Finance Committee on May 22nd, 2018

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Chair, I was required to be here due to a motion passed by this committee. Many members may have forgotten about that. Identical motions were passed in every committee. I had a moment to explain to the chair that, whereas in the normal parliamentary rules I would have the right to present amendments that were substantive at report stage, this committee passed a motion which says I can't do that because I have an opportunity to present the motions and amendments at clause-by-clause consideration in every committee.

While report stage can only happen once a day for any particular bill, clause-by-clause can happen simultaneously in many places. Today, I find myself called before the committees to deal with Bill C-68 in the fisheries committee, Bill C-69 in the environment committee, as well as Bill C-74 in the finance committee, all at the same time, all in the same day, so I have to apologize that I've been in and out.

I need to plead with individual members to consider that if you're asked to pass a similar motion—for those of us who are re-elected in the next election—this motion imposes an extremely arduous and unfair process on members of smaller parties. While I would have liked to speak to this to support the evidence of the Canadian Labour Congress that the way the bill is functioning will unfairly reduce the Canadian worker benefit entitlement, I accept the chair's ruling that it's out of order for the reasons the chair has stated.

I did want to put on the record that I may not be here for one of my subsequent amendments because of the pressures of clause-by-clause in a simultaneous committee.

I hope this process of putting members through this through the motions passed by every committee will be reconsidered, because it's extremely unfair.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you, Ms. May.

(Clause 19 agreed to on division)

(Clauses 20 to 68 inclusive agreed to on division)

(On clause 69)

Part 2 is amendments to the excise tax, tobacco taxation, and related legislation. We have Mr. Coulombe and Mr. Mercille from Finance in case there are questions or clarifications. Thank you, officials, for coming.

The first amendment proposed is from the NDP.

Just for clarification, the vote on NDP-3 applies to NDP-4, as they are consequential.

On NDP-3, the floor is yours, Mr. Dusseault.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you, Mr. Chair.

I was just going to mention that this amendment is the first of a series of two related amendments. This is a topic we have heard about repeatedly at this committee: the taxation or the levying of excise fees on cannabis used for medical purposes.

I know that the committee received many letters about this. I don't know the latest figures, but I believe that over 4,000 Canadians wrote to MPs or to the committee to oppose this new excise tax regime on medical cannabis. Many witnesses mentioned the disastrous consequences this could have on the current users of medical cannabis. It should be said that there is already a medical cannabis regime, and that it is a legal regime. There are many users: according to the testimony we heard at this committee, there are more than 260,000. People criticized this new tax on medication vehemently. This is indeed what it is, strictly speaking. In this case, in this part of the bill, we are talking about imposing an excise duty on the production of cannabis, including cannabis used for medical purposes.

My amendment consists in adding a definition, among the others that the bill adds, to section 2 of the Excise Tax Act, 2001.

In its current form the bill proposes to add a definition of “prescription cannabis drug”. It is quite a limited definition of what would be considered cannabis used for medical purposes.

There are two conditions to meet for a product to be considered a prescription cannabis drug.

First of all, the bill refers to “a drug or mixture of drugs that may, under the Food and Drugs Act or the Controlled Drugs and Substances Act, be sold to a consumer, as defined in subsection 123(1) of the Excise Tax Act, without a prescription”. This means that it would be considered a medication. In several places, the bill refers to prescription cannabis that must be prescribed by a physician.

There is another point that is mentioned in a few places in the bill, and I will get back to it later: you have to obtain a DIN, that is to say a drug identification number. It is quite complicated to obtain: you have to be able to confirm or prove the effectiveness of a drug in order to obtain a drug identification number from Health Canada, which is not currently done for any cannabis product used for medical purposes, and this may not happen for several years. It's not impossible; some witnesses told us that they were working on it.

That being said, my amendment would add a new definition. The point is not to remove those that already exist, but to add the following definition of “medical cannabis”:

Cannabis that is intended to be sold for medical purposes under a licence or a permit issued under the Cannabis Act [...]

This would broaden the definition of medical cannabis regarding the imposition of an excise tax on cannabis.

In addition, producers testified before us and stated that it is possible for them to divide their production or to differentiate between cannabis for medical purposes and recreational cannabis. It's extremely important to know that producers are ready to make the distinction in their own production facilities. If that were the case, cannabis destined for the medical market could be exempted from the excise tax since it would be used as a medication. Later I will present an amendment on that topic. Who, around this table, wants to tax medication? I am anxious to hear the position of my colleagues here regarding such a tax.

We are discussing imposing a tax on vice, as this is often known. It is true that there are currently excise taxes on tobacco and alcohol. Now, we propose to extend those excise taxes to cannabis. It's okay to tax recreational cannabis, but it's a whole other matter to tax medical cannabis.

It goes without saying that the committee agrees with the experts and the many statements we heard from the members of civil society who demanded this amendment. Many of the fellow citizens of all my colleagues around this table also wish to be able, in this case, to continue to use tax-free and excise tax-free medication.

I hope all of my colleagues will support me.

[The Chair, Liberal, Wayne Easter]

Ms. O'Connell and then Mr. Kmiec.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you, Mr. Chair.

Thank you to my colleague for the amendment. I think at the end of the day, though, the excise duty does not apply to products, as pointed out, that have drug identification numbers, DINs, or that are prescribed by a physician. I think that's an important clarification. For example, under the current system, doctors provide authorization, not a prescription, for medical cannabis.

Moving forward, I think accessing a DIN, or going through the rigorous process and the trials to receive a DIN, is an important step in this country toward ensuring that when prescriptions and products receive DINs, it's done so in a process that I think all Canadians come to expect with these types of products. There is an avenue. I do think we'll get there one day. Cannabis producers for medical purposes will go through that process, and I think they should. Once they have the drug identification number, then it is already built into the legislation that they have the excise duty exemption.

I think we're creating a system that is fair. I don't think we want to go down the road where people start arguing about why certain products shouldn't have to go through the drug identification number process. I'm perfectly comfortable that there is an avenue to be exempt for medical cannabis as long as they go through the process that I think other products have to go through as well. Moving forward, a doctor can then prescribe it in the same manner.

I'm happy that there's a path to get there. As I said, I think we will eventually get there, but it's up to those cannabis producers to go through the rigorous testing that I think all Canadians would expect. That would then automatically kick into the existing legislation. So I won't support the amendment, because I think that's an important step that should be taken in order to have this exemption.

[The Chair, Liberal, Wayne Easter]

Mr. Kmiec.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

To the officials, what will happen if this amendment is not done? Without this amendment, will there be a situation where persons who require cannabis for medicinal purposes prescribed by their doctor will then have to pay GST on it? I understand the whole drug identification number from Health Canada, but until such time as it's done, will veterans, for example, with a prescription for medicinal cannabis be charged GST in the interim?

[The Chair, Liberal, Wayne Easter]

Mr. Mercille.

[Pierre Mercille, Director General (Legislation), Sales Tax Division, Tax Policy Branch, Department of Finance]

The amendment we're discussing right now doesn't touch the GST at all. There are amendments to the Excise Act, 2001 that imposed the excise duty on cannabis.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

If this amendment passes, will they be covered?

[Pierre Mercille]

Whether this amendment passes or not has no effect on the GST.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

It has no effect on it whatsoever.

[Pierre Mercille]

On the GST, no.

[The Chair, Liberal, Wayne Easter]

Just for clarification, there's nothing in consequential amendment NDP-4 that covers off this point either, is there, Pierre?

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Here, we are really talking about excise taxes under the Excise Tax Act, 2001. Amendments NDP-5, NDP-6 and NDP-7 would help to improve the current situation with regard to cannabis. As we speak, cannabis is taxed throughout Canada, either by means of the GST, the HST or the QST. This amendment only concerns the excise tax. The situation would be similar to the situation for alcohol producers. As soon as they produce a drop of alcohol, they are subject to the excise tax. The same system would apply to cannabis, because it would be the same law. Just as is the case for alcohol and tobacco products, we would tax cannabis at the production level, and not at the retail sales point.

[The Chair, Liberal, Wayne Easter]

Mr. Albas.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

I think the purpose of the amendment is to create a definition in law so that there can be an exemption down the road. I think that's the pith and substance of it, so I'll take it as that.

I just want to correct the good member from the NDP. When I go to many Okanagan wineries, many of the people there will tell me that they are sampling the wines for their heart, for good health reasons.

I just don't like you lumping alcohol in as being a sin tax.

[The Chair, Liberal, Wayne Easter]

That's a very good point.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

I knew I'd get a laugh out of at least one of you.

[The Chair, Liberal, Wayne Easter]

That's just red wine, isn't it?

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Yes. Well....

[The Chair, Liberal, Wayne Easter]

It's a good job we're not the health committee.

We'll vote on NDP-3.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

I would like a recorded vote.

(Amendment negatived: nays 5; yeas 4 [See Minutes of Proceedings])

[The Chair, Liberal, Wayne Easter]

NDP-3 has been defeated. As a result, we will not be dealing with NDP-4.

We'll turn now to PV-2.

Ms. May.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Chair, our Green Party amendment PV-2 attempts to do the same thing the NDP amendment attempted to do. It's at least in the same ballpark, I think. My amendment recasts, or tweaks, if you will, the definition of “prescription cannabis drug”. What I'm attempting to do here, and I hope it will be effective, is to ensure that medical use of cannabis is not exposed to a GST/HST charge.

I appreciate the support down this whole side of the table. It's nice to be working with Dan Albas again. We worked on “free the grapes”. Maybe we can help people who need medical cannabis at the same time and get everybody on board.

What I've done with this amendment is to say the following:

prescription cannabis drug means a cannabis product that is intended to be sold for medical purposes in accordance with the Controlled Drugs and Substances Act or the Cannabis Act or a cannabis product

This will get us out of the requirement for a DIN. We do know, according to testimony before this committee, that 269,000 Canadians are using cannabis for medical purposes on the authorization of their health care providers, but very, very few of those products actually currently have a DIN. Many of them may not be able to get through all the hoops to do so. This broadens the definition of “prescription cannabis drug” to a real-life example of how such drugs are used right now.