BC Medical Marijuana Growers to Pay Tax on Illegal Income

The Canada Revenue Agency is trying to smoke out some income tax from marijuana growers who supply B.C.’s Compassion Club.

Medical marijuana may be legal, but the club’s suppliers don’t grow it legally.

When Canada Revenue demanded a list of its growers for income tax purposes, the club went to court claiming CRA would scare off its suppliers.

Compassion Club lawyer John Conroy says the two sides have reached an agreement and the club is now trying to convince growers to claim their income.

He says many people don’t realize that even if you’re involved in illegal activities, declaring the illegal income won’t result in criminal charges.

By law, CRA must keep all tax information confidential and an agency spokesman says their only concern is the income – not the source.

– Article from The Globe and Mail.

Pot growers can’t hide from the tax man, B.C. Compassion Club told

by The Canadian Press

VANCOUVER – Police may turn a blind eye to the sale of unlicensed medical marijuana in British Columbia, but the tax man doesn’t.

The Canada Revenue Agency came knocking on the door of the British Columbia Compassion Club last October looking for a list of its pot suppliers.

The club went to federal court asking for a judicial review of the agency demand, arguing that ill medical marijuana users would be the losers when supplies dried up because they had to give up the names.

“If the applicant is seen as a source of information for authorities, it is foreseeable that cultivators will cease to deal with the applicant,” say documents filed in federal court.

“The applicant’s position is that the CRA should consider the potential ‘collateral damage’ from its use of civil audit powers.”

The Vancouver-based non-profit society supplies medical-grade marijuana to about 6,000 registered members diagnosed with everything from arthritis and glaucoma to cancer and HIV.

Instead of proceeding with the court action, the club has worked out an agreement with the federal tax agency, said John Conroy, lawyer for the Compassion Club.

Now, club organizers are trying to convince 30 or so growers to step forward and declare their income to the agency during an amnesty worked out with the agency.

“A lot of people don’t realize that even if you’re involved in illegal activity, declaring your income will not result in you being busted, because the CRA is not allowed by law to pass the information on to police,” Conroy said.

Since 2001, patients with an exemption from Health Canada are able to grow medical marijuana or get someone else to grow it for them. However, in its application to the federal court the club claims is impossible to obtain a legal supply of cultivated, medical-grade cannabis and so it relies on an illegal supply.

“Cultivators for the applicant grow in contravention of existing laws and risk criminal sanction,” the club claims in the request for the federal court review.

That will be one of the difficulties in convincing the club’s growers to step up to claim revenues, Conroy said in an interview.

And while the club puts strict organic farming conditions on growers and bans the use of chemicals, it insists it knows little about the growers themselves.

“Because of their fear of the law and government and so on, the information that the club has on the various growers is very, very thin,” said Conroy.

In many cases, organizers have only first names, he added.

That fear is one of the reasons why the club went to court when the revenue agency asked for three years of information.

A spokesman for the Canada Revenue Agency would not talk about the specific case involving the Compassion Club, but said income is taxable whether it’s legal or not.

“You file your return, that’s the end of it,” said Dave Morgan. “Section 241 of the Income Tax Act keeps your information confidential.”

Morgan said there are certain circumstances under the Criminal Code where police can make a request for information if charges have been laid, but added that police access is highly regulated.

“Our concern is that individuals report their income, regardless of its source,” Morgan said.

The Compassion Club’s website claims its growers don’t make a huge profit, because the medicinal cannabis must be organically grown.

“Prices are kept as low as possible so the medicine remains affordable, generally between $8 to $9 per gram,” it said.

The daily menu at the club also offers members non-smoking options such as cannabis-infused butter and olive oil, tinctures and sprays and a variety of baked goods, including wheat-free, vegan and sugar-free options.

– Article from Winnipeg Free Press.