The federal government will significantly reduce the amount of medical marijuana for which it reimburses veterans as it attempts to rein in a program expected to cost $75-million this year.

The new policy, which will limit veterans to three grams of medical marijuana a day instead of 10, was announced six months after a report by Auditor-General Michael Ferguson identified a massive surge in medical marijuana prescriptions for veterans and raised concerns about the small number of doctors writing those prescriptions.

The new limits take effect on May 21, 2017, for veterans whose marijuana prescriptions are already covered. New patients will start at the lower daily limit immediately. Veterans authorized by a specialist to receive more than three grams a day can seek exemptions.

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Veterans Affairs Minister Kent Hehr announced the new policy on Tuesday at the Canadian Military and Veteran Health Research Forum in Vancouver.

"Since the first veteran was reimbursed on compassionate grounds in 2007, the department has been reimbursing veterans for cannabis in increasing numbers at an increasing cost," Mr. Hehr said. "We went from one veteran to over 3,000 in eight years, many of whom are accessing up to 10 grams per day."

The policy change will affect about two-thirds of the 3,071 veterans currently being reimbursed for medical marijuana, said Michel Doiron, assistant deputy minister of service delivery at Veterans Affairs Canada (VAC). About 2,000 veterans receive four grams a day or more; 900 of those receive 10 grams a day or more, Mr. Doiron said.

In 2008-09, five veterans incurred costs of $19,088. From April to September of this year, marijuana for 3,071 veterans cost the federal government $31-million.

"We had estimated that somewhere around $75-million would be our cost this year just for marijuana," Mr. Doiron said.

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The new policy also includes a maximum limit of $8.50 per gram, which VAC calls a "fair market value price."

The policy will include the equivalent value in fresh marijuana and cannabis oil. Until now, Ottawa had reimbursed veterans for dried buds only, despite a Supreme Court of Canada ruling that being limited to smoking or vaporizing put sick people at risk of cancer and bronchial infections.

Mr. Hehr said VAC and the Canadian Armed Forces (CAF) will launch "a research project to clarify and contribute to evidence of the effect on the health" of veterans.

The Auditor-General's report said medical marijuana prescriptions for veterans increased after Ottawa overhauled its home-growing regime two years earlier.

That report also found that 53 per cent of 1,300 veterans got prescriptions the previous year from just four doctors.

Mr. Doiron said on Tuesday that VAC and the CAF have raised concerns with the federal college of physicians.

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Vic Neufeld, president and chief executive officer of Aphria, a licensed producer that serves about 650 veterans, said the three-gram limit seems "out of line."

Veterans often have conditions that are much more serious than those of the average medical marijuana patient, which can necessitate stronger strains, or more marijuana.

According to Health Canada, the average Canadian is authorized 2.6 grams per day.

"Our average, non-veteran patient is probably close to 1.5 grams a day, compared to 4.6, 4.7 grams a day for veterans," Mr. Neufeld said. "With PTSD, they basically self-medicate throughout the day … but the [average] patient of Aphria is there for a sleep disorder. So she may take it two hours before bed time."

Of 650 veterans, Mr. Neufeld estimates fewer than 50 have prescriptions for 10 grams a day.

With a report from Renata D'Aliesio