Under the taxation framework in Canada, a federal excise duty is payable by a licensed cannabis producer when the cannabis products they package are delivered to a purchaser (for example, a provincially authorized distributor/retailer or final consumer).
An excise stamp must be present on all cannabis products that have been legally produced and are available for purchase. The only exception is for low-THC cannabis products, prescription cannabis drugs, and exported products. Only a person who has obtained a cannabis licence from the Canada Revenue Agency (CRA) is able to purchase cannabis excise stamps. The CRA is responsible for licensing cultivators, producers and packagers of cannabis products, and collecting federal duties and taxes.
Cultivators, producers and packagers of cannabis products are required to obtain a cannabis licence from the CRA before production begins. In order to qualify for a CRA cannabis licence, applicants are also required to obtain a licence from Health Canada.
Once you have both licenses, the following is required:
- Purchase and apply cannabis excise stamps to cannabis products
- To register for the cannabis stamp, use Form L301, Registration for Cannabis Stamping Regime. You may be asked to provide more information.
- If no additional information is required, a letter will be sent to confirm your registration, along with instructions on how to purchase.
- For more information, Excise Duty Notice EDN54, General Overview of the Cannabis Excise Stamps.
- Calculate the duty on sales
- For cannabis products that are imported, the person who must pay the duty is the importer, owner or other person who is liable under the Customs Act. A cannabis licensee does not have to pay the duty at the time of importation.
- To calculate the cannabis duty see this chart.
- File their return and remit (pay) excise duty to the CRA
- Monthly returns must be filed to report inventories for all cannabis licensees. Additional info can be found here.
