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In light of the recent explosion of marijuana dispensaries around the country, many have been questioning the eligibility of the products sold as deductible expenses for tax purposes.

Per the Canada Revenue Agency’s list of eligible medical expenses, “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” can be deducted as a medical expense, and included in the total claimed on line 330 of your personal tax return. The deduction allows for a taxpayer to deduct both medical marijuana and medical marijuana seeds as an eligible expense. According to a CRA spokesperson, this is not a newly approved expense and has been recognized by the Income Tax Act for several years.

A spokesperson for the Canadian Medical Cannabis Industry Association (CMCIA), estimates the average cost per patient to be approximately $7.60 per day, totalling $2,774 for one year; however this amount may vary depending on dosage and type of product used. As this is a costly treatment, taxpayers are more likely to reach the necessary threshold in order to benefit from the medical expense deduction, which is calculated as follows for 2015:

15% of:

  • Total medical expenses (prescriptions, dental, etc.)
  • Less: 3% of your net income (up to a maximum of $2,180)

Therefore, depending on one’s income, a significant amount of money must usually be disbursed on medical expenses before taxpayers are able to benefit from this tax credit. Allowing taxpayers to deduct medical marijuana and related expenses may help save more tax dollars for Canadians suffering from conditions requiring this type of treatment.

Note: there is also a refundable medical expense supplement available to some Canadian taxpayers, depending on net income and other amounts claimed on the tax return. For more information, please visit: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns409-485/452-eng.html.

At this point, it is still uncertain whether private insurance plans will allow medical marijuana and related expenses as part of their regular drug plans, and the CMCIA continues to push for its users to gain this additional medical coverage.

For additional information on the application process for growers and users of medical marijuana, please visit: http://www.hc-sc.gc.ca/dhp-mps/marihuana/index-eng.php


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Philip Hogan

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The information contained in this article is for general use only and should not be viewed as professional advice. Accounting and tax rules and regulations regularly change and individuals should contact a competent professional to obtain accounting and tax advice based on their specific situation.


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