Excise tax on Canadian THC products is at an extreme, according to a recent report documented on CLN. More recently, excise tax in the Canadian market has begun to motivate industry moves that resemble problems created by America’s Farm Bill south of the border. A processor patented a synthetic variation of THC to bypass excise tax, yet Delta 8 has yet to bypass limits on edible formulations in Canada.
Delta 8 wave under the US Farm Bill
Delta-9 THC is federally illegal in the US. In 2018, however, the Farm Bill redefined cannabis with less than 0.3% Delta-9 THC as hemp. Thereafter, hemp-derived cannabinoids such as CBD were legal minus a few nuances, such as the Analogue Act. This meant the Farm Bill accidentally defined every other form of THC as hemp.
Supply for CBD biomass outgrew its demand and prices for the therapeutic cannabinoid plummeted. Processors solved the problem by chemically converting legal CBD isolate into a lighter THC isomer. Loopholes created by the Farm Bill, therefore, led to a wave of legal Delta-8 and synthetic THC sales without tax or regulation. And for the next four years, transient state and federal laws have continued to fail to reconcile those loopholes.
Synthesizing loopholes in Canadian THC taxes
New products defined under the Cannabis Act must be approved through a Health Canadaportal following Section 244 of the Regulations. And all new cannabis products must go through the portal regardless of cannabinoid content.
In Canada, CBD has never been less legal than THC — up until a specific number of milligrams per package of edibles. A producer’s ability to grow CBD is, at least, just as restricted as THC. Fields of CBD biomass grow in the foothills of BC’s Coastal Mountains and numerous other locations across Canada’s landscape.
In Canada, though, THC legally defines delta-9 tetrahydrocannabinol. In contrast, the Act and Regulations do not restrict delta-8 THC in edibles. As an example, THC and THCa are both defined as Delta-9 under the Act and in guidelines within the portal. Furthermore, Total THC exclusively defines the quantity of D9 but not other isomers of the cannabinoid.
Taxing THC-o-acetate in the Canadian market
The CEO and Founder of one Canadian cannabis process discussed in a Linkedin post the waves their new THC-o-acetate patent will make in Ottawa. Bypassing excise tax is the company’s reason to push a synthetic variation of THC onto Canada’s market. More regulations will likely be the response, though. That is assuming any waves made by the patent will create flip-flopping laws similar to America’s post-Farm Bill market.
Let us know in that comments what you think of delta 8 as a means to bypass THC limits in edibles. Should synthetic forms of THC or other cannabinoids be used as a tax-free cash grab in Canada?