Excise duty framework for cannabis
Under the taxation framework, 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. 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. Provincial and territorial governments are responsible for the distribution and retail sale of cannabis.
Cultivators, producers and packagers of cannabis products are required to obtain a cannabis licence from the CRA before production. In order to qualify for a CRA cannabis licence, applicants are also required to obtain a licence from Health Canada.
Once licensed, they are required to:
- Purchase and apply cannabis excise stamps to their products (if they package cannabis products)
- Calculate the duty on their sales
- File their return and remit excise duty to the CRA
Consumers purchasing cannabis products are responsible for paying the applicable GST/HST depending on the province or territory where the product is purchased (5%, 13% or 15%).
Consumers can confirm that they are purchasing legally produced cannabis products by verifying that there is a cannabis excise stamp on their product. Each province and territory has a different coloured cannabis excise stamp for products that are being sold in their respective jurisdiction.
- Excise Duty Notice EDN52, Obtaining and Renewing a Cannabis Licence.
- Excise Duty Notice EDN53, General Information for Cultivators, Producers and Packagers of Cannabis Products.
- Excise Duty Notice EDN54, General Overview of the Cannabis Excise Stamps.
- Excise Duty Notice EDN55, Calculation of Cannabis Duty and Additional Cannabis Duty on Cannabis Products.
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