At a Glance: Cannabis Taxation

The current approach to cannabis is not working, and the Government of Canada is committed to legalizing, regulating and restricting access to cannabis to keep it out of the hands of kids, and profits out of the hands of criminals. The Department of Finance Canada is consulting on a proposed new taxation regime on cannabis, which will help us achieve those goals, and is working with the provinces and territories to ensure a coordinated approach across the country.

Proposed Excise Duty Framework

The Government of Canada believes that the total of federal and provincial-territorial taxes on cannabis products should not exceed $1.00 per gram, or 10 per cent of the producer’s sale price of a product, and that this tax room should be shared equally between the two orders of government. The proposed federal excise duty rate would be 50 cents per gram of cannabis, or 5 per cent of the producer’s sale price of that product. An additional rate would apply for an agreeing province or territory.  

The proposed duty would apply to all cannabis products available for legal sale, including fresh and dried cannabis, cannabis oils, as well as seeds and seedlings for home cultivation. The rate will also apply to the sale of medical cannabis.

It is important to note that excise duties are not paid directly by consumers. Rather, they are paid by manufacturers.

Application of Goods and Services Tax/Harmonized Sales Tax (GST/HST)

Cannabis product sales will be taxable under the Goods and Services Tax/Harmonized Sales Tax (GST/HST), as is currently the case for medical cannabis, for example.   

Unlike the excise duty, GST/HST is paid directly by consumers at the point of sale.

The following example shows the final price paid by consumers at a combined rate of $1.00 per gram, or 10 per cent of the sale price:

One gram of dried cannabis

Pre-duty price: $8.00

Excise duty (per gram): $1.00

Subtotal: $9.00

GST/HST: $1.17

Total: $10.17

60 ml bottle of cannabis oil

Pre-duty price: $130.00

Excise duty (per cent): $13.00

Subtotal: $143.00

GST/HST: $18.59

Total: $161.59