Why patients pay taxes on medical marijuana—and have trouble getting it covered by insurance
Gerald Major credits medical marijuana for helping him cut his opioid use down to a third of what he used previously. His spondylitis, an arthritis of the spine, causes serious and daily chronic pain that makes it difficult to sleep and function in the day. Medical cannabis, he says, isn’t a magical cure, but it helps. “It helps me with my mood more than anything, which helps me handle and process my pain differently,” he says.
More than 100,000 Canadians have prescriptions for medical cannabis, according to Health Canada data, but most pay for it out of pocket. They also pay sales tax on it, and the federal government is proposing that they be taxed even more. Last month, patients protested the federal government proposal that they pay the same 10 percent “sin tax” as recreational users when the drug becomes legal later this year.
Patients who use medical cannabis, like Major, argue that insurance coverage for medical cannabis should be expanded, and just like any prescription drug, it shouldn’t be taxed. But governments, employers and insurance providers worry about illegitimate use of the medical cannabis system.
How is cannabis covered now?
Medical cannabis is currently covered in extremely rare cases by government-funded and privately funded plans. But that might be changing. Last year, Loblaw Companies Limited and its subsidiary, Shoppers Drug Mart, announced the company would cover medical cannabis for up to $1,500 a year for approximately 45,000 of its employees, but only for symptoms related to multiple sclerosis and cancer. Also in 2017, the Ontario Public Service Employees Union began covering up to $3,000-a-year worth of medical cannabis for its employees, without stipulations on what it’s used for. The drug is only covered with a prescription from a doctor. Other unions and companies have since followed suit.
At other companies whose drug plans do not cover medical marijuana as described above, individual employees or claimants have challenged their companies, and the employers have agreed to cover medical marijuana for those individuals only, explains Joan Weir, director of health and disability policy with the Canadian Life and Health Insurance Association. For example, the Workers Insurance Safety Board in Ontario will cover medical cannabis on a case-by-case basis. “Most insurers will have employers who have said, ‘I want to cover medical cannabis for this person.’ There are exceptions on file,” says Weir.
Jonathan Zaid is one exceptional case. He is the founder of Canadians for Fair Access to Medical Marijuana, a patient advocacy non-profit organization that has received funding and grants from medical marijuana producers and clinics. The University of Waterloo student uses medical cannabis to treat his migraines and insomnia and a couple years ago, he challenged the fact that the drug wasn’t covered. His insurance had paid for dozens of other, more expensive prescriptions, none of which worked as well as medical cannabis. His student union, which administers the health insurance plan, eventually agreed with Zaid and the drug is now covered. But, Zaid says, most patients aren’t as fortunate. “It’s very common that patients are challenging their employers, but the success rate is not as high as we’d like it to be.”
Patients who can’t find coverage are on their own. Carole Reece, who suffers from spondylitis, chronic migraines and fibromyalgia, spends $300 a month on her medical cannabis, and she says she would spend more if she could afford it. Currently, she is vaporizing marijuana, but she would prefer to use the more costly gel capsules, which, she explains, “last longer and are easier to use.” She adds the drug has reduced her reliance on anti-inflammatory drugs. “Those are quite hard on my stomach,” she says.
According to Zaid, many people who use medical cannabis spend hundreds of dollars a month on the drug, and the number one reason people use medical cannabis is for chronic pain. He thinks insurance providers should “at least fund medical cannabis for non-cancer chronic pain in adults,” in addition to the more frequently funded cancer- and MS-related symptoms.
Why doesn’t health insurance cover cannabis?
Chris Kamel, director of the Rapid Response unit of the Canadian Agency for Drugs and Technologies in Health, says the evidence that cannabis effectively treats chronic pain is thin. He has headed several reviews of the health effects of the cannabis plant and synthetic forms—all at the request of health care decision makers, such as insurance companies. While some studies and reviews show therapeutic benefits for certain conditions like pain and post-traumatic stress disorder (PTSD), “we’re often looking at small studies or uncontrolled studies [studies without a placebo group],” Kamel says. “And largely the evidence is short-term, but we know people who use cannabis may use it for many years,” he says.
Research shows that cannabis has side effects, including short-term cognitive impairment, dependency, and psychotic symptoms. With most studies only following people for under a few months, it’s difficult to know whether the benefits outweigh the risks over the long term, Kamel explains.
“A number of patients are claiming they’ve really seen enormous benefits. We do not have the evidence to support that right now,” says Jason Busse, associate professor at McMaster and the co-director of the Michael G. DeGroote Chronic Pain Clinic.
Busse explains that decision makers can’t trust patient anecdotes, because patients may feel better due to the placebo factor, or they may have become dependent on cannabis. “You can become physically dependent on cannabis and feel withdrawal symptoms when you don’t take it, so you might continue to take it to treat withdrawal, thinking it’s helping you,” he says.
The demand for high-quality evidence before medical cannabis is funded puts users in a bind. “We do think that the federal government has a responsibility to fund medical cannabis research and we hope they’ll do that in the upcoming budget,” says Zaid.
Some have argued that cannabis should be covered as an alternative to opioids to treat chronic pain for some patients. For example, in a commentary in the Canadian Medical Association Journal, David Juurlink wrote, “many analgesics we might prescribe instead of cannabis are themselves not supported by robust evidence” and that “the direct toxic effects of cannabinoids are simply dwarfed by those of opioids and nonsteroidal anti-inflammatory drugs.”
Yet Dr. Esther Choo, an emergency medicine professor at Oregon Health State University, argues that we should learn from the opioid crisis and not make the same mistake of funding cannabis, without high-quality evidence that it’s helpful for chronic pain.
Zaid points out that many employers are concerned that if marijuana is covered for chronic pain and other common indications, people who enjoy cannabis recreationally will argue that they’re in pain to get a prescription for the drug, massively escalating costs. However, he says, “there are ways to mitigate those kinds of risks to ensure only people most in need who have legitimate conditions and proper documentation get covered.” For example, for many high-cost drugs, insurance companies require doctors to share detailed information about their patients’ conditions in order to receive approval for coverage, a process known as prior authorization.
Major thinks that there needs to be “accountability,” in that patients should be able to demonstrate a reduction in pain medications to have their medical cannabis covered. Otherwise he fears that patients will use cannabis on top of their other drugs without an improvement in their quality of life.
Why is medical cannabis taxed?
Late last year, Finance Minister Bill Morneau announced that medical and recreational cannabis would have the same excise tax applied, of 10 percent. The decision was in keeping with recommendations by Health Canada’s task force on the legalization of marijuana, which called for a single supply system for both medical and non-medical use. Bill Blair, parliamentary secretary to the Minister of Justice and lead on marijuana legalization told the media that the government is concerned that little or no taxation of medical marijuana could drive recreational users to inappropriately use the medical cannabis system.
But Paul Lewin, a Toronto-based criminal defence lawyer who focuses on the cannabis industry, thinks the concern that a tax rate differential will lead to abuse fails to appreciate the checks and balances of the medical system. “You need a doctor to sign off in order for it to be legal,” says Lewin. “Why are we casting doubt on doctors?”
Adam Greenblatt, an advocate for medical marijuana and the Québec Brand Manager at Canopy Growth Corporation, points out that other countries have tax rate differentials. Colorado taxes medical marijuana at 2.9 percent, and recreational marijuana at 15 percent, for instance.
Reece is concerned the excise tax will be an additional, unfair barrier, given that other drugs aren’t taxed. She points out medical marijuana users already pay sales taxes. “We should be treated fairly and as equitably as other patients who access other health products,” she says.