Medical Marijuana? Yes, you can claim it on your taxes!

Green bud, grey area: Medical cannabis consumers buy products directly from licensed producers, but they must pay for it out of pocket – sometimes to the tune of hundreds of dollars a month.

Medical cannabis generally isn’t covered by third-party health insurance plans. Because it doesn’t have a drug identification number (DIN), a regulatory stamp of approval issued by Health Canada. Sun Life became the country’s first major insurance company to offer optional coverage for medical cannabis in 2018, while Manulife also launched optional coverage for participating individual and group plans in partnership with Shoppers Drug Mart. A handful of employers may offer some type of coverage through their employee group benefit plans, but for many consumers, the only opportunity for financial relief comes through the taxman.

Who qualifies to claim medical cannabis?

Anyone with a prescription from an authorized medical practitioner to purchase cannabis from a licensed producer. Producers are legally required to issue receipts, which you’ll need come tax filing time. Hold on to the paper copies, or find out how to access your receipts online. In case of an audit or review, the CRA recommends keeping receipts for six years.

What can you claim?

You can claim the amount paid for fresh or dried cannabis, cannabis oils, cannabis seeds and plants procured from a licensed producer. That is basically the product only. You cannot claim costs related to growing or accessories.

Not eligible for tax deductions

  • lights
  • containers and other storage
  • fertilizers
  • vaporizers
  • pipes
  • empty capsules or capsule fillers.

How To Claim

Check your receipts and tally up the amount you spent on medical cannabis. Then add the total to any other allowable medical expenses you plan to claim on your T1 Income Tax and Benefit Return. If your return is prepared by a professional, submit your receipts to them. If you use tax software, you’ll be prompted to enter your medical expenses in the deductions and credits section.

Medical expenses don’t have to be calculated by the calendar year. It can be any 12-month period ending in the current tax year (2019). If you already claimed these expenses on your last tax return, you can’t claim them again.

Your total eligible medical expenses minus the lesser of $2,302, or 3% of your net income (your income after taxes). Depending on how much you make and amount of medical expenses claimed, the threshold can be high. Here are two examples using different incomes and the same $2,500 in medical expenses:

If your net income is $70,000, you must deduct $2,100 from your total medical expenses. You will receive a credit of $400.
If your net income is $30,000, you must deduct $900 from your total medical expenses. You will receive a credit of $1,600.

Each province and territory has different tax laws and policies. Regardless, you only have to submit one return through the CRA. Except for Quebec, all provinces and territories let the federal government collect income taxes and administer the returns. Quebec residents file both a provincial income tax return with Revenue Québec and a federal return with the CRA.

The deadline to file your income tax return for the 2019 year is June 1, 2020. June 15 if you are self-employed.

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