How to claim a pot tax exemption

How to claim a pot tax exemption

How to claim a pot tax exemption

Ever since cannabis was legalized for recreational consumption in Canada, the sector has settled into more of a mixed bag, with winners and losers becoming more distinguishable to the expert eye. The Canadian federal government had also hoped to win a $100-million-a-year tax windfall from the move, but that seems up in the air as the black market for the substance persists.

One more thing that’s become potentially more complicated since October 17: the ability to claim pot as a medical expense. “Medical marijuana has been eligible as a tax deduction for roughly 10 years,” noted a recent article on

“Prior to legalization, however, it was arguably much easier for auditors to check if a cannabis write-off was above board, since no cannabis could be purchased legitimately in Canada without medical authorization.”

The Canada Revenue Agency (CRA) includes cannabis among a myriad of substances and products authorized as a permitted medical expense. Those who seek to get their pot expense written off must provide evidence of a prescription to certify that it’s medically necessary and not simply for recreational or leisurely consumption.

Another caveat: the prescription must come from a qualified medical professional. Under the CRA rules, dubious prescriptions handed out by naturopaths will be excluded from any tax exemption.

And in order to get their pot expenses deducted, users have to get their product from a licensed producer. It should go without saying that black-market purchases are generally not recognized by Canada’s tax-collection agency. As a general rule, the CRA recommends keeping receipts for six years in case of an audit or review.

According to a column published by, medical users can file claims on the amount paid for fresh or dried cannabis as well as cannabis plants. Aside from that, they can apply to deduct expenses on cannabis-based medical products like seeds and oils — not to be confused with oils extracted for recreational purposes.

Those filing for a deduction shouldn’t expect the full amount they spent to be deducted. From their total eligible medical expenses, the CRA will subtract either $2,268 or 3% of their income after taxes, whichever is less. And while the majority of Canadian taxpayers need only submit one return through the CRA, those living in Quebec will have to file with both Revenu Québec and the federal collection agency.


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