Switzerland: Federal Court overturns tobacco tax on diet cannabis

«Cannabis flowers, even when smoked, are a product with special properties that are not tobacco substitutes,» ruled the Swiss Federal Court.

The latter had been seized by three plaintiffs who questioned the taxation of light cannabis at the same level as tobacco products, a model that has been followed. in Luxembourg and in Belgium. The Federal Court, contrary to the Federal Administrative Court, considered that «from the consumer's point of view, [legal] cannabis flowers do not replace conventional tobacco products, and satisfy other needs».

Until now, Swiss diet cannabis has been taxed at 25% of its selling price, in addition to Swiss VAT and a specific tax of CHF 80 per kilo. The final judgment of the Swiss Federal Supreme Court.

What impact will this have on the Swiss market?

Swiss Customs, which collects the taxes, has not yet updated the information notices for retailers. Until now, retailers have had to declare the number of packets of cannabis light sold each month, and pay the corresponding taxes. Similarly, packets with tobacco labels («Smoking kills») should no longer be necessary.

According to our information, Customs should put the new information online early next week at the latest.

However, further thought could be given to the actual status of diet cannabis, which has until now been referred to by default as "light" cannabis. to a tobacco substitute. Will there be a new tax specifically for cannabis?

And will the taxes collected to date have to be reimbursed? This would mean taking at least CHF 60 million from the Old Age and Survivors' Insurance (AHV) and Disability Insurance (DI) funds, which are fed by tobacco and beer taxes.

On the consumer side, the consequence could be a slight drop in the price per gram of cannabis to less than 1% THC in Switzerland. It's a safe bet, however, that retailers will be able to keep a larger margin without passing on the lower prices at the cash register.