Tax On Cannabis Is Repealed In Switzerland

The cannabis industry is booming in Switzerland, where low-THC cannabis products have increased in popularity and availability in recent years. Since 2011, low-THC cannabis products have been legal in Switzerland for adults. ‘Low-THC’ is defined in Switzerland as having less than 1% THC. High-THC products are still prohibited in Switzerland.

Switzerland is at the forefront of a floral hemp industry that is growing in size at an exponential rate. Often billed as a ‘tobacco alternative,’ low-THC products have generated quite a bit of revenue for the government of Switzerland, however, a recent court ruling will send at least some of that back to certain companies, as well as potentially prevent future types of taxation. Per Swiss Info:

The Swiss Federal Court has ruled that cannabis – the legal, low-THC version – should not be subject to the tobacco tax.

Responding to the complaints of three cannabis production companies, the court found that there was no legal basis for a 25% tobacco tax on the sales price of cannabis. The tax will be dropped immediately.

In Switzerland, cannabis with a tetrahydrocannabinol (THC) content of less than 1% is legal. It is sold as oil, tea or directly in its flower form. Cannabis blossoms are not explicitly mentioned in tobacco tax legislation, the Federal Court stated in its ruling, which was announced on Tuesday.

A lack of tax will help the industry thrive even more than it already was in Switzerland. Without the tax, products can be sold for cheaper to consumers, and that will presumably make products more enticing for customers.

The downside of the court decision is that it will obviously lower government revenues generated by the cannabis industry. It will be interesting to see if legislation is passed to impose a cannabis-specific tax to replace the incorrectly applied tobacco tax.

Cannabis is not the same as tobacco. Studies have found cannabis, especially low-THC forms of cannabis, to be much safer than tobacco. Also, as noted in the court’s decision, not all forms of low-THC cannabis are meant to be smoked. Many products in Switzerland are topical rubs, among other smokeless options.