Hedges was assessed for his failure to charge GST on his sales of illegally produced dried marihuana to an intermediary ("BCCCS"), which in turn sold it to individual members suffering from ailments. After a detailed review of the regulatory regime, including the Marihuana Medical Access Regulations permitting sales by licensed producers to patients who, following certification by a medical practitioner, had received an "Authorization to Possess" (ATP) from Health Canada, C Miller J found that zero-rating of the product under Sched. VI, Part I, s. 2(d) turned on whether, as a general mater, dried marihuana was a "drug" which "may [not], under the MMARs, be sold to a consumer without a prescription or exemption" (para. 74).
He found that it was a "drug" as broadly defined in the Food and Drugs Act (noting at para. 67 that "dried marihuana sold for use recreationally is not a drug as defined under the FDA, while dried marihuana sold for use therapeutically is") and rejected Crown submissions that the term should be restricted to drugs approved under the FDA and accessible by prescription.
However, he found (at para. 84) that "the medical declaration required to be completed by a practitioner pursuant to the MMARs is not an order nor is it given to a pharmacist [and] is clearly not a prescription" and further found (at paras. 94-6) that an ATP is not as exemption. The appeal was dismissed.