Operating a cannabis business? Get to know the excise duty
Under the excise duty taxation framework, if you (or your organization/business) want to cultivate, produce or package cannabis products, you must obtain a cannabis licence from the CRA prior to beginning these activities. To qualify for a CRA cannabis licence, you are also required to obtain a licence from Health Canada.
How to get your CRA cannabis licence
To become a CRA cannabis licensee, you must produce or package cannabis products. The CRA’s definition of a cannabis product is consistent with the definition of cannabis in the Cannabis Act.
Only a CRA cannabis licensee may possess unpackaged, unstamped cannabis products. You are not eligible for a CRA licence if your business involves only storing unpackaged cannabis products.
Activities that do not require a licence:
- cannabis products that are produced in Canada by an individual for their personal use and in accordance with the Cannabis Act;
- cannabis products that are produced in Canada by an individual, under the Cannabis Act, for the medical purposes of the individual; and
- cannabis products that are produced in Canada by an individual who, under the Cannabis Act, is a designated person who is authorized to produce cannabis products in Canada for the medical purposes of another individual.
Thinking about entering the cannabis industry? Do you require a CRA licence? (PDF) Note: You should submit your application for a CRA licence at the same time that you submit an application for a licence from Health Canada.
What to do after you receive your CRA cannabis licence
When you become a licensed cannabis producer, you must pay a federal excise duty when the cannabis products you package are delivered to a purchaser (for example, a provincially-authorized distributor/retailer or final consumer).
With a few exceptions, a cannabis excise stamp must be present on all of your cannabis products that are available for purchase.
Once licensed, you are required to:
The cannabis excise stamp (PDF) Each province and territory has a different coloured cannabis excise stamp for products that are being sold in their respective jurisdiction.
Keep your business compliant
The CRA wants your cannabis business to start off on the right foot and remain compliant.
Avoid potential penalties by familiarizing yourself with the following important information:
- You may only start production activities or take possession of unstamped, non-duty paid cannabis once you have received your CRA licence. Even if you have received your Health Canada licence, penalties can apply if you do these things prior to receiving the CRA licence.
- You must not sell cannabis that is unpackaged, unstamped, and non-duty paid to a person who does not hold a CRA licence. As a seller, it is your responsibility to make sure your purchaser holds a CRA licence before delivering unpackaged cannabis product.
- Only you are allowed to possess the cannabis excise stamps issued to you. You cannot provide your stamps to another cannabis licensee under any circumstances.
- You must apply a cannabis excise stamp to packaged cannabis extracts (excluding low-THC cannabis oils), edible cannabis, and cannabis topicals , whether or not there is minimal or no total THC contained within the cannabis product. Dried and fresh cannabis and cannabis oils that contain concentrations of no more than 0.3% THC w/w are considered low-THC products. Low-THC cannabis products per the excise duty framework do not require a cannabis excise stamp and are exempt of duty.
- You must remain current with your monthly return filing and remittances to maintain your CRA licence and continue placing orders for cannabis excise stamps.
Questions about cannabis
You can contact the CRA with your cannabis questions.
For more information on obtaining your CRA cannabis licence, contact your regional excise office.
Related Links
- 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.
- Excise Duty Notice EDN60, Calculation of Cannabis Duty and Additional Cannabis Duty on Cannabis Oil, Edible Cannabis, Cannabis Extracts and Cannabis Topicals
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