When marijuana edibles hit Canadian cannabis dispensary shelves later this year, you can expect them to be taxed based on how strong they are.
Canada's recently released federal 2020 budget proposes to tax marijuana edibles based on the amount of THC they contain. THC is one of the active ingredients in cannabis and the one most associated with producing the plant's signature high. Consumers can expect to pay a tax rate of one percent per each milligram of THC on all marijuana edibles they purchase. And since the government plans to cap the amount of THC per edible at 10 mg, consumers should expect to pay a 10 percent cannabis tax on most edible purchases.
This is a significantly different from Canada's tax strategy for dried cannabis flower, which is taxed based on weight at a rate of either ten percent per gram or C$1 per gram—whichever is higher. THC content is not considered in determining taxes on flower.
Cannabis oils, which are currently available legally in Canada, will also be subject to this THC-based tax starting in May. Previously, they were taxed the same way as dried cannabis flower. Cannabis concentrates and topicals will also be subject to the THC tax when they are introduced to the market alongside marijuana edibles this fall. The new tax scheme will be applicable to both recreational and medicinal products.
Products that contain the non-intoxicating cannabis compound CBD will not be subject to the new excise tax. That means fans of the trendy wellness product shouldn't be too concerned about a spike in price of their preferred products come May.
The proposed taxation plan comes days after several licensed cannabis producers raised concerns that current testing regulations could mean poor offerings for consumers on day one of edibles legalization.
h/t: The Financial Post