Exempt CBD from Canadian Excise Tax


As currently proposed, the Canadian Cannabis Excise Tax will create an excessive economic burden on many sick and disabled Canadians. In many cases, it will add an additional $1000 or year or more to the existing federal taxes. The stated rationale for this tax is that recreational users may claim to be medical users in order to avoid the excise tax on recreational marijuana. This rationale, however, cannot be appropriately applied to Cannabidiol (CBD) oil, because CBD is not psychotropic, and CBD oil has no potential for recreational use. Therefore, adding an excise tax to CBD oils that contain only small amounts of THC, serves no purpose other than to create an additional financial burden of sick and disabled Canadians.

If you agree, please e-mail the Department of Finance Canada at fin.cannabis-taxation-cannabis.fin@canada.ca and tell them:

Exempt CBD oils that contain less than 3mg/ml of THC from the Canadian Cannabis Excise Tax. Taxing Low-THC CBD oils is unfair and unnecessary.

The Department of Finance will accept comments on the proposed tax until 7 December 2017 and you can view the entire proposal here: http://www.fin.gc.ca/n17/data/17-114_1-eng.asp

Let the Canadian Department of Finance know what you think about the proposed excise tax. Feel free to quote or draw on any part of this blog post, if that is helpful. Also feel free to share this post with anyone who may be interested.

For more details on why CBD should be exempted, see below:

About me I want to be clear about the fact that I have a personal stake in this matter. Our son’s doctor has prescribed CBD oil to help manage intractable epilepsy. Intractable epilepsy refers to seizure disorders that cannot be controlled by other available medications. In our son’s case, he has some seizures pretty much every day of his life. Since his doctor prescribed CBD oil a little more than two years ago, the frequency of his seizures has decreased by about half, and the intensity of the remaining seizures has also decreased. It is very expensive, but it has improved his quality of life. The proposed excise tax will add substantially to this cost.

How large would the financial burden of the excise tax be on sick and disabled Canadians? CBD oil has been prescribed for a variety of conditions for both children and adults. The cost depends on the amount required, which varies based upon a number of factors including body weight. A child weighing 20Kg will typically use much less than an 80Kg adult. Doses typically range from 5mg to 20mg per Kg of CBD per day, so a child on a low dose might only require 100mg per day, but an adult on a higher dose might require 1600mg per day. Based on the published proposal from the Canadian Department of Finance, the excise and additional sales tax would add an additional $14.69 per 1200mg (60ml bottle) in Provinces with the current HST. For a small child on a low dose this would at $446.82 in additional tax to their annual cost. For an adult on a higher dose, this would add $6,706.90 in additional taxes each year. The average Canadian who requires CBD oil on a daily basis will almost certainly face more than an additional $1000 tax burden annually.

According to Statistics Canada (Wall, 2017), “Persons with a disability make up 41% of the low‑income population” of Canada. Canadians with disabilities are 2.7 times as likely to fall in the low income category as other Canadians and those with severe disabilities, the group most likely to require CBD treatment, are the most likely to fall into the economically disadvantaged group. As a result, the excise tax on CBD oils will disproportionately impact already economically disadvantage Canadians, in some cases forcing them to do without an important component of their health care and in others forcing them to sacrifice other human needs.

Should sick and disabled Canadians be penalized to prevent tax cheaters? The proposed Cannabis Excise Tax would tax sick and disabled Canadians in an attempt to discourage false claims of medical need by recreational cannabis users, who want to evade taxes. This approach does not consider the significant burden placed on those with legitimate medical needs. The logic used by the Department of Finance is equivalent to moving all the accessible parking spaces to the most distant and inaccessible locations in order to prevent individuals who do not have disabilities from parking in them. It punishes innocent Canadians with genuine needs for potential misbehaviour of others. In my view, the role of the Canadian government should be to assist Canadians with illnesses and disabilities to access prescribed healthcare, not to impede it. This raises a serious question about whether any medically prescribed cannabis products should be subject to additional taxes. If, however, the Department of Finance insists that a taxing sick and disabled Canadians to avoid tax cheats is necessary, CBD products that have no potential for recreational use should be exempted.

Is there scientific evidence that CBD oil has medical value? CBD (Cannabidiol) has been proven to be valuable treatment for saome children and adults with poorly controlled seizures (See Reference List below). For example, a double-blind study by Devinsky and colleagues (2017) and published in the New England Journal of Medicine randomly assigned CBD and placebo to 120 children with intractable epilepsy. Results showed a significant benefits to those treated with CBD. The median seizure frequency decreased by more than half in those treated with CBD, and 5% of those treated with CBD became entirely seizure free, while none of the control group became seizure free. While my focus on writing this has been the treatment of severe seizure disorders. Other research suggests that CBD also may be a valuable treatment for other medical conditions, such as stroke (Ceprian et al, 2017), Parkinson disease (National Academies of Sciences, Engineering, and Medicine, 2017), anxiety disorders (National Academies of Sciences, Engineering, and Medicine, 2017) and cancer (Ramer, & Hinz, 2017).

Would recreational users claim to be medical users to purchase CBD products and avoid the excise tax? While CBD is produced by the cannabis plant, it is an entirely separate substance from TCH (Tetrahydrocannabinol), the chemical compound that produces the “marijuana high.” Low-THC CBD oils contain very little THC, and regardless of taxation, low-THC CBD oils would not be economically viable sources of THC for recreational use.

As an example, the CBD oil that our son currently uses contains 1 mg of THC per each ml of oil and costs roughly $130 per 60 ml or $2.17 per mg. The same vendor produces THC oil, and sells high-THC oil that contains 18.3 mg of THC for $150 or $0.14 per mg of THC with the 10% excise tax would raise the cost to $0.15 / mg of THC. Purchasing the CBD oil to get the same amount of THC would cost 14.5 times as much without taxing the CBD oil, so there would be no reason artificially raise the price further.

In fact, a problem with the currently proposed excise tax is that it is based on dry-leaf weight not THC content. Since the THC content of cannabis leaf can vary greatly, taxing on the basis of dry-leaf weight is like taxing a litre of vodka and a litre of beer the same because they are both one litre. The result of this taxation will likely have the result of pushing producers or recreational cannabis toward stronger and stronger strains.

Research studies have already demonstrated that CBD does not have potential for drug abuse or recreational use as a psychotropic drug. For example, a 2017 study found “CBD did not display any signals of abuse liability” (Babalonis et al, 2017).

In any case, low THC-CBD oils that contain 3% or less THC have are not psychotropic, have no potential for diversion to recreational use and should be exempted.

Would exempting low-THC CBD oil from excise tax be difficult? The currently proposed Canadian Cannabis Excise Tax already exempts some low THC cannabis. Industrial cannabis is currently exempted from excise tax because it contains very low levels of THC and has little potential for diversion to recreational use. The published proposed Canadian Cannabis Excise Tax simply added a footnote stating, “Industrial hemp would not be considered cannabis products and would not be subject to excise duties.” Since industrial hemp is cannabis, this simply means for taxation purposes, some cannabis will not be treated as cannabis.

This exemption makes sense. In Canada, industrial hemp sells for about $2 per kilogram, if the excise tax were applied, it would raise add $500 to $1,000 per kilogram, which would create unreasonable hardship for producers and potential consumers, and there is no reason to think this low-THC cannabis will be diverted to recreational drug use (National Academies of Sciences, Engineering, and Medicine, 2017)

Treating low-THC CBD oil as a separate category would not be difficult, and this has been achieved easily in other jurisdictions. For example, the 16 US states that have not legalized marijuana exempt CBD oil and permit low-THC cannibidiol products (National Academies of Sciences, Engineering, and Medicine, 2017).

Reference List

Alvarez, F. J., Lafuente, H., Rey-Santano, M. C., Mielgo, V. E., Gastiasoro, E., Rueda, M., et al. (2008). Neuroprotective effects of the nonpsychoactive cannabinoid cannabidiol in hypoxic-ischemic newborn piglets. Pediatr Res, 64(6), 653-658.

Ames, F. R., & Cridland, S. (1986). Anticonvulsant effect of cannabidiol. S Afr Med J, 69(1), 14.

Babalonis, S., Haney, M., Malcolm, R. J., Lofwall, M. R., Votaw, V. R., Sparenborg, S., et al. (2017). Oral cannabidiol does not produce a signal for abuse liability in frequent marijuana smokers. Drug Alcohol Depend, 172, 9-13.

Bauer, P. R., & Sander, J. W. (2016). Cannabidiol in patients with treatment-resistant epilepsy. Lancet Neurol, 15(6), 544.

Bialer, M., Johannessen, S. I., Levy, R. H., Perucca, E., Tomson, T., & White, H. S. (2015). Progress report on new antiepileptic drugs: A summary of the Twelfth Eilat Conference (EILAT XII). Epilepsy Res, 111, 85-141.

Carlini, E. A., Leite, J. R., Tannhauser, M., & Berardi, A. C. (1973). Letter: Cannabidiol and Cannabis sativa extract protect mice and rats against convulsive agents. J Pharm Pharmacol, 25(8), 664-665.

Ceprian, M., Jimenez-Sanchez, L., Vargas, C., Barata, L., Hind, W., & Martinez-Orgado, J. (2017). Cannabidiol reduces brain damage and improves functional recovery in a neonatal rat model of arterial ischemic stroke. Neuropharmacology, 116, 151-159.

Cilio, M. R., Thiele, E. A., & Devinsky, O. (2014). The case for assessing cannabidiol in epilepsy. Epilepsia, 55(6), 787-790.

Consroe, P., & Wolkin, A. (1977). Cannabidiol–antiepileptic drug comparisons and interactions in experimentally induced seizures in rats. J Pharmacol Exp Ther, 201(1), 26-32.

Cunha, J. M., Carlini, E. A., Pereira, A. E., Ramos, O. L., Pimentel, C., Gagliardi, R., et al. (1980). Chronic administration of cannabidiol to healthy volunteers and epileptic patients. Pharmacology, 21(3), 175-185.

Devinsky, O., Cilio, M. R., Cross, H., Fernandez-Ruiz, J., French, J., Hill, C., et al. (2014). Cannabidiol: pharmacology and potential therapeutic role in epilepsy and other neuropsychiatric disorders. Epilepsia, 55(6), 791-802.

Devinsky, O., Cross, J. H., Laux, L., Marsh, E., Miller, I., Nabbout, R., et al. (2017). Trial of Cannabidiol for Drug-Resistant Seizures in the Dravet Syndrome. N Engl J Med, 376(21), 2011-2020.

Devinsky, O., Marsh, E., Friedman, D., Thiele, E., Laux, L., Sullivan, J., et al. (2016). Cannabidiol in patients with treatment-resistant epilepsy: an open-label interventional trial. Lancet Neurol, 15(3), 270-278.

Hussain, S. A., Zhou, R., Jacobson, C., Weng, J., Cheng, E., Lay, J., et al. (2015). Perceived efficacy of cannabidiol-enriched cannabis extracts for treatment of pediatric epilepsy: A potential role for infantile spasms and Lennox-Gastaut syndrome. Epilepsy Behav, 47, 138-141.

Jones, N. A., Glyn, S. E., Akiyama, S., Hill, T. D., Hill, A. J., Weston, S. E., et al. (2012). Cannabidiol exerts anti-convulsant effects in animal models of temporal lobe and partial seizures. Seizure, 21(5), 344-352.

Kaplan, J. S., Stella, N., Catterall, W. A., & Westenbroek, R. E. (2017). Cannabidiol attenuates seizures and social deficits in a mouse model of Dravet syndrome. Proc Natl Acad Sci U S A, 114(42), 11229-11234.

Leo, A., Russo, E., & Elia, M. (2016). Cannabidiol and epilepsy: Rationale and therapeutic potential. Pharmacol Res, 107, 85-92.

Moore, Y., & Robinson, R. (2017). Cannabidiol reduced frequency of convulsive seizures in drug resistant Dravet syndrome. Arch Dis Child Educ Pract Ed.

National Academies of Sciences, Engineering, and Medicine. (2017). The health effects of cannabis and cannabinoids: The current state of evidence and recommendations for research. Washington, DC: The National Academies Press. doi: 10.17226/24625.

The Health Effects of Cannabis and Cannabinoids: The Current State of Evidence and Recommendations …

Palleria, C., Cozza, G., Khengar, R., Libri, V., & De Sarro, G. (2017). Safety profile of the newest antiepileptic drugs: a curated literature review. Curr Pharm Des.

Ramer, R., & Hinz, B. (2017). Cannabinoids as Anticancer Drugs. Adv Pharmacol, 80, 397-436.

Saade, D., & Joshi, C. (2015). Pure cannabidiol in the treatment of malignant migrating partial seizures in infancy: a case report. Pediatr Neurol, 52(5), 544-547.

Sun, S., Hu, F., Wu, J., & Zhang, S. (2017). Cannabidiol attenuates OGD/R-induced damage by enhancing mitochondrial bioenergetics and modulating glucose metabolism via pentose-phosphate pathway in hippocampal neurons. Redox Biol, 11, 577-585.

Tzadok, M., Uliel-Siboni, S., Linder, I., Kramer, U., Epstein, O., Menascu, S., et al. (2016). CBD-enriched medical cannabis for intractable pediatric epilepsy: The current Israeli experience. Seizure, 35, 41-44.

Wall, K. (2017, August 11). Low income among persons with a disability in Canada. Insights on Canadian Society (75-006-X). Ottawa: Statistics Canada. http://www.statcan.gc.ca/pub/75-006-x/2017001/article/54854-eng.htm



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