Cannabis annual regulatory fee and exemption for licence holders

On this page

• Overview
• Annual regulatory fee
• Entry year
• First year
• Subsequent years
• Statement of cannabis revenue
• Exemption for sale for medical purposes

Overview

This page covers:

• the deadlines for submitting the necessary paperwork to Health Canada
• the due dates of your annual regulatory fee invoices
• how the annual regulatory fee is calculated
• how to complete your Statement of cannabis revenue
• how to apply for the exemption from the annual regulatory fee for sale for medical purposes licence holders

When you receive your licence (at the start of your entry year)

• Within 30 days: Apply for the Exemption for sale for medical purposes (if applicable)
• Within 60 days: Pay your entry year annual regulatory fee, which will be the minimum fee for your licence class

Before April 30 of your first year

• Submit your Statement of cannabis revenue for the previous fiscal year (from initial licensing date to March 31)
  • Based on your statement of cannabis revenue, if your annual regulatory fee would be more than the minimum fee you already paid for the year ($2,500 for micro and nursery licences or $23,000 for standard licences), you will receive a reconciliation fee invoice for the remaining balance.
• Submit the information for the Exemption for sale for medical purposes (if applicable)
  • Submit a letter confirming that all cannabis sales on your Statement of cannabis revenue were exclusively for medical purposes
  • Apply for the medical sales exemption for the current fiscal year

Before September 30 of your first year

• Pay your invoice for your first year annual regulatory fee
• Pay the reconciliation fee invoice for your entry year (if applicable)

Before April 30 of every subsequent year

• Submit your Statement of cannabis revenue for the previous fiscal year (April 1 to March 31)
• Submit the information for the Exemption for sale for medical purposes (if applicable)
  • Submit a letter confirming that all cannabis sales on your Statement of cannabis revenue were exclusively for medical purposes
  • Apply for the exemption for the current fiscal year

Before September 30 of every subsequent year

• Pay your invoice for your annual regulatory fee for the current year

Annual regulatory fee

You need to pay the annual regulatory fee for each fiscal year (the Government of Canada's fiscal year starts on April 1 and ends on March 31) that you have a valid licence.

Even if you do not have a valid licence on April 30, as long as your licence was valid for at least 1 day during the fiscal year you are considered to be a licence holder by Health Canada and are required to pay the annual regulatory fee.

If you were licensed for less than a full fiscal year, the annual regulatory fee will not be reduced. The amount will be the same whether you've had your licence for a full year or a couple of days. Likewise, if your licence is suspended or revoked, the annual regulatory fee will be the full annual amount and will not be reduced for the days on which your licence was not valid.

Your annual regulatory fee will be the higher of:

• the minimum fee for your licence class
  • $2,500 for micro-cultivation, micro-processing and nursery licences
  • $23,000 for standard-cultivation, standard-processing and sale for medical purposes licences
• a percentage of the cannabis revenue on your previous year's Statement of cannabis revenue
  • for micro-cultivation, micro-processing and nursery licences:
    • revenue up to $1,000,000: 1%
    • revenue above $1,000,000: 2.3%
  • for standard-cultivation, standard-processing and sale for medical purposes licences: 2.3%

The annual regulatory fee is invoiced per site. A site with multiple licences will pay the same minimum fee as a site with only 1 licence. If you have licences with different minimum fee rates, you'll pay the higher rate. However, if a sale for medical purposes licence is held in combination with a micro-cultivation, a micro-processing or a nursery licence, you'll pay the lower rate.

These numbers are only for you to estimate your annual regulatory fee. Health Canada will calculate the annual regulatory fee for you and send you an invoice.

Entry year

Entry year annual regulatory fee

Your entry year starts on the date you receive your cannabis licence and ends on March 31. When you receive your cannabis licence, you'll receive an invoice for the minimum fee rate for your type of licence. You must pay the invoice within 60 days of the effective date on your licence. Your responsible person will receive the invoice for the entry year annual regulatory fee by email.

The minimum fee is:

• $2,500 for micro-cultivation, micro-processing and nursery licences
• $23,000 for standard-cultivation, standard-processing and sale for medical purposes licences

For example, if you receive a standard-cultivation and a standard-processing licence from Health Canada on November 1st, you will receive an invoice for $23,000. This invoice will be due by December 31st.

If you want to apply for the exemption for a sale for medical purposes licence, you must apply within 30 days of receiving your licence. If you do not apply within 30 days your exemption request will be refused.

Entry year Statement of cannabis revenue

The Statement of cannabis revenue for your entry year will include your revenue from the date of your initial licensing to March 31. You need to submit your Statement of cannabis revenue through the Cannabis tracking and licensing system before April 30 of the following fiscal year.

Refer to Statement of cannabis revenue for instructions on how to complete and submit the statement.

Entry year reconciliation payment

Based on your entry year statement of cannabis revenue, if your annual regulatory fee would be more than the minimum fee you already paid for the year ($2,500 for micro and nursery licences or $23,000 for standard licences), you will receive a second annual regulatory fee invoice for the remaining balance. You need to pay this invoice before September 30 of the following fiscal year. Your responsible person will receive the invoice for the entry year reconciliation payment by email.

For example, if you reported $3 million in cannabis revenue on your entry year Statement of cannabis revenue, you will receive a reconciliation fee invoice for $46,000 (2.3% of $3 million, less the $23,000 minimum fee you paid when you received your cannabis licence).

First year

First year annual regulatory fee

Your first year is the first full fiscal year following your entry year at the same site. It starts on April 1 and ends on March 31.

The first year's annual regulatory fee is based on the daily average cannabis revenue on your entry year's Statement of cannabis revenue. This formula is used to calculate your cannabis revenue:

(Cannabis Revenue in Entry Year)/(Days in Operation in Entry Year)×365(or 366 in leap years)

Your responsible person will receive an invoice for your first year annual regulatory fee by email. You need to pay your first year annual regulatory fee invoice before September 30 of that year.

For example, if you earned $3 million in cannabis revenue in your entry year and were in operation for 200 calendar days, your prorated cannabis revenue for your first year would be $5,475,000, and your first year annual regulatory fee would be 2.3% of the total, or $125,925.

First year Statement of cannabis revenue

After the end of your first full fiscal year (after March 31), you need to submit a Statement of cannabis revenue in the Cannabis tracking and licensing system before April 30 of the following fiscal year.

Refer to the Statement of cannabis revenue section for instructions and how to submit.

Subsequent years

Subsequent year annual regulatory fee

For every subsequent year, starting on April 1 and ending on March 31, your responsible person will receive an invoice by email for your annual regulatory fees based on your previous Statement of cannabis revenue (from April 1 to March 31).

You need to pay your invoice before September 30 of that year.

Subsequent year Statement of cannabis revenue

After the end of each subsequent fiscal year (after March 31), you need to submit a Statement of cannabis revenue in the Cannabis tracking and licensing system before April 30 of the following fiscal year.

Refer to the Statement of cannabis revenue section for instructions and how to submit.

Statement of cannabis revenue

Every year, by April 30, you'll need to submit a Statement of cannabis revenue for each licensed site for the previous fiscal year (April 1 to March 31). This rule still applies even if you do not have a valid licence on April 30, as long as your licence was valid for at least 1 day during the fiscal year. You'll submit your Statement of cannabis revenue through the Cannabis tracking and licensing system.

A detailed step-by-step walkthrough (you must be logged in to your account to view the webinar and the CTLS user guide) is available through GCCollab. To create an account on GCCollab, please visit the account creation page.

Cannabis Revenue

Cannabis revenue is the amount of revenue received from the sale of cannabis minus the amount you paid for cannabis.

If your cannabis revenue is negative (for example, you reported more purchases than sales), Health Canada treats your cannabis revenue as 0. This means you can't use negative revenue in 1 fiscal year to lower cannabis revenue in future years or receive a refund from Health Canada for your annual regulatory fee.

Sales

The cannabis sales you report on your Statement of cannabis revenue need to follow these rules:

• Reported in line with generally accepted accounting principles established by the Accounting Standards Board
• Reported in Canadian dollars only
• Use the discounted price of cannabis products if these products are sold at a reduced rate
• Do not count taxes, such as excise duty, provincial sales tax, goods and services tax or harmonized sales tax. As you remit these taxes to their respective provincial governments or the federal government, they are not cannabis sales
• Do not count any revenue you earned providing transportation or distribution services for cannabis products. For example, if you earn revenue from charging delivery fees on cannabis products, do not count this revenue as part of your cannabis revenue
• Do not count any revenue you collected on behalf of another organization that you must remit to that organization. This includes remitting fees or surcharges to provincial or territorial distributors, and well as remittances to other licence holders if you sold their cannabis on consignment
• Do not count any revenue earned from charging other licence holders to process or package cannabis products
• Do not count any revenue earned from royalties or leasing rights (only the sale of physical cannabis products should be counted)

Purchases

The cannabis purchases you report on your Statement of cannabis revenue need to follow these rules:

• Reported in line with generally accepted accounting principles established by the Accounting Standards Board
• Reported in Canadian dollars only
• Use the discounted price of cannabis products if these products are purchased at a reduced rate
• Do not count any fees paid to other licence holders to process or package cannabis on your behalf
• Do not count any purchases spent on royalties or leasing rights (only the purchase of physical cannabis products should be counted)
• Only count cannabis purchases from the following licence holders (any cannabis purchased from a source not on this list cannot be included on your Statement of cannabis revenue):
  • Standard-cultivation
  • Standard-processing
  • Micro-cultivation
  • Micro-processing
  • Sale for medical purposes
  • Nursery

Exemption for sale for medical purposes licences

In certain cases, you may apply for an exemption from the annual regulatory fee. To be eligible for this exemption, you must:

• Have a sale for medical purposes licence; and
• Sell cannabis only within Canada to registered clients or a named responsible adult, or to a person to which an exemption has been granted under section 140 of the Cannabis Act. This means that you cannot sell cannabis to anyone else, including other cannabis licence holders

If you meet the above criteria, you must follow the 3 steps below every fiscal year you want to claim an exemption from the annual regulatory fee.

The definition of 'sell' under the Cannabis Act includes offering for sale, exposing for sale and having in possession for sale. Even licence holders with no cannabis sales are still eligible to obtain a medical sales exemption from the annual regulatory fee.

If you have questions about claiming the exemption for sale for medical purposes licences, contact cannabiscrf-rcf@hc-sc.gc.ca as soon as possible to avoid missing any deadlines.

To receive an exemption, you must complete the following steps every year. If you don't submit your exemption request on time every year, your exemption request will be refused.

Step 1: Declaration – medical exemption request

Before April 30 at the beginning of the fiscal year you are requesting the exemption for, or within 30 days of initial licensing for new licence holders

Submit a declaration stating that all your cannabis sales during the next fiscal year will be exclusively for medical purposes. Submit it through the Cannabis tracking and licensing system or by email at cannabiscrf-rcf@hc-sc.gc.ca.

If you submit a medical exemption request through the Cannabis tracking and licensing system, the declaration will be automatically generated and submitted to Health Canada. If you want to submit a declaration by email, please use the following template:

"I, [Responsible Person], for [Company Name, LIC-XXXX-XXXX], intend to sell cannabis products exclusively for medical purposes within Canada to a person that is a client or a named responsible adult or to which an exemption has been granted under section 140 of the Cannabis Act for a medical purpose and in relation to the cannabis or class of cannabis that is sold during fiscal year [20XX-XX]."

If your declaration is approved, your annual regulatory fee invoice will be deferred until the end of the fiscal year. At the end of the fiscal year you will need to complete Step 2 and Step 3, as outlined below.

If you miss the deadline to submit your declaration for any reason, your medical exemption request will be refused.

Step 2: Statement of cannabis revenue

Before April 30 following the end of the fiscal year you are requesting the exemption for

Submit a completed Statement of cannabis revenue for the applicable fiscal year. Submit it through the Cannabis tracking and licensing system. You must submit a Statement of cannabis revenue even if you had no sales or purchases during the fiscal year.

If you miss the deadline to submit your Statement of cannabis revenue for any reason, your medical exemption request will be refused.

Step 3: Attestation – medical exemption request

Before April 30 following the end of the fiscal year you are requesting the exemption for

Submit a signed attestation that confirms that all your sales from the previous year were exclusively for medical purposes. You must submit this even if you only hold a medical sales licence and even if you didn't make any sales during the fiscal year. Submit it through the Cannabis tracking and licensing system or by email at cannabiscrf-rcf@hc-sc.gc.ca.

If you submit an attestation through the Cannabis tracking and licensing system, the statement will be automatically generated and submitted to Health Canada. If you want to submit an attestation by email, please use the following template:

"I, [Responsible Person], for [Company Name, LIC-XXXX-XXXX], confirm that all sales that appear on my statement of cannabis revenue for [fiscal year 20XX-XX] were exclusively for medical purposes within Canada to a person that is a client or a named responsible adult or to which an exemption has been granted under section 140 of the Cannabis Act for a medical purpose and in relation to the cannabis or class of cannabis that is sold."

If you miss the deadline to submit your signed attestation for any reason, your medical exemption request will be refused.

If Health Canada determines that you successfully completed all 3 of the necessary steps, within the established parameters of the Cannabis Fees Order, no annual regulatory fee invoice will be issued for the fiscal year you applied for.