Canada Approves Cannabis as Medical Expense

The Great White North has had its fair share of cannabis controversy lately, with Health Canada sending out 13 cease and desist letters to unlicensed dispensaries throughout the country threatening police raids if they did not comply.

However, it seems as though lawmaker’s views on marijuana are beginning to change with a recent announcement from The Canadian Medical Cannabis Industry Association (CMCIA). The association recently received a letter from the Canada Revenue Agency (CRA) confirming that medical cannabis can be written off on a legal patient’s taxes as a medical expense.

According to the CRA website’s list of qualifying medical expenses, a Canadian taxpayer can now write off “the amount paid to Health Canada or a designated producer for a person authorized to possess or use the drug for medical purposes under the Marihuana Medical Access Regulations or exempt under section 56 of the Controlled Drugs and Substances Act.”

Taxpayers will be able to claim these medical expenses on Line 330 of their T1 tax returns.

The new policy is part of an amendment to the Canadian Income Tax Act, which dictates what taxpayers pay and what they can write off on their income taxes. The amendment changes the wording to allow for Health Canada’s Marihuana for Medical Purposes Regulations (MMPR), a set of regulations put in place in 2013 that regulates the Canadian medical marijuana market. The new language in the Income Tax Actspecifically states that “the CRA will not disallow eligible medical expenses claimed for the purchase of medical marihuana allowable under these new regulations.”

Until now, the Income Tax Act had not yet recognized the legal existence of the MMPR, creating a confusing situation. Because medical marijuana requires a prescription to obtain in Canada, many were wondering why they could not be accepted as a medical expense.

This change in policy is the result of a previous request from earlier in the year by CMCIA to the CRA to allow medical marijuana to be considered an eligible medical expense in the eyes of the government. According to Cam Battley, a CMCIA spokesperson, the average cost per-patient for medical marijuana runs about $7.60 a day, which totals to about $2,774 per year. The price, quality, and amount prescribed for each patient is different, but the end result can still be a costly venture for some patients.

But for the 2014 tax year, the CRA has set a threshold for the amount that can be claimed as a medical expense to three percent of the net income of the patient or $2,171, whichever happens to be the lower amount. “This is an important step, because it allows patients to write off a major component of their health-care costs,” Battley explains in an interview with CBC News.

In order to qualify for the tax expense, patients need to follow two simple rules: firstly, they are required to have a legitimate prescription from a licensed doctor for the medical marijuana they purchase. And second, they must have the prescription filled at a legally licensed marijuana dispensary.

Although minimum thresholds do need to be met in order for a patient to qualify, the current state of the medical marijuana industry has made the process of receiving their prescriptions a very expensive endeavor. Because of this, a good number of qualified patients would be able to take advantage of the tax break and not go broke in the process.

“This is an important step in acknowledging the legitimacy of the way patients use medical cannabis, to help manage the symptoms of a range of health conditions,” said Neil Belot, Executive Director of the CMCIA. “We have been working with the CRA and the Department of Finance for several months to clarify this issue, and we’re extremely pleased that cannabis regulated by Health Canada has been recognized as an allowable tax expense. It’s very good news, and will help make the use of cannabis as medicine more accessible and affordable for patients.”

For some supporters, this is looking to be the change that could tip the scales in favor of cannabis for Canada. Recent polls show that the country is ready to alter the current laws governing marijuana, with two-thirds of the country in favor of relaxing the laws. Additionally, one third of the country’s voters claim that they believe marijuana should be regulated and taxed, while another third believe that decriminalization of small amounts of the substance is all that is necessary.

But there are still some that believe that the new changes don’t go far enough. For example, David Rotfleisch, a tax lawyer from Rotfleisch & Samulovitch Professional Corporation, says that the CRA needs to take this addition even further by allowing for more items to be tax exempt, so long as they aid in one’s health.

“It’s very good that CRA is recognizing medical marijuana as eligible since it is clearly a physician prescribed remedy,” Rotfleisch explains. “However, CRA takes the position that physician prescribed natural remedies, including vitamins, even if [purchased] pursuant to a written physician prescription are not eligible medical expenses.”

The new amendment also allows taxpayers to write off various other purchases as medical expenses, including crutches, gluten-free products, wigs for cancer patients, and even a portion of an air conditioner. But even still, Rotfleisch is hoping to expand these tax write-offs to include all kinds of medication.

“Cold remedies are clearly effective in alleviating cold symptoms, but don’t qualify as medical expenses,” he explains. “It seems to me that this is an area that needs a loosening of the rules by CRA.”

But at the moment, it looks as though the tide is just starting to change on medical marijuana views for Canada. Hopefully this will bring with it a slew of other revisions to the current laws, allowing for more and more patients to gain easy and affordable access to the medication they require.

What do you think? Should medical marijuana be considered a medical expense on your taxes? Let us know what you think in the comments below.