Medical marijuana subject to federal sales tax, unlike prescription drugs, Canadian judge rules

So, the deal is this: if you get a prescription for it, it’s not subject to federal tax. If you get it from a compassion club, it is. Clearly this is the weakest attempt yet to drive OC (organized crime) out of the pot business by adding a minor tax and paperwork burden, and equally clearly it will not work.

National Post | News

Sales of medical marijuana are subject to federal sales tax even when they fall into a largely unregulated grey area, a judge has just ruled in a case that underscores the legal haziness around pot in Canada.

B.C.’s Gerry Hedges earned as much as $114,000 a year selling a strain of pot he named Po-Chi — after his dog — to a Vancouver “compassion club” for medical-marijuana users. Though the police once raided his operation on B.C.’s Gabriola island and the Harper government has generally discouraged marijuana use, the federal tax department insisted he charge GST on the shipments.

Mr. Hedges refused, arguing his pot was exempt from sales tax because it is akin to a prescription drug.

But tax-court Justice Campbell Miller has ruled that pot is indeed subject to GST, after dissecting the status of a substance that federal law both criminally sanctions and, sometimes, treats as medicine.

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