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ARTICLE · 07 OCTOBER 2026

When Is Cannabis, Cannabis?

Millar Kreklewetz
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The Canada Revenue Agency has quietly shifted its administrative position on cannabis trim classification, moving from treating it as lower-taxed non-flowering material to higher-taxed flowering material. This policy change is now resulting in significant audit assessments for cannabis producers who relied on CRA's previous guidance, potentially creating substantial additional duty exposure across the industry.

CanadaTax
Robert Kreklewetz
Robert Kreklewetz
Daniel Zhang
Daniel Zhang

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Cannabis cultivators and producers will generally be aware of the two-tier flat tax that applies to the production of cannabis products, such as pre-rolls. That is, a higher tax rate of $0.25 per gram applies to flowering material, while a lower tax rate of $0.075 per gram applies to non-flowering material – putatively on the basis that it is far less potent in terms of cannabinoid content (THC and CBD).

The CRA has recently – and very quietly – revamped its administrative guidance to seemingly eliminate this distinction, leaving many producers facing huge assessment liability in this area, or just paying too much tax!

Flowering or Non-Flowering? It Matters

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