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Kalpna Mistry

Kalpna Mistry

Does Your Cannabis Business Require a CRA license?

The first thing to note is that a Canada Revenue Agency (CRA) cannabis license is separate from regular Health Canada cannabis licensing that is required for cultivating and manufacturing. In short, even if you have a Health Canada cannabis license to conduct cultivation, production or packaging of cannabis products, you may still require a separate CRA cannabis license depending on the specific activities you’re conducting at your licensed site.

All establishments conducting the following activities in relation to cannabis, must apply for a CRA cannabis licence:

  • cultivating (you grow cannabis products).
  • producing (you produce cannabis products).
  • packaging (you package cannabis products).

You do not have to apply for a CRA cannabis licence in any of the following situations:

  • you are an individual who produces cannabis products in Canada for your own personal use in accordance with the Cannabis Act.
  • you are an individual who under the Cannabis Act produces cannabis products in Canada for your own medical purposes.
  • you are an individual who produces cannabis products in Canada, and who under the Cannabis Act are a designated person who is authorized to produce cannabis products in Canada for the medical purposes of another individual.
  • you are an industrial hemp grower who produces industrial hemp by-products.

For those who will be packaging cannabis products, registration for the cannabis stamping regime must also occur prior to the sale of any packaged cannabis products.

The CRA cannabis licence is valid for a maximum of 2 years and will NOT be automatically renewed. In order to renew your licence, you must apply for a licence renewal no later than 30 days before the expiration date of your current licence. You must continue to meet the requirements of the licence during the period you are licensed.

When applying for or renewing a CRA cannabis licence, you must ensure that the business meets all of the following conditions:

  • You are not the subject of a receivership of your debts.
  • You have not failed to comply with any Act of Parliament (other than the Excise Act, 2001) or of a provincial or territorial legislature that deals with the taxation or control of alcohol or tobacco, or any regulations under it in the past 5 years.
  • You have not acted to defraud her Majesty in the past 5 years.
  • Everyone involved must be at least 18 years of age.
  • Have a valid business address in Canada.
  • Provide a list of all premises that will be cultivating, producing and/or packaging cannabis products.
  • Have sufficient financial resources to conduct your business in a responsible manner.
  • Hold a valid licence/permit from Health Canada issued under the Cannabis Act.
  • Provide a business plan (including a business industry overview, operating plan, financial plan or source of funds, and a sales and marketing plan).
  • Provide acceptable security to cover one month of cannabis duty liability (minimum of $5,000 and a maximum of $5 million).

There are also specific requirements to be kept in mind that must be followed by all licence holders.

  • Register for the cannabis stamping regime (packagers of cannabis products for final sale).
  • Calculate the duties imposed on cannabis.
  • Report (send) and remit (pay) the monthly duty payable on cannabis.
  • Report your unpackaged and packaged cannabis product inventories.
  • Keep all your supporting documents for at least 6 years to support all aspects of your operations.
  • Apply for a licence renewal at least 30 days before the expiry of your licence (your licence is valid for a maximum of 2 years).

How to apply for a CRA cannabis license:

The CRA has provided a form to be utilized for applying for a Cannabis License (Form L300, Cannabis Licence Application). This form includes the collection of general information relating to the business such as;

  • Which cannabis related activities you plan to carry out.
  • The type of business, legal name and business number.
  • The physical and mailing address for the site.
  • Contact Information.
  • Financial security amounts.

Once complete, the form should be printed, signed and subsequently sent to your local Regional Excise Duty Office.

Once you have applied for a CRA cannabis license, the CRA will conduct a review of the application to determine eligibility for a cannabis license. This decision will be based on the information provided on your application form; they may also reach out to obtain additional information where necessary.

If the business successfully meets the eligibility criteria, the CRA will send a letter to confirm your CRA license approval. This letter will specify your new excise duty program account number.

Please keep in mind that this license approval does not mean that you may begin business activities relating to cannabis. You may only start to produce cannabis products after you receive licences from both the CRA and Health Canada.

If any information that was provided in your licence application has changed or is no longer accurate, it must be immediately reported to the CRA.

The CRA can also suspend or cancel your licence if you no longer meet the conditions to be a licensee. These reasons include but are not limited to:

  • You are bankrupt.
  • You stop cultivating, producing, or packaging cannabis products.
  • You fail to comply with any Act for the taxation or control of alcohol or tobacco.
  • You act to defraud Her Majesty.
  • You fail to notify the CRA of any changes to your licensing information as required by legislation.

If a licence is not being cancelled at your request, the CRA will send you a written notice at least 90 days before the proposed cancellation date of your licence. You have 90 days from the date of notification to provide the reason why the licence should not be cancelled.

How we can help

At Cannabis License Experts, we provide you with the guidance to plan your cannabis business, acquire funding, navigate the legal requirements, and acquire the appropriate licence for your operations. As the Canadian cannabis industry develops, more and more licensed producers will be needed to meet the demands of consumers.

Cannabis License Experts offers support from day one of starting your cannabis business, including strategic planning, floor plan preparation, site audits, SOPs, Preventive Control Plans (PCPs) and more.

Our Edibles Compliance division can provide you with a solid plan for your edibles business to help get your products on store shelves.

References

https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/excise-duties-levies/apply-cannabis-licence.html

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