$147,000 tax bill for Victoria medical-marijuana club
Sep 08 2012
Ted Smith of the Cannabis Buyers Club of Canada says the group will become a non-profit society.Photograph by: Darren Stone, Times Colonist , Times Colonist
The tax man has come knocking at the door of the Cannabis Buyers Club of Canada, and its founder said there will be full compliance from the organization.
Ted Smith, who has run the club for more than 16 years, said it now has a tax bill of more than $147,000 from the Canada Revenue Agency for unpaid HST in the first six months of this year.
"We started to collect HST here in the store around July 28. So, for over a month now, we've actually been giving out receipts and collecting HST that we are going to remit to the government."
He said the club has about 4,000 clients who come to the small storefront on Johnson Street for medical marijuana to help treat various kinds of pain and illnesses.
The new tax reality is bringing structural changes to the operation, Smith said.
"Part of this transformation, of being in compliance with the tax laws, is creation of a new, non-profit society," he said. "It's going to be called the original name of this group, the Victoria Cannabis Buyers Club."
That means ownership will be transferred to the non-profit in the near future, he said, adding that the sale price will be $420 - a reference to 4/20, a slang term that refers to cannabis culture.
After selling the club, Smith said he will earn his livelihood from such things as sales of his newly published textbook Hempology 101: The History and Uses of Cannabis Sativa.
Smith said he doesn't have the personal resources right now to pay the tax bill, but he hopes that creating a non-profit society will shift the burden of the current tax bill to him.
"I don't want the club to be held accountable for essentially my mistakes here. It doesn't seem fair or reasonable to go after the non-profit group when it's my bill and something that I'm responsible for."
As for his personal resources, Smith said he has been taking home about $24,000 a year but remains optimistic he can find a way to deal with the taxes.
"We'll see in the future, if I sell enough books and the donations come in, maybe I can afford to make payments on a bill like that."
He said he has established a good rapport with the taxation office and will be talking to a staff member next week. Confidentiality rules prevent the Canada Revenue Agency from commenting on specific cases.
Smith said taxation officials began taking a closer look at the club during a court case involving colleague Owen Smith (no relation) for his work as a baker with the club.
Owen Smith was charged with trafficking and unlawful possession of marijuana after making cookies and skin products from the substance in a downtown apartment building.
Judge Robert Johnston was hearing the case and ruled in April that restricting the use of medical marijuana to only its usual dried form is unconstitutional. He gave Health Canada a year to respond. Owen Smith will be back in court in early 2013.
The city has another medical-marijuana group called the Vancouver Island Compassion Society.
On the national level, the Canadian Association of Medical Cannabis Dispensaries has obtained a legal opinion that says GST and HST should not be charged to medical-marijuana patients, president Rade Kovacevic said.
"We've been working on trying to get clarification on this, so that dispensaries can be following the legislation as needed - as well, though, so that patients aren't paying taxes that they may not have to."