VANCOUVER, B.C. (CN) - To protect the identities of its suppliers, a medical marijuana provider challenged provisions in Canada's Income Tax Act that allow the Canada Revenue Agency to require disclosure of documents from an organization that is not the target of an audit. The British Columbia Compassion Club Society serves more than 6,000 members, all of whom have the support of a doctor, according to the federal complaint, or application, as it's called in Canada.
While marijuana is still illegal in Canada, the society relies upon a 1998 legal opinion from attorney John Conroy Q.C., which stated that marijuana possession is legal if the drug has been prescribed by a doctor.
The society provides patients with "high quality, organically grown, and chemical free strains of cannabis," the application states, and none of its strains "should be equated to cannabis sold commonly on the 'street.'"
The Canada Revenue Agency served the society with a 30-day notice under a special enforcement program, seeking documents and other information "all aimed at uncovering the identity of the cultivators from whom the applicant has purchased its members' supplies."
"The applicant straddles a very difficult position in that its members' activities are legal, but it is impossible for the applicant to obtain a supply of legally cultivated medical grade cannabis to provide to its members to alleviate their suffering," the application states. "Given the element of criminality present in the cultivating and distribution of the medical grade marijuana, the applicant has been careful not to obtain information that could identify its cultivators."
The Canadian tax man threatens "the very essence" of the society's existence, the application states, because cultivators will cut off supplies if they view the society as a source of information for law enforcement.
"In short, it is foreseeable that the requirement will have a punitive impact on both the applicant and the applicant's members," the application states.
The society wants the tax agency to "consider the potential 'collateral damage' from its use of civil audit powers," and a declaration that its "failure to consider 'collateral damage' should be grounds to find that the underlying decision is unreasonable."
The society is represented by Gavin Laird of Pitt Meadows, B.C.