09/11/2015 04:49 EDT | Updated 09/11/2016 05:12 EDT

Prescribed Medical Pot OK'd As Revenue Canada Expense, Industry Group Says

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The Canada Revenue Agency has said medical cannabis purchased under prescription is an allowable medical expense at tax time, according to the Canadian Medical Cannabis Industry Association (CMCIA).

The CMCIA said it got a letter from the CRA last month saying cannabis from a licensed producer qualifies as a medical expense.

The CRA was responding to a letter sent earlier this year by the CMCIA, the industry association for licensed producers of medical cannabis, asking for a ruling on the issue, according to association spokesman Cam Battley.

The CRA has not yet responded to a request for confirmation.

"This is an important step, because it allows patients to write off a major component of their health-care costs," Battley told CBC News.

While the allowable medical expense is a complicated formula that is calculated based on taxable income, the cost of legally licensed marijuana can be high, meaning many who use the drug under prescription may be eligible.

Battley estimated an average cost per patient of about $7.60 a day, meaning a full year's prescription could cost  $2,774. The cost of the drug can be lower or higher, depending on dosage and type.

Health Canada moves against storefront dispensaries

Earlier this week, Health Canada sent out cease-and-desist letters to 13 unlicensed marijuana dispensaries demanding they shut down immediately.

It threatened raids by the RCMP unless the dispensaries submit a written statement by Sept. 21 confirming they have ended the practice of dispensing marijuana.

The threat carries through on Ottawa's warnings that it will not tolerate storefront dispensaries.

The CMCIA is continuing its campaign to normalize the use of cannabis from licensed producers with a legal prescription from a doctor.

Battley said the next objective of the CMCIA is to achieve broader coverage of cannabis prescriptions by private insurers.

He said the group has opened discussion on the issue with the insurance industry and found it "Surprisingly open and willing to have a conversation."

Lobbying for private insurance coverage

"I think that's because they know it's here to stay. This is not flash-in-a-pan…it's something around which there is a parallel regulatory system It's a true prescription drug and it's here to stay," he said.

Earlier this year, Sun Life agreed to pay for a University of Waterloo student's medical marijuana prescription through his student health plan after the student union went to bat for him. Jonathan Zaid uses the drug to combat a syndrome called new daily persistent headache.

"This is an offset for the insurers to pay for medical cannabis as his regimen of medical cannabis was cheaper than his regimen of prescription drugs," Battley said.

Battley said employers may also be receptive, as it is a question of getting people back to work after an illness.