Cannabis

 

This page explains how PST applies to cannabis.

For up to date information on registering a business in B.C., applying for a cannabis retail store licence and registering to collect and remit the PST, go to our Cannabis and PST webpage. 

In this guide

• Registration
• Sales
• Purchases and leases for your business
• Improvements to real property and affixed machinery

Registration

PST applies to medical and non-medical cannabis products and cannabis accessories. Therefore, you must register to collect and remit PST if you sell or intend to sell medical or non-medical cannabis or cannabis accessories.

Medical cannabis

If you sell or intend to sell medical cannabis at retail in B.C., you must register to collect and remit PST. Before you can register for PST, you must be federally authorized to make retail sales of medical cannabis. You must provide proof you are licensed by Health Canada for sales for medical purposes at the time of registration.

Federal license holders located outside B.C. but within Canada may also need to register if they meet certain criteria. For more information, see Businesses in Canada but Outside B.C. in Bulletin PST 001, Register to Collect PST (PDF, 376KB).

Non-medical cannabis

If you sell or intend to sell non-medical cannabis, you must register to collect and remit PST. Before you can register for PST, you must have a registered business in B.C. and a cannabis retail store licence or a producer retail store licence. You must provide proof of your licence, and your business lease agreement or proof of land ownership, at the time of registration. For information on applying for a cannabis retail store licence or a producer retail store licence see non-medical cannabis licences.

Note: All businesses that must be registered to collect and remit PST are considered to be PST collectors whether or not they are actually registered. All PST collectors have specific obligations to collect and remit PST.

How to register

You can apply to register to collect and remit PST using any of the following options:

• Online: register online using eTaxBC (see Register to collect PST for more information)
• In person: at your local Service BC Centre
• By fax or mail: complete an Application for Registration for Provincial Sales Tax (PST) (FIN 418) (PDF, 420KB) and send it to us

If we approve your application, you will be provided with a letter advising you of your PST number and your ongoing reporting periods for your PST returns.

Businesses currently registered to collect PST

If you are already registered to collect PST and you become licensed to sell medical or non-medical cannabis products in B.C., you must provide us with proof you are licensed by Health Canada for sales for medical purposes or proof of your cannabis retail store licence or producer retail store licence as soon as possible. You may email copies to REVLIQCL@gov.bc.ca.

Wholesalers

If you only sell cannabis products or accessories at wholesale (for example, you sell cannabis to the BC Liquor Distribution Branch, or cannabis accessories to retailers), you are not required to register for PST. You may still choose to register so you can use your PST number to claim an exemption in certain circumstances, e.g. inventory purchases for resale. For more information, see Voluntary Registration in Bulletin PST 104, Wholesalers (PDF, 398KB).

Note: Despite any licence or designation indicating you are a cannabis wholesaler, if you sell cannabis at retail, you must register to collect and remit PST. Retail sales include selling cannabis seedlings, clones, or plantlets that customers use to grow their own cannabis for resale. 

Sales

Taxable sales

Cannabis products

You charge 7% PST on retail sales of cannabis products, such as:

• Fresh or dried cannabis flowers, capsules, extracts not designed for use in a vaping device, concentrates (including oils or tinctures) or topical products (except drugs listed in Schedule I or IA of the Drug Schedules Regulation. See non-taxable sales below)
• Cannabis seedlings, clones and plantlets 
  • Sales of cannabis seedlings, clones and plantlets for customers to grow cannabis for resale are retail sales
  • For cannabis seeds, see non-taxable sales below
• Cannabis products for household pets
• Soap or bath products containing cannabis
• Edible cannabis products (except edible hemp products, see non-taxable sales below)

Other goods

You charge 7% PST on retail sales of other taxable goods, such as:

• Cannabis accessories and their parts
  • Rolling papers or wraps
  • Grinders and screens
  • Holders
  • Pipes or bubblers
  • Bongs or water pipes
  • Dab or oil rigs
  • Batteries
• Cleaning tools and solutions for accessories
• Lighters

Vapour products

You charge 20% PST on retail sales of vapour products, which include:

• Vaping devices (e.g. vaporizers and vape pens)
• Cartridges, parts and accessories for these devices
• Vaping substances (e.g. cannabis e-juice)

See Notice 2019-005, Notice to Sellers of Vapour Products PST Rate Increase to 20% (PDF, 253KB).

Note: Dry-herb vaporizers (vaporizers used with dry cannabis) remain subject to 7% PST.

Non-taxable sales

You do not charge PST on the following products:

• Cannabis seeds
• Drugs listed in Schedule I or IA of the Drug Schedules Regulation (exempt for all purchasers, including hospitals, practitioners and health authorities)
• Food products derived from hemp plants and parts, such as hemp seeds, hemp hearts, hemp protein powder and hemp seed oil

Gift cards and gift certificates

You do not charge PST on a purchase of gift cards or gift certificates because it is a purchase of store credit a customer may redeem later. When a customer redeems the credit, PST applies to the purchase as if the credit was cash. PST will apply if the item purchased is subject to PST.

Sales to certain individuals

You do not charge PST on goods purchased by:

• First Nations individuals in certain situations (see Bulletin PST 314, Exemptions for First Nations (PDF, 498KB))
• Persons who qualify as members of the diplomatic or consular corps (see Bulletin CTB 007, Exemption for Members of the Diplomatic and Consular Corps (PDF, 188KB))

Small sellers

If you sell cannabis products, you do not qualify as a small seller (see Bulletin PST 003, Small Sellers (PDF, 313KB)). 

Purchases and leases for your business

Taxable goods

You must pay PST on the purchase or lease of new or used taxable goods you use in your business, such as:

• Advertising materials, such as flyers and brochures
• Cleaning supplies, such as rags, soaps and cleaning solutions
• Computer hardware, including point-of-sale systems and other electronic devices
• Energy for heat and light (except electricity)
• Freestanding freezer and refrigeration units
• Paper towels and toilet paper
• Shelving and display equipment
• Stationery, furniture and office equipment
• Supplies, such as cash register tapes, letterhead, toner, cleaning supplies
• Software, unless a specific exemption applies (e.g. custom software). For more information, see Bulletin PST 105, Software (PDF, 425KB)
• Related services you purchase for your own equipment, such as repairs to your office equipment. For more information, see Bulletin PST 301, Related Services (PDF, 462KB)

If your supplier does not charge you PST on the above items, you must self-assess (pay directly to us) the PST due on your next PST return. If you do not have a PST number, you must self-assess the PST due using a Casual Remittance Return (FIN 405) (PDF, 260KB) on or before the last day of the month following the month you purchased or leased the taxable items. For example, if you purchase a taxable item in July, you must file the return and pay the PST no later than August 31.

Goods brought into B.C.

You must pay PST if you purchase or lease taxable goods outside B.C. and bring or send them into B.C. or receive them in B.C. You pay PST on the total amount you pay to bring the goods into B.C., including charges for transportation, customs, excise, and any other costs, except the goods and services tax (GST).

If your supplier does not charge you PST at the time of the sale or lease, you must self-assess the PST due on your next PST return. If you do not have a PST number, you must self-assess the PST due using the Casual Remittance Return (FIN 405) (PDF, 260KB) on or before the last day of the month following the month you brought or sent the goods into B.C. or received the goods in B.C.

For more information, see Bulletin PST 310, Goods Brought Into B.C (PDF, 310KB).

Promotional materials

Promotional materials are goods you use, give away or sell below cost to help advertise or promote your business. Examples of promotional materials include samples, gifts, premiums and prizes, and goods given away as part of a loyalty or rewards points program. You must pay PST on all taxable goods you purchase or make as promotional materials. For example, you must pay PST if you buy hats or pens you will give away to promote your business.

Promotional material on which you must pay PST also includes taxable goods you obtain to sell at a price below cost. For example, you purchase a box of pipes at a cost of $20 per pipe. To promote greater sales, you offer to sell the pipes to preferred customers at a below cost price of $10 per pipe. Your customer pays PST on the $10 purchase price of the pipe. In addition, on your next PST return, you need to self-assess PST based on the following formula:

(Cost – Customer’s purchase price) x PST rate = PST to self-assess

($20 – $10) x 7% = $.70 PST to self-assess

Note: You do not need to self-assess PST on goods sold below cost if you are not selling the goods below cost for promotional purposes. For example, you purchased bottles of cannabis capsules at $15 per item and attempted to sell them for $25 per bottle. After some time, you decide to mark down the remaining items to $10 per bottle before the expiry date or because their value has decreased. In this case, your customer pays PST on the $10 purchase price of the bottles of cannabis capsules, but you do not need to self-assess any additional PST.

For more information, see Bulletin PST 311, Promotional Materials and Special Offers (PDF, 357KB).

Exempt purchases

Goods for resale

You are exempt from PST on goods (e.g. cannabis or cannabis accessories) you obtain solely for resale to your customers.

For more information, see Bulletin PST 208, Goods for Resale (PDF, 368KB).

Change in use

If you take taxable goods from your resale inventory for business or personal use, you must self-assess the PST due on your cost of the goods.

If you have a PST number, you must self-assess the PST due on your next PST return. If you do not have a PST number, you must self-assess the PST due using the Casual Remittance Return (FIN 405) (PDF, 260KB) on or before the last day of the month following the month you used the goods for a taxable purpose.

Goods incorporated into other goods for resale

You are exempt from PST on goods you obtain solely for processing, fabricating, manufacturing, attaching, or incorporating into other goods for resale, such as rolling papers that you obtain to make cannabis cigarettes. To purchase these items exempt from PST, give the supplier your PST number. If you do not have a PST number and you qualify, give the supplier a completed Certificate of Exemption – General (FIN 490) (PDF, 230KB).

For more information, see Bulletin PST 208, Goods for Resale (PDF, 368KB).

Containers and packaging materials

You are exempt from PST on containers and packaging materials (except reusable containers) you obtain solely for packaging goods for sale, or if you provide them to your customers with their purchases of goods. However, you must pay PST on containers and packaging materials if you use them for other purposes, such as storing, handling or shipping goods, or you use them to provide a service.

If you make your own containers and packaging materials solely for use in packaging the cannabis products you sell, you may purchase the materials exempt from PST.

Generally, you are not required to charge PST on the containers and packaging materials you provide with goods and services, unless you separately charge your customers for them. However, in limited circumstances, you may be required to charge PST on the fair market value of the containers and packaging materials.

For more information, see Bulletin PST 305, Containers and Packaging Materials (PDF, 502KB).

Labels

You are exempt from PST on labels you obtain solely for attaching to the goods you sell, provided they remain with the goods after the sale. If you remove the labels from the goods at or before the time of sale, you must pay PST on the labels.

To claim this exemption, you provide your PST number to your supplier or, if you have not yet received your PST number, a completed Certificate of Exemption – General (FIN 490) (PDF, 230KB).

Safety equipment and protective clothing

The following safety equipment and protective clothing is exempt from PST:

• Work-related safety equipment and protective clothing designed to be worn by, or attached to, a worker if required under specified provincial work safety legislation when purchased or leased by an employer, self-employed person or educational institution
• Specifically listed work-related safety equipment and protective clothing designed to be worn by a worker, including respirators
• Specifically listed general safety equipment and protective clothing, including first aid kits and portable fire extinguishers

For more information, see Bulletin PST 100, Safety Equipment and Protective Clothing (PDF, 317KB).

Improvements to real property and affixed machinery

Real property is land and anything that is attached to the land, so it becomes part of real property after installation (i.e. is no longer personal property at common law). This would normally include buildings, structures, and things such as machinery or equipment, that are attached to the land (or to buildings or structures) by some means other than their own weight.

If you enter into a contract under which a contractor will supply and affix, or install, goods so they become part of real property, your contractor must pay PST on the goods they use to fulfil the contract, unless a specific exemption applies. In this case, as the customer of the contractor, you do not pay PST on the contract.

For more information, see Bulletin PST 501, Real Property Contractors (PDF, 332KB).