KUALA LUMPUR, June 23 — The Ministry of Finance (MOF) has clarified that cannabis remains prohibited in Malaysia, despite a 5 per cent sales and service tax (SST) on the drug.
Cannabis “of a kind used primarily in pharmacy” is listed on the First Schedule of the Sales Tax (Rate of Sales Tax) Order 2025, subject to 5 per cent sales tax, under two products: “cannabis, in cut, crushed or powdered form” (HS code: 1211 90 1100) and “cannabis, in other forms” (HS code: 1211 90 1200). The Order for the expanded SST comes into effect on July 1.
“The first point to note is that Malaysia has not changed any laws regarding cannabis or any drugs. All laws, restrictions, and prohibitions remain in place and there is no change,” an MOF spokesperson told CodeBlue in a statement.
CodeBlue asked MOF if the government exempted medical cannabis from the list of dangerous drugs in an order gazetted under the Dangerous Drugs Act (DDA) 1952, prior to levying the SST.
MOF explained that both the Sales Tax (Rate of Sales Tax) Order (PUA170/2025) and the Sales Tax (Goods Exempted from Sales Tax) Order 2025 (PUA171/2025) follow the Harmonised System Tariff Nomenclature Classification issued by the World Customs Organization, commonly referred to as HS codes for classifying traded products.
“It will list out all products in the world, including items that are banned, such as nuclear weapons, turtle eggs, guns etc. Each country will prepare their gazette order and put a duty rate for each tariff line and the sales tax for each product,” said the MOF spokesperson.
However, not all gun-related products or firearms with HS codes are listed on either PUA170/2025 or PUA171/2025. Military weapons under the 9301 HS code heading are listed on the exemption list.
But revolvers and pistols (HS code: 9302 00 0000), hunting shotguns (HS code: 9303 20 1000), or hunting rifles (HS code: 9303 30 1000) are not on either the taxation or exemption list. According to the Customs website, these goods require permits or licences from the Royal Malaysian Police (PDRM) for import or export.
Hence, it appears that not all products with HS codes are on either PUA170/2025 or PUA171/2025.
MOF told CodeBlue that for any importer, several documents have to be read together, namely the Gazette Order for Import Duty, Gazette Order for Sales Tax, Gazette Order for Prohibition, and Rules and Regulations for Import Permit or Licence.
“In the case of cannabis, it is in the Gazette Order for Prohibition. That means no one is allowed to import it, except with the proper approvals. In case it is imported for, let’s say pharmaceutical purposes, it will require approvals from MOH (Ministry of Health) and PDRM,” said the MOF spokesperson.
“Customs will not allow these products to pass through our ports without the necessary approvals.”
He also explained that the listing of the two cannabis products on PUA170/2025 is under the 1211 HS code heading, “Plants and parts of plants (including seeds and fruits), of a kind used primarily in perfumery, in pharmacy or for insecticidal, fungicidal or similar purposes, fresh, chilled, frozen or dried, whether or not cut, crushed or powdered.”
“It does not refer to medical cannabis,” said the MOF spokesperson.
“For importation of both products above, it is subject to rule 29(2) under Schedule 3, Part 1, of the Customs Duties Prohibition Order 2023. The rules state the requirement for physical examination by the Department of Agriculture and Maqis (Malaysian Quarantine and Inspection Services), and relevant agencies in Sabah and Sarawak.”
MOF noted that cannabis is regulated by both the police and the MOH under the DDA, the Poisons Act 1952, the Sale of Drugs Act 1952, as well as the Control of Drugs and Cosmetics Regulations 1984 under the Sale of Drugs Act.
“Therefore, we wish to underscore that the Government of Malaysia did not change any laws regarding cannabis. All agencies remain on high alert for this dangerous product.”
According to the United Kingdom’s HM Revenue & Customs, citing a judgement by the European Court of Justice, narcotic drugs are generally not subject to the value-added tax (VAT), such as the sale of heroin by street dealers, due to universal prohibition on the sale of narcotics throughout the European Union (EU).
An appeals court in the United States ruled in 2007 that Tennessee’s tax on illegal drugs was unconstitutional because it derived revenue from illegal activities. The “crack tax” required people to buy tax stamps for illegal drugs and liquor, costing US$50 per gram of cocaine or US$3.50 per gram of marijuana.
Under the Tennessee state law, the US’ Department of Revenue could still seize the property of people caught with illegal drugs or alcohol that did not bear the special tax stamps, regardless of the outcome of their criminal cases.
It is unclear how much revenue Putrajaya can collect from the sale of the cannabis plant, should the Customs Department go after the belongings of people selling the plant without paying 5 per cent SST, separate from enforcement action by narcotics police under the DDA.
Planting and possessing cannabis plants are an offence under Section 6B of the DDA, subject to life imprisonment and not less than six strokes of the cane.
Unlike the levy of a sales tax on the cannabis plant despite cannabis remaining an illegal narcotic, the government took a more straightforward approach in taxing liquid or gel nicotine that was previously classified a Group C poison under the Poisons Act, limited to dispensing by medical practitioners or pharmacists.
Then-Health Minister Dr Zaliha Mustafa first gazetted an order to remove liquid or gel nicotine from the Poisons List, therefore legalising the sale of nicotine e-liquids by vape businesses, before MOF imposed an excise duty of 40 sen per ml on the substance on April 1, 2023.
Health Minister Dzulkefly Ahmad told Parliament last March that no cannabis-based products are currently registered for medical use under the Control of Drugs and Cosmetics Regulations. Public officials may cultivate cannabis for research, educational, experimental, or medical purposes, subject to authorisation from the health minister.
“Cannabis, in cut, crushed or powdered form” (HS code: 1211 90 1100) and “cannabis, in other forms” (HS code: 1211 90 1200) were also listed on Malaysia’s earlier Sales Tax (Rates of Tax) Order 2022 (PUA176/2022), subject to 5 per cent sales tax, that has now been revoked with the gazettement of the 2025 order.
In August 2022, then-Health Minister Khairy Jamaluddin announced plans to permit medical cannabis if there was sufficient clinical evidence, after his working visit to a government marijuana manufacturing plant in Bangkok, Thailand.
Thailand was the first Southeast Asian country to legalise the cultivation and possession of cannabis after removing marijuana from its banned narcotics list in June 2022. However, DW reported last month that a new medical bill is expected to be announced in the next few weeks that will restrict cannabis to medical use, marking a U-turn by the Thai government.
CodeBlue reported in March 2023 on a feasibility study by the Malaysian Agricultural Research and Development Institute (Mardi) found that a majority of the general public and medical professionals in Malaysia support the use of medical cannabis.
Medical cannabis is generally used for pain relief. Malaysian clinicians practising in chronic pain, palliative care, and cancer interviewed by CodeBlue in 2022, however, were largely opposed to prescribing cannabis to patients without strong evidence. But one believed that cannabis could be a useful alternative to opioids in pain management.
