Legion officials say there are increasing concerns about poorly trained dogs, and there should be national standards.
Service dogs can be trained to help veterans with PTSD by alerting them to their symptoms, whether it's night terrors or anxiety in a public place.
Commands in Ontario and British Columbia have funded dogs but have put that funding on hold until standards are in place.
Dave Gordon, executive director of the Royal Canadian Legion Ontario Command, said while his organization is eager to see PTSD service dogs paired with veterans, a number of people have complained after purchasing dogs that could not do their jobs.
"If somebody comes up with a good idea to raise money, somebody else comes up with a good idea, a way to scam it," said Gordon.
Gordon told CBC News the Ontario Command has had to turn down about five requests for poppy fund assistance for PTSD service dogs since that decision.
In January 2014, the British Columbia/Yukon Command announced it would pair veterans with PTSD with service dogs. After funding about half a dozen dogs through one provider, executive director Inga Kruse said the command put a moratorium on funding the dogs because some veterans using them brought concerns to their attention.
Quebec and P.E.I. commands haven't had any requests to fund service dogs, but say they won't approve any applications until there are national standards.
'Like the Wild West'
Medric Cousineau, who runs an organization in Halifax that pairs veterans with PTSD service dogs, also thinks the service dog industry needs a national standard.
"The service dog market right now, in a lot of cases it's like the Wild West and there's not a lot of regulation out there,” said Cousineau, who runs Paws Fur Thought.
Cousineau runs his organization through the Nova Scotia Nunavut Command. While some of his clients have received funding through local legion poppy funds in Ontario and Nova Scotia, much of the money comes from other fundraising.
Nova Scotia's Royal Canadian Legion Branch 164, in Eastern Passage, used $3,200 of its poppy funds to help Cousineau buy his own service dog to help his PTSD a few years ago, said "Lefty" Layton Hollis, the branch's president.
"I do believe that there should be a standard set somewhere to make sure not only is the dog trained properly but is the dog compatible with the individual," said Hollis.
Advice for legions
Alberta/Northwest Territories Command told CBC News it's continuing to approve poppy funds for PTSD service dogs, provided certain guidelines are met.
The legion's Dominion Convention in June 2014 passed a resolution allowing regional commands to authorize up to 25 per cent of poppy funds at local branches to help veterans fund PTSD service dogs.
Ray McInnis, director of the Dominion Command, said in an email that while the regional branches have autonomy, he has advised them to follow certain rules if they pay for these service dogs.
Those rules include the legion selecting a Canadian service dog provider that is "able to show proof of liability insurance" and can "conduct an intake process that determines that the veteran is in the right phase of his or her recovery or treatment to receive a service dog, i.e. has a doctor’s prescription or recommendation and is financially able to care for the dog," wrote McInnis.
By late spring, Veterans Affairs Canada hopes to launch a pilot project pairing 50 veterans with PTSD, with service dogs. It hopes to study the potential therapeutic effects, as well as developing a national standard for dog providers.
"While we're doing this pilot we want to put together national standards to try to see how we can ensure that if a veteran gets a dog that it's going to meet their needs and it's going to provide a benefit," Veterans Affairs Minister Erin O'Toole told CBC News.
"We're also going to study, does this service animal help the underlying psychiatric condition or mental condition? Or is it helping their anxiety? Which is a good thing, but is it actually treating the underlying operational stress?"
The preliminary work for that pilot project is already underway, led by the Canadian Institute for Military and Veterans Health Research.
When CBC News asked the minister about concerns raised by legion branches about what they say are poorly trained service dogs, O'Toole said, "We want to make sure that that the service animal is the right one and is properly trained."
He explained the growing popularity of service dogs as help and potential therapy for PTSD was the main reason behind Veterans Affairs developing a pilot project.
"I think we can give peace of mind to veterans knowing that, in the future, once we have this standard, if they have a service dog join their family, they know that it's properly trained, they know the care that's required."
Once the pilot project gets underway in the upcoming months, it could take 18 to 24 months before national standards are in place.