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Myth 2: continued...
Many employers provide medical benefits for employees and unfortunately medical cannabis is typically not covered. More progressive organizations do cover this expense. Regardless, many companies offer a Health Spending Account component and medical cannabis obtained lawfully from a Health Canada licensed producer qualifies. If for example, your own plan has a $500 HSA, you can claim $500 coverage through your HSA. Let’s look at a person earning $100,000 per year with a 1/gr per day prescription.
Medical expense from Medical Cannabis = $10.17 x 365 days = $3,712.50.
Other medical expenses not covered by benefits* = $1,500.00
Total Medical Expenses: $5,212.50
Amount covered by HSA: $500.
Ineligible amount is lower of $2,327 or $3,000 (3% x $100,000) = $2,327
Eligible amount* = $2,385.50 ($4,712.50 - $2,327.00)
Federal Tax Credit* = $357.83
Net Cost*: $3,712.50 - $500 (HSA) - $357.83 = $2,854.23 ($7.82/gr).
And actually lower when the provincial/territorial tax credits are applied.
* The “other medical expenses” amount of $1,500 is less than the ineligible amount of $2,327 and therefore it is not unreasonable to consider the entire eligible amount of $2,385.50 as being applicable to the cost of medical cannabis.
Remember too that the tax credit is the federal amount only; therefore, the actual net cost will be lower but that exact amount varies in each province or territory but could be in excess of $100.
My opinion is that in time, medical cannabis will be 100% medical benefits eligible for a majority of Canadians with benefit plans. It is also my opinion that the HST on medical cannabis will be removed in time either in fact (HST exempt) or appearance (HST zero rated). As an aside, to the consumer, there is no difference between HST exempt and HST zero rated since it is not charged either way but there is a distinction to the producer.