Area of Law: Cannabis Law
Answer # 2427
How are cannabis sales taxed?Region: Ontario Answer # 2427
Cannabis is subject to the following taxes in Canada:
- Federal excise duty tax
- GST, HST, GST/PST, or QST
What is the Federal excise duty tax?
The Federal Government, through Canada Revenue Agency, is responsible for licensing cultivators, producers and packagers of cannabis products, and for collecting federal duties and taxes.
A licensed cannabis producer must pay a federal excise duty to CRA when they package cannabis and cannabis products for sale to a purchaser, such as a provincially-authorized distributor or retailer.
All legally produced cannabis products available for sale must have an excise stamp on the packaging. Each province has a different coloured stamp.
What is taxed?
As per Schedule 1 of the Cannabis Act, for federal excise duty purposes cannabis and cannabis products include “any part of a cannabis plant… regardless of whether that part has been processed or not.” This includes:
- all processed and unprocessed cannabis plants, such as dried and fresh cannabis flowers (but not industrial hemp products),
- any substances or mixtures containing a cannabis plant, and
- any cannabinoid compounds or identical substances found in cannabis plants (cannabis oils).
This does not include:
- non-viable seeds of a cannabis plant,
- mature stalks, without any leaf, flower, seed or branch, of such a plant,
- fibre derived from the mature stalk, and
- the root or any part of the root of such a plant.
Cannabis products exempt from duty tax include:
- low –THC cannabis products (less than 0.3% THC),
- cannabis grown for personal use, and
- medical cannabis (only available with a prescription).
Coordinated Cannabis Taxation Agreements (“CCTAs”)
All provinces and territories, have signed a Coordinated Cannabis Taxation Agreement (CCTA) with the Federal Government. The terms under all the agreements, with the exception of Manitoba, are:
- The combined rate of all federal, provincial, and territorial cannabis-specific duties and taxes will not exceed the higher of $1 per gram, or 10% of a producer’s selling price.
- Revenues from the excise duties on cannabis products will be shared as follows: 75% to provincial and territorial governments, and 25% to the Federal Government.
Manitoba has entered into the Canada-Manitoba Coordinated Tax Agreement, with the Federal Government. The Manitoba Liquor and Lotteries (MBLL) has applied a wholesale mark-up on non-medical cannabis of $0.75 per gram. The Manitoba government will also collect a cannabis retailer Social Responsibility Fee (SRF) on the annual revenues from the sale of non-medical cannabis by all provincially-licensed cannabis retailers.
Consumers Sales Tax
When buying cannabis, consumers must pay GST, HST, GST/PST, or QST (in Quebec).
- Alberta: 5% GST
- British Columbia: 12% GST/PST
- Manitoba (recreational cannabis): 5% GST
- Manitoba (medical cannabis): 13% GST/PST
- New Brunswick: 15% HST
- Newfoundland & Labrador: 15% HST
- Northwest Territories: 5% GST
- Nova Scotia: 15% HST
- Nunavut: 5% GST
- Ontario: 13% HST
- Ontario (qualified medical cannabis get 8% rebate): 5% GST (after rebate)
- Prince Edward Island: 15% HST
- Quebec: 14.975 GST/QST
- Saskatchewan: 11% GST/PST
- Yukon: 5% GST
For legal advice and assistance with a cannabis related matter, contact our preferred cannabis law expert, Harrison Jordan Law .
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