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Revenue Canada

by tedsmith » Thu May 17, 2012 3:52 pm

Well, it had to happen sooner or later. Last Friday, 4 weeks after we changed the MMAR, two Revenue Canada agents came to visit me at the Cannabis Buyers Club of Canada. One was from the Special Enforcement Program, the other was a Collection Enforcement Liaison Officer. It seems our court case has come to their attention, especially the parts that say the club does not collect income taxes or GST.

Since the beginning I have run the club as an unincorporated co-operative. I have paid my personal taxes but do not have books, a bank account or a legally incorporated society or company for the club.

All that is about to change.

While it is impossible to say how things will work out, it appears as though we are going to be able to work with Revenue Canada towards incorporating a co-operative, opening bank accounts and moving to a new bigger facility with a kitchen!

I have decided to hold the 1st Annual General Meeting on Sat Sept 22, 2012 and hope to move into a new space on Jan 1, 2013. In order to start moving things along, I have decided to form two committees, Finance and Incorporation. The Finance Committee will primarily deal with Revenue Canada, book-keeping and fundraising. The Incorporation Committee will be disolved after the Sept 22 meeting, with its primary goals being the creation of the new society's by-laws and organization of the AGM.

The 1st meeting of the Finance Committee will be Thurs May 31 at 1 pm and the 1st meeting of the Incorporation Committee will be at 3pm.

I am also preparing to write a letter to the Minister responsible for Health Canada explaining the situation and repeating our request for an Exemption #56 from the Controlled Drugs and Substances Act. I will explain how I think our club could work with the proposed changes to the Marijuana Medical Access Regulations.

Our next meeting with Revenue Canada is on June 1. I will update the Hempology 101 forums and my facebook page as events develop.

I would like to extend a huge thank you to everyone who has helped me and the CBC of C get this far.
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by zigzag1a » Mon Jun 04, 2012 8:02 am

Hmmm, win a court case get a prize?
revenue Canada is most likely touring the country telling all dispensaries more or less the same story.
It's one way that the feds can get income from marijuana without having to agree with much of anything about it.
Medical marijuana exemptee.

"I am free, no matter what rules surround me. If I find them tolerable, I tolerate them; if I find them too obnoxious, I break them. I am free because I know that I alone am morally responsible for everything I do."
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by tedsmith » Wed Sep 05, 2012 2:10 pm

For Immediate Release

Weds Sept 5, 2012

Victoria, B.C.: The federal government might not want to licence medical cannabis dispensaries but they seem happy to make sure they are paying their taxes. About 4 months ago Special Enforcement Officers from the Canada Revenue Agency came into the Cannabis Buyers Clubs of Canada looking for HST and unpaid employee deductions. The club’s founder, Leon ‘Ted’ Smith, has run the operation as an unincorporated co-op for over 16 years. A press conference will be held at the club at 826 Johnson St. on Thurs, Sept 6 at 11 am to explain more details.

Victoria police brought the club to the attention of the CRA soon after a judge determined the Marijuana Medical Access Regulations were unconstitutional because they did not allow patients to make extracts of cannabis even if they had a licence to possess it. The trial started after a baker of the club, Owen Smith (no relation to Ted), was arrested in a downtown apartment making cookies on Dec 2009. A 20-day jury trial is scheduled for Feb 2013. So many problems exist with the current MMAR that major changes are being worked on, though those changes do not include compassion clubs or extracts.

Agents for the CRA have been very considerate, and have asked Ted to pay HST and employee deductions for the current year. The first bill for unpaid HST for the first 6 months of the year arrived on Fri Aug 31, putting Ted $147,808.88 in debt very suddenly. Another bill for unpaid employee deductions is expected soon. While the club intends upon joining other legal challenges against the application of the HST to medical cannabis, members have been charged HST since late July.

Surprising to many, Ted has looked forward to this situation. Now that the club is paying taxes, it seems the perfect opportunity for a non-profit society to form and officially take control of the organization. Changing the name back to the original Victoria Cannabis Buyers Club will help mark the new developments, as will new photo-id membership cards. After selling the club to the non-profit society, Ted plans upon making a living with his newly published textbook, HEMPOLOGY 101: The History and Uses of Cannabis Sativa.

For more information call 250-381-4220 or see cbc-canada.ca.

###
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by papapuff » Fri Sep 07, 2012 11:45 am

CBC.ca





Medical marijuana club in Victoria hit with $150K HST bill


CBC News
Posted: Sep 7, 2012 8:06 AM PT
Last Updated: Sep 7, 2012 10:25 AM PT


Image
Ted Smith, president of Cannabis Buyers' Club of Canada,
right, stands outside the B.C. Supreme Court courthouse in
Victoria, with Owen Smith, left, and lawyer Kirk Tousaw
following a recent legal victory. (CBC)

The Victoria founder of the Cannabis Buyers' Club of Canada has been hit with a $150,000 tax bill for not paying the HST on his medical marijuana sales.

Ted Smith says his club sells $2.5 million in medical marijuana annually, but he didn't think it had to pay HST. Last May, the taxman came to set him straight.

Smith says he will now have to pay six months worth of HST payments and some employee deductions.

"They're not asking me to submit for years past, and they're not fining and penalizing me. What they really want is for the club to be in compliance."

Smith says he is personally responsible for the $150,000 tax bill, so he'll pay it out of his own pocket.

"I'm the one that went this long without paying taxes or doing anything about it, and I don't think it's fair for the membership to have to pay."

Club to be restructured

He says for the past 16 years, he has run the Cannabis Buyers' Club of Canada as an informal co-op, so there are no actual assets for Canada Revenue Agency to go after.

"There is no other organization to go after. The Buyers' Club is unincorporated. There are no bank accounts.There's no society. It's just me. So, yeah, this is my personal bill."

Smith says the club will be turned into a non-profit society whose books will be open to its members. And he'll be cutting formal ties to the club and will no longer draw his salary of $2,000 a month.

"It's kind of a relief because people have been speculating that I have been making money off this and I haven't. The most expensive thing I have is the gold tooth in my mouth."

Earlier this year, Smith did win a legal victory when a B.C. Supreme Court judge struck down a section of Canada's medical marijuana laws that said licensed users cannot possess pot cookies or marijuana body creams.

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by tedsmith » Fri Sep 07, 2012 12:12 pm

CAMCD has obtained a legal opinion from David Sherman, Canada's leading
authority on GST/HST, that no GST/HST is payable on medical cannabis. This
issue has yet to be resolved. CAMCD has been working for two years to
clarify this important issue to ensure that patients do not have to pay any
more than they should for this essential medicine.

You can view the legal opinion here:
http://www.camcd-acdcm.ca/wp-content/up ... nnabis.pdf

*It should be noted that this is an extremely delicate and nuanced issue*.
We have been working behind the scenes carefully handling this situation
so as to avoid a roll-out of tax assessments against compassion clubs and
growers across the country, which could adversely impact tens of thousands
of patients and their providers.
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by papapuff » Fri Sep 07, 2012 2:51 pm

Peninsula News Review



Letter to the Editor




Doobie-ous tax bill mellows out Victoria marijuana club


By Daniel Palmer - Victoria News
Published: September 07, 2012 2:00 PM
Updated: September 07, 2012 2:20 PM

A Victoria medicinal marijuana club is being forced to pay $150,000 in backdated taxes on its estimated $2.5 million in annual sales.

Canada Revenue Agency began investigating the Cannabis Buyers’ Club of Canada and owner Ted Smith in early May, after he admitted in a B.C. Supreme Court case that he had not been paying taxes or employee deductions.

“Honestly, I’m just happy I’m not going to jail,” said Smith, who has operated the club for 16 years in Victoria.

“In a way, this is kind of a step towards legitimacy for us.”

Smith won the court case in April, which struck down a section of federal regulations that made the sale of edible marijuana and other products to medicinal users illegal.

As part of his evidence, he admitted the club had been avoiding tax payments.

“The police actually took that judgement to the CRA and they started investigating me from there,” Smith said, adding he will pay the tax bill out of his own pocket and separate himself from future club business.

“I’m going to be left with this mortgage-like debt, but the club’s not going to be affected,” he said.

Smith is currently in the final stages of appointing a board of directors with the intention of converting the club into a non-profit society.

Two committees on incorporation and finance are already working to ensure the new organization operates completely within the law, Smith added.

“We’ll be a lot more transparent, a lot more accountable. It’s a step we’ve been looking to do for a long time,” he said.

“I can live with a $150,000 debt. But I haven’t done anything criminal here at all, I’ve just not been in compliance.”

Smith hopes to use some proceeds from his recently published book, Hempology 101: The History and Uses of Cannibis Sativa, to help pay the massive tax bill.
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by papapuff » Sat Sep 08, 2012 11:18 am

Times Colonist





$147,000 tax bill for medical-marijuana club



Leader hopes to foot bill himself



By Jeff Bell, Times Colonist September 8, 2012


Image
Ted Smith of the Cannabis Buyers Club of Canada says the group will become a non-profit society.
Photograph by: Darren Stone, Times Colonist , Times Colonist


The tax man has come knocking at the door of the Cannabis Buyers Club of Canada, and its founder said there will be full compliance from the organization.

Ted Smith, who has run the club for more than 16 years, said it now has a tax bill of more than $147,000 from the Canada Revenue Agency for unpaid HST in the first six months of this year.

"We started to collect HST here in the store around July 28. So, for over a month now, we've actually been giving out receipts and collecting HST that we are going to remit to the government."

He said the club has about 4,000 clients who come to the small storefront on Johnson Street for medical marijuana to help treat various kinds of pain and illnesses.

The new tax reality is bringing structural changes to the operation, Smith said.

"Part of this transformation, of being in compliance with the tax laws, is creation of a new, non-profit society," he said. "It's going to be called the original name of this group, the Victoria Cannabis Buyers Club."

That means ownership will be transferred to the non-profit in the near future, he said, adding that the sale price will be $420 - a reference to 4/20, a slang term that refers to cannabis culture.

After selling the club, Smith said he will earn his livelihood from such things as sales of his newly published textbook Hempology 101: The History and Uses of Cannabis Sativa.

Smith said he doesn't have the personal resources right now to pay the tax bill, but he hopes that creating a non-profit society will shift the burden of the current tax bill to him.

"I don't want the club to be held accountable for essentially my mistakes here. It doesn't seem fair or reasonable to go after the non-profit group when it's my bill and something that I'm responsible for."

As for his personal resources, Smith said he has been taking home about $24,000 a year but remains optimistic he can find a way to deal with the taxes.

"We'll see in the future, if I sell enough books and the donations come in, maybe I can afford to make payments on a bill like that."

He said he has established a good rapport with the taxation office and will be talking to a staff member next week. Confidentiality rules prevent the Canada Revenue Agency from commenting on specific cases.

Smith said taxation officials began taking a closer look at the club during a court case involving colleague Owen Smith (no relation) for his work as a baker with the club.

Owen Smith was charged with trafficking and unlawful possession of marijuana after making cookies and skin products from the substance in a downtown apartment building.

Judge Robert Johnston was hearing the case and ruled in April that restricting the use of medical marijuana to only its usual dried form is unconstitutional. He gave Health Canada a year to respond. Owen Smith will be back in court in early 2013.

The city has another medical-marijuana group called the Vancouver Island Compassion Society.

On the national level, the Canadian Association of Medical Cannabis Dispensaries has obtained a legal opinion that says GST and HST should not be charged to medical-marijuana patients, president Rade Kovacevic said.

"We've been working on trying to get clarification on this, so that dispensaries can be following the legislation as needed - as well, though, so that patients aren't paying taxes that they may not have to."

jwbell@timescolonist.com

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by tedsmith » Tue Sep 11, 2012 10:41 am

Editorial: Tax on medical pot no joke for users

http://www.saanichnews.com/opinion/169320626.html

By Editorial - Saanich News
Published: September 11, 2012 8:00 AM

When a club that sells medical marijuana completely spaces out on paying $150,000 in income taxes, stoner jokes aren’t far behind.

But for the thousands of people who use marijuana to ease chronic pain from illness and side effects of legal medication, the possibility of losing ready access to medical pot doesn’t bring out the giggles.

Leon “Ted” Smith and his Victoria-based Cannabis Buyers’ Club of Canada has sold marijuana products for 16 years to thousands of people who can prove they have certain permanent diseases or chronic ailment.

Smith admits in the media and on his website that he’s avoided paying taxes to the Canada Revenue Agency for years and wrote: “(I) assumed I would end up in jail for it.”

This kind of sloppy bookkeeping does little to improve the public image of selling or using medical marijuana. Hopefully this won’t undo the good work Smith has done helping suffering people and challenging ethically-dubious laws that snares marijuana in a grey area of legality.

Indeed, among the number of court cases involving Smith and the CBCC, this year a trial involving the CBCC’s head baker had restrictive parts of federal medical marijuana law deemed unconstitutional.

This is typical of laws that try to have it both ways. Health Canada allows people to purchase and/or grow marijuana for medical purposes, which is a tacit admission that marijuana can help some sick people – while the agency discourages its use. Doctors in B.C. can prescribe marijuana, but the doctors’ college discourages that due to legal liability and a lack of scientific studies.

Sick people having some access to pot is better than none, but inconsistent messages from health authorities and the federal government opens the door for advocates such as Smith to operate businesses that are effectively illegal.

As Smith noted, out of his tax troubles the club will become a non-profit, run by a board. This is good news for the many legitimate pot users in this city who don’t have to risk the dangers of buying from dealers on the street.
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by CannabOwen » Fri Sep 14, 2012 11:56 am

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by tedsmith » Tue Sep 18, 2012 10:17 am

http://www.timescolonist.com/news/club+ ... story.html

Pot-club operator is happy to pay taxes

By Les Leyne, Times ColonistSeptember 18, 2012

Ted Smith is the happiest new taxpayer you can imagine. The longtime marijuana advocate was only too happy to go public recently with news that the Canada Revenue Agency has sent him a demand note for about $150,000 in back taxes.

That's based on just the last few months of operation of the long-running pot-buying club Smith runs for the benefit of people with various medical afflictions.

"In many ways this is a wonderful thing that's happened," he told reporters at a news conference. "Paying taxes - has been my dream since the beginning," he said.

Few recipients of demand notes from the tax collector talk like that. His enthusiasm obviously stems from the fact that paying taxes further legitimizes the club and is another step down the road toward decriminalizing marijuana.

And there's not much doubt that the finance arms of most governments would be as happy to tax Smith as he is to pay the taxes. Because the financial numbers he referred to - backed up by findings in an earlier court case - are startling.

The rundown little storefront on Johnson Street is doing a booming business. Smith estimated he's averaging $6,000 a day running it on what a judge earlier commented was a very casual basis.

If you wander around downtown looking at the retail landscape, you can count on one hand the number of small shops where they can boast that kind of cash flow. Smith told reporters the club brought in $250,000 in July.

Police have been sporadically busting the club's operations for years, but it doesn't seem to make much of a dent in the enterprise. A takedown of the club's bakery a few years ago resulted in the case where the glimpse of the financial picture was provided.

They knocked on an apartment door on View Street in 2009 and found a bachelor suite had been converted into a cannabis bakery. The baker worked directly for Smith and was paid between $10 and $13 an hour.

The eventual court decision by Justice Robert Johnston last spring noted: "Smith buys marijuana in pound quantities and pays employees, like the accused - to render between five and 10 per cent of the dried marijuana into other forms like cookies, oils, capsules and ointments. The bulk of the dried marijuana is packaged and sold through the store openly operated by the club in downtown Victoria."

The decision noted that Smith estimated the store - open seven days a week - generated revenue of $6,000 to $6,500 a day.

"Mr. Smith aims for a profit margin of between 20 per cent 25 per cent," said the decision.

Neither the club nor the store keep records and the society maintains only minimal records, said the judge.

So where the money goes is anyone's guess. Johnston's decision found that a non-profit society "is involved somehow," but "it appears that the club is a sole proprietorship wholly owned by Mr. Ted Smith."

Smith, who said he pulls down only about $24,000 a year from the store, said he will be rejigging the operation to turn it over to a society.

The key observation in the decision from last spring is that "neither the store nor the club collects or remits HST, nor does the business pay income taxes."


It looks as if the CRA can read court decisions just like everyone else. When the club's revenues came to light, it apparently sparked the demand for back taxes.

The bulk of the decision revolved around constitutional arguments over the difference between marijuana dried for smoking - the form stipulated under the current medical-marijuana regime - and pot processed into cookies and oils. The judge found the different treatment unconstitutional and gave the federal government a year to respond.

Whatever government lawyers make of cookies versus joints, it's clear the finance ministry has dollar signs in its eyes.

Imagine the provincial finance ministry, which just disclosed a billion-dollar hole in the books because of a natural-gas slump, learning of a multimillion-dollar business that is eager to start paying taxes.

It's just a taste of what's to come, eventually. Watch the municipal convention next week for another development, when the Union of B.C.

Municipalities debates decriminalization. A resolution from Metchosin urges decriminalization, and research on the regulation and taxation of pot, and it's apparently going to be duly considered.

lleyne@timescolonist.com

© Copyright (c) The Victoria Times Colonist


Read more: http://www.timescolonist.com/news/club+ ... z26qJ2NHTo
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by papapuff » Wed Sep 19, 2012 11:08 am

Goldstream News Gazette



Letter to the Editor



Prescription pot too expensive as is


Published: September 19, 2012 8:00 AM

My physician has filled out the forms to prescribe me medical marijuana – I need cannabis to help me eat because of the side effects from medication I take twice a day.

There is no tax on prescriptions in Canada. I should not be paying HST, which is now being charged at Ted Smith’s Cannabis buyers club. All my prescriptions are covered because I am on disability – except medical marijuana which is now $11.20 a gram. I already can not afford to buy it, not even close. Not everyone has a place to grow, or someone to grow for them. What good is medical marijuana if I can not afford to purchase it?

Stephen Nordquist

Victoria

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