and they need it to manage their conditions. This is going to raise their taxes,” he stated.
“… I’m effective with taxing higher-THC adult-use merchandise, however on the medical aspect, I feel it’s unfair to be taxing individuals for this product, provided that we don’t tax opioids, which trigger deaths.
“This is directly going to impact medical users. Now you’re going to get into the total percentage of THC, so I think it’s definitely going to dig deeper into the pockets of medical users.”
Under the brand new system, sufferers in some provinces would find yourself paying extra tax, and sufferers in others would pay much less.
The business had been lobbying the federal government to remove the excise tax on medical hashish altogether.
Terry Lake, vice chairman of Quebec-based licensed firm Hexo and former British Columbia well being minister, tweeted that the tax will lump more costs onto the payments of some sufferers who want higher-THC merchandise.
“I strongly believe the medical and rec stream should be treated separately from a tax-policy perspective,” he advised Marijuana Business Daily.
“Whereas a scaled tax on THC makes sense for rec use – as it should with alcohol – it makes little sense for medical use. THC is an important ingredient for many medical patients. Can you imagine taxing any medication based on its effectiveness?”
Cannabis stays the one class of medical product that has an excise tax, representing a barrier to entry for a lot of sufferers, stated Omar Khan, vice chairman of public affairs at Hill+Knowlton Strategies, a Toronto-based consultancy.
“This approach to taxing the THC amount fails to recognize that there is a legitimate need for THC when it comes to cannabis use for medical purposes,” he stated.
The price range additionally purports to introduce a tax credit score for medical hashish, nevertheless CFAMM identified that sufferers have lengthy been capable of declare medical hashish on their taxes.
“In addition, patients who are on (the Ontario Disability Support Program) or any other government assistance programs with limited income may not be eligible for tax returns, making such credits meaningless to them,” CFAMM spokesman Max Monahan-Ellison stated.
“Tax credits ignore some of the most vulnerable and financially unstable Canadians.”
Cost to corporations
The medical tax additionally hits the underside line of some hashish corporations that choose to cowl the levy for his or her sufferers.
In a regulatory submitting, Aurora Cannabis stated its gross margin on marijuana internet income declined to 54% within the present quarter from 70% within the earlier one.
The firm cited as one of many causes “the negative impact of excise taxes on medicinal sales, the cost of which was not passed on to these patients.”
Canopy Growth additionally cited the absorption of medical excise taxes as a cause for decrease gross margin, because it reported absorbing medical excise taxes of about CA$2 million within the quarter.
Some different corporations opting to soak up the excise tax for his or her sufferers, or which have compassion packages, embrace:
Matt Lamers could be reached at [email protected]
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