Ottawa’s plan for excise tax on medical marijuana draws ire of patients, producers

TORONTO — The federal government’s proposed plan to impose an excise tax on medical marijuana as well as recreational cannabis has left patient advocate groups and Canadian licensed cannabis producers fuming.

Canadians for Fair Access to Medical Marijuana (CFAMM) and the Arthritis Society said in a joint statement Friday medical pot should be treated the same way as most other prescription medications and applying the excise tax to medical cannabis unfairly disadvantages patients.

“The use of medical cannabis should be recognized in line with all other prescription medications and accordingly exempt from taxation,” said Jonathan Zaid, the founder and executive director of CFAMM. “Patients have a fundamental right to have access to affordable medicine.”

Ottawa unveiled its federal tax proposal on Friday in preparation for the July 2018 deadline for the legalization of recreational marijuana in Canada, which will be up for public consultation until Dec. 7.

This plan would add an excise tax of $1 per gram of marijuana or 10 per cent of the final retail price, whichever is higher. The revenues will be split equally between Ottawa and the provinces and territories.

Bill Blair, parliamentary secretary to the minister of justice and the Liberal lead on the legal pot program, also said the government’s task force report recommended the tax regime on medical and recreational marijuana be the same.

“Our government remains committed to maintaining a functional medical marijuana system and at the same time, we do not want the taxation levels to be an incentive for people to utilize that system inappropriately and so we propose that the taxation levels for both non-medical and medical will be aligned,” Blair said.

However, Cam Battley, executive vice-president of licensed producer Aurora Cannabis Inc. (TSX:ACB), said sick people do not need the additional cost burden and applying the tax to medical marijuana is “outrageous” and “wrong.”

He added that patient advocates have been calling on governments for the removal of existing sales tax on medical cannabis to put it in line with other pharmaceuticals, such as opioids.

“This needs to be nipped in the bud,” Battley said. “What the federal government is doing with respect to cannabis on a broad basis is very positive, very sound public sound public policy. This is not.”

Battley adds that the government’s proposal presupposes that people will fake an illness in order to access medical cannabis.

“No Canadian physician who values his or her license is ever going to write a prescription for medical cannabis for somebody that they know is faking or seeking consumer cannabis on a discount. That’s a knock on the professionalism of the physicians in Canada.”

But Rosalie Wyonch, a policy analyst at the C.D. Howe Institute who researches pot markets and tax policies, said while other jurisdictions like Colorado and Washington decided to treat medical marijuana like other medicines, Blair has a valid point about creating an incentive for people to see out the cheaper product. She said at the end of the day that’s a policy decision for the government to make.

But Canadian licensed cannabis producer MedReleaf echoed Aurora’s call for elimination of taxes on pot for medicinal users.

“Cannabis is a legitimate medicine,” said Darren Karasiuk, MedReleaf’s vice president of strategy. “And, again, should be treated as such, which is to say like most prescription products, which is tax exempt. We want to see our patients certainly stick with the medical system… They are going to much more likely adhere to physician direction on what products to use. And it’s going to, we think, lead to better health outcomes.”

Licensed producer Tilray says it supports Ottawa’s tax plan for recreational marijuana, but it “falls short” on medical cannabis. “Taxing medical and recreational cannabis at the same rate will erode the medical cannabis system, negatively impacting Canadian patients,” said its chief executive Brendan Kennedy, in a statement.

— With files from Mia Rabson in Ottawa

Armina Ligaya, The Canadian Press