AROUND THE COURTS
Medical marijuana is subject to GST and HST, it seems.
In Gerry Hedges v. The Queen, 2016 FCA 19, the Federal Court of Appeal recently ruled that medical marijuana was subject to GST.
The taxpayer sold marijuana to the British
Columbia Compassion Club Society to provide
to members who needed it for medical
purposes. This was done outside the scope of
the Medical Marijuana Access Regulations,
which permitted certain people to legally
buy and own marijuana. However, based on
numerous Court cases, the Compassion Club
and its patients were protected by the Charter of
Rights, since access to marijuana is a
legitimate health need for many patients.
The taxpayer was assessed for not collecting
and remitting GST on his sales. He argued
that, based on a technical reading of a hard-
to-read rule in the GST legislation, marijuana
was “zero-rated” (i.e., tax-free) as a drug.
The Tax Court dismissed Mr. Hedges’
appeal, and he appealed to the Federal Court
of Appeal. The Court of Appeal did not
address the technical arguments of the case,
but simply ruled that Mr. Hedges’ sales were
“unlawful” and therefore could not be zero-
rated. The Court of Appeal did not address
the point that the sales were likely protected
by the Charter of Rights.
So it appears that medical marijuana is
subject to GST/HST — at least when its sale
is unlawful. The status of medical marijuana
sold “lawfully” is not yet clear, since the
Federal Court of Appeal declined to address
the legal arguments on that point.
