By Lucas De Vries

February 20, 2020
Reading Time: 2 minutes

Cannabis flowers are a product with special properties that are not a substitute for tobacco. The Swiss Federal Court ruled.

The latter brought a case before it against the taxation of light cannabis at the same level as tobacco products. A model that followed in Luxembourg and Belgium. The Federal Court, unlike the Federal Administrative Court, held that “from the consumer’s point of view, [legal] cannabis flowers do not replace conventional tobacco products and satisfy other needs”.

Swiss light cannabis was previously taxable at 25% of its sale price. In addition to Swiss VAT and a specific tax of CHF 80 per kilogram. The Federal Supreme Court’s final ruling, therefore, cancels this tax.

What are the repercussions of the Swiss market?

The Swiss Customs, which collects the tax, have not yet updated the information notices for traders. Until now, traders have had to declare the number of packaged bags of light cannabis each month and then pay the corresponding fees. Packets with the words tobacco (“Smoking kills”) should also no longer be necessary.

According to our information, the customs authorities should make the new information available online by the beginning of next week at the latest.

Nevertheless, further reflection could be given to the real status of light cannabis. Which has so far been related by default to a substitute for tobacco. Will a new tax specific to cannabis come into force ?

Also, will the taxes collected so far have to be refunded? This would mean taking at least CHF 60 million from the funds of the Old-Age and Survivors’ Insurance and Disability Insurance. Which depend on tobacco and beer taxes.

On the consumer side, the consequence could be a slight drop in the price of a gram of cannabis to less than 1% THC in Switzerland. However, it is to be hoped that dealers will be able to maintain a higher margin without having to pass on the lower prices at the checkout.

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