On March 19, 2018, Finance Minister Bill Morneau tabled in the House of Commons the Liberal Government’s fourth budget, Investing in the Middle Class (“Budget 2019”). Budget 2019 contains tax measures affecting cannabis products.
Excise tax changes
Budget 2019 proposes to expand the excise duty to capture new classes of cannabis products as they become legal for sale under the Cannabis Act later this year. Specifically, 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 the final product. There will be no changes to excise duties imposed on most other products, namely fresh and dried cannabis, and seeds and seedlings.
In addition, effective May 1, 2019, certain low-THC products will be subject to lower excise duties than before to provide tax relief for those products typically used by individuals for medical purposes.
Medical expense tax credit
Budget 2019 proposes to expand the range of cannabis products eligible for the medical expense tax credit, effective October 17, 2018, when cannabis products purchased for medical purposes became regulated under the Cannabis Act. As new classes of cannabis products become legal for sale under the Cannabis Act, amounts paid for those products may be eligible for the 15% non-refundable tax credit available for qualifying medical expenses.
For a discussion of these tax measures as well as others in Budget 2019, please see McCarthy Tétrault's Budget 2019 Commentary.