The federal government has angered proponents of medical cannabis and the opposition by announcing that its planned excise tax on recreational products will also apply to marijuana that is used to treat various illnesses.

A large number of groups had been calling on Ottawa to remove the sales tax that is currently imposed on medical marijuana. Instead, they were shocked to learn on Friday that sales taxes will continue to apply on medical marijuana, but also that an excise tax of $1 a gram will be added on the product.

"It's a double whammy. This is of great concern for Canadian patients," said Philippe Lucas, executive director of the Canadian Medical Cannabis Council.

Story continues below advertisement

Ottawa is arguing that it does not want to create a financial incentive for users to buy medical marijuana for recreational purposes, but advocates said the excise tax will simply penalize sick Canadians – and push some of them toward opioid use.

"Today, patients are forced to make treatment choices based on finances, including switching to less effective medications with severe side effects, such as opioids. The proposed application of excise tax to medical cannabis will further compound these issues and will impose significant barriers for patient access," said Jonathan Zaid, executive director of Canadians for Fair Access to Medical Marijuana.

B.C. lawyer Kirk Tousaw said the courts have defended the right of sick Canadians to affordable access to medical marijuana.

"This is an adding a 10-per-cent burden to the existing cost, so it's new taxation aimed only at sick people. That is contrary to everything we know about how we should do medicine," he said.

The NDP said it will fight the proposal in Parliament, hoping to convince MPs from all parties to reject the proposal.

"From almost every public health angle, the decision by the Liberals to apply the excise tax is inconsistent and contrary to public health policy," said NDP MP Don Davies.

Conservative health critic Marilyn Gladu said that medical marijuana should be exempt of any taxes.

Story continues below advertisement

"This is just another example of the government going after the vulnerable for taxes. These are people who have chronic pain conditions or PTSD in many cases," said the Conservative MP. "They should have applied the zero tax that was recommended to them. They say they consult, but they don't listen."

There are about 300,000 Canadians using marijuana for medical purposes. The excise tax will add at least $300 a year to an average medical cannabis bill.

Prime Minister Justin Trudeau announced plans in October for an excise tax on recreational marijuana of $1 a gram on purchases less than $10, and 10 per cent on amounts more than $10.

As the federal government announced consultations on the proposed excise tax on Friday, it also said it would apply on medical marijuana to ensure that it will be priced in the same manner as recreational products.

"Our government remains committed to maintaining a functional medical marijuana system," said Liberal MP Bill Blair, who is the parliamentary secretary to the ministers of health and justice. "At the same time, we do not want the taxation levels to be an incentive for people to utilize that system inappropriately, and so we propose that the taxation levels for both medical and non-medical will be aligned."

Mr. Lucas said the federal government's rationale is flawed.

Story continues below advertisement

"It's a morally and ethically untenable position," he said. "We cannot punish the 99 per cent of Canadians who are legally using medical cannabis … in order to discourage the 1 per cent who might be inclined to cheat the system."

Based on an estimated black market of 400,000 kilos a year, the excise and sales taxes would bring in about $1-billion a year in revenue once the drug is legalized by July, 2018.

In the lead-up to legalization, the federal department of finance will consult other levels of government, as well as various stakeholders, on its proposed excise tax framework. The findings will be shared at a meeting of federal and provincial finance ministers on Dec. 10 and 11 in Ottawa.

According to the federal proposal, the excise tax would be split evenly with provincial governments.

Alberta Finance Minister Joe Ceci slammed the federal proposal for the 50/50 split for the excise tax, saying the provinces and municipalities will be responsible for the additional costs related to policing, education and other ongoing implementation work on the ground – not Ottawa. He said he doesn't quibble with the 10-per-cent tax, but says 100 per cent of that amount – or close to – should go to the provinces that will have to do the heavy lifting as recreational cannabis is legalized.

He said other provinces are on the same page.

Story continues below advertisement

"I'll be sending a letter immediately on behalf of all the provinces back to the federal government saying that's unacceptable, and we need to get in a room together to work this out," Mr. Ceci said speaking to reporters in Calgary late Friday.

Municipalities are also calling for a share of the revenue, given their role in enforcing bylaws.

"Your government has proposed a cannabis-revenue-sharing formula with the provinces to support ongoing costs," Jenny Gerbasi, president of the Federation of Canadian Municipalities, said in a letter to Mr. Trudeau on Nov. 2. "Given municipalities' central role in administration and enforcement, municipalities should be meaningful participants in these revenue-sharing conversations. Regardless of the formula adopted, ensuring public safety will depend on predictable, long-term support for local administration and enforcement."

B.C.'s finance minister said her government wants a greater share of marijuana tax revenue, arguing the province must shoulder costs related to legalization such as education and policing.

"I'm taking the federal minister at his word that this is a consultation and negotiation, so I'm looking forward to that conversation," said Carole James. "To look at a 50-50 split when we're taking more of the share of responsibility here in B.C. just isn't fair and certainly isn't going to work for our province."

With files from the Canadian Press