EDN61 Excise Stamping Regime – Transition to New Contract

January 2020

This version replaces the one dated August 2019 and includes updated information on the use and the sale of old and new excise stamps during the transition between the old and the new contracts.

The purpose of this notice is to inform excise stamp users (tobacco licensees, prescribed persons who are importing tobacco products, and cannabis licensees) that the previous excise stamp contract ended on September 30, 2019 and that a new excise stamp contract has been in place since October 1, 2019. It also provides information on the length of the contract, current and discontinued excise stamp types, pricing, security features, delivery options, additional services and measures to facilitate a smooth transition to the new excise stamp contract and maintain the integrity of the excise stamping regime.

The information included in this publication is for reference purposes only and does not replace the Excise Act, 2001 or its regulations. Should there be any discrepancy between the information in this publication and that contained in the Act or its regulations, the legislative provisions apply. If the information in this publication does not completely address your particular situation, you may wish to refer to the Act or its regulations, or contact any Canada Revenue Agency (CRA) regional excise office for additional information. These offices are listed at Contact Information – Excise Duties, Excise Taxes, Fuel Charge and Air Travellers Security Charge.

In this publication, all legislative references to the Act are to the Excise Act, 2001, unless otherwise specified.

Table of contents

Overview

Under the Act, no person can sell, offer for sale or have in their possession a tobacco or cannabis product, except low-THC cannabis products and prescription cannabis drugs, unless it bears the appropriate excise stamp. Any person that contravenes this requirement is liable to a fine, imprisonment or both.

The excise stamp indicates that federal excise duty has been paid and that the tobacco product was manufactured, or the cannabis product was produced, legally. The excise stamp has state-of-the-art visible and hidden identifiers and incorporates security features that only federal, provincial and territorial law enforcement agencies can detect. The excise stamp allows law enforcement agencies, retailers and consumers to more easily identify illicit tobacco and cannabis products.

The federal excise stamp is distributed through a secure process administered by the CRA. The excise stamp may contain federal, provincial or territorial features depending on the intended jurisdiction of sale. For more information on the excise stamping regime, go to Excise duty notices under the Excise Act, 2001. For more information on the excise stamp features, see the section “Excise stamp security features” in this notice.

Stamp provider and term of contract

The previous contract to design, manufacture and distribute excise stamps, awarded in 2008 to the joint venture of the Canadian Bank Note Company Limited and SICPA Security Solutions Canada Corporation, expired on September 30, 2019.

Following a bidding process, the CRA awarded the new excise stamp contract to the Canadian Bank Note Company Limited. The new excise stamp contract came into effect on October 1, 2019 and will expire on September 30, 2024. At expiry, the CRA has the option to extend the contract up to 10 additional one-year periods.

Excise stamp types

Since October 1, 2019, the following excise stamp types are available:

The following tobacco excise stamp types are no longer available:

For more information on how to proceed with unused old excise stamps, refer to the last section of this notice entitled “Transition”.

Price for excise stamps

Under the new contract ending September 30, 2024, the price for an excise stamp is $0.0067425 per stamp. All applicable taxes and delivery charges are extra.

Excise stamp security features

Under the Act, no person can sell, offer for sale or have in their possession a tobacco or cannabis product, except low-THC cannabis products and prescription cannabis drugs, unless it bears the appropriate excise stamp. Similarly, no person can produce, possess, sell, or otherwise supply or offer to supply anything that is intended to resemble or pass for an excise stamp. Furthermore, if an excise stamp has not been applied to a cannabis or tobacco product, it can only be in the possession of certain persons. This includes:

The following is an example of an excise stamp, as well as a description of some of the excise stamp’s unique security features, which are explained below the example.

Excise stamp’s unique security features
Image description

Example of an excise stamp showing the features that make up the stamp, specifically the stamp type, the jurisdiction, the anti-copy line work, the unique identifier, the colour shift ink, the federal duty-paid status and the intaglio latent image. Each feature is explained below.

Visible features

Visible features include the following:

Overt security features

The overt security features include the following:

Delivery options

Under the new contract, the excise stamp provider is providing secured delivery services to excise stamp users by using:

Also, under the new contract, the excise stamp provider is accountable for the excise stamps until the excise stamp user accepts possession or takes delivery of the excise stamps. This is deemed to occur on the earlier of the time:

The cost of secure delivery is the responsibility of the excise stamp user and must be at cost and not subject to an additional surcharge or profit mark-up by the excise stamp provider.

Verification tools

Since excise stamps contain hidden security features not readily apparent upon unaided visible inspection, the CRA has made handheld devices available to help verify the authenticity of the excise stamps.

A level-1 device is available for lease to excise stamp users. Although excise stamp users are not required to possess or use this verification tool, it allows them to authenticate the excise stamps they are applying on cannabis or tobacco products. This tool helps excise stamp users to comply with the Act and verify that they are not in possession of or applying counterfeit excise stamps. Excise stamp users are able to order level-1 devices through the web-based ordering system. The lease price will include enhancements, upgrades or replacements, as well as any cost to recall the tool (the all-inclusive firm price).

Under the new contract ending September 30, 2024, the price for the lease of one level-1 verification tool is a one-time payment of $500. All applicable taxes and delivery charges are extra.

Similarly, a level-2 device is available for the enforcement community, and can be obtained from the CRA. The level-2 device authenticates the excise stamp and provide additional information that is useful for the enforcement of the Act and any provincial or territorial legislation.

Additional services

Under the new contract, the excise stamp provider may enter into commercial arrangements with the excise stamp user for services such as, but not limited to, filling excise stamp dispensing cartridges, applying an adhesive to excise stamps or putting excise stamps into a roll (reel) format.

It is important to note that when an excise stamp user contracts with the excise stamp provider for additional services related to the excise stamp, the ownership and responsibility for accounting for these excise stamps are transferred to the excise stamp user before the additional services can begin, even though delivery of the excise stamps has not been completed and the excise stamp provider will still have possession of the excise stamps. Any excise stamps that are unaccounted for or are damaged during these additional services will be the responsibility of the excise stamp user.

Test stamps

On May 1, 2019, the web-based ordering system was updated to provide excise stamp users the option to order “test stamps” online. The availability of test stamps allows for the testing and calibration of application equipment without the accountability and controls imposed on excise stamps.

Note that test stamps are not excise stamps; they do not indicate that excise duty was paid and cannot be used in place of excise stamps.

Transition

To facilitate a smooth transition between the two stamp contracts, excise stamp users have maintained their current user identifications and passwords to access the web-based ordering system.

The excise stamp is mandatory on all tobacco and cannabis products, except low-THC cannabis products and prescription cannabis drugs, destined for the Canadian duty-paid market. As the old excise stamp contract has expired and the new one came into effect on October 1, 2019, excise stamp users may still have in their possession an inventory of unused excise stamps obtained under the old excise stamp contract. To minimize the impact on excise stamp users and facilitate reduction of inventories of unused excise stamps, the CRA will allow excise stamp users to continue to apply the old excise stamp to manufactured products until their inventory has been depleted. As a result, legally stamped tobacco and cannabis products found on the Canadian market after October 1, 2019 may carry either the old or new excise stamp.

Similarly, the stamp provider may continue to sell the old excise stamp until their inventory is depleted. However, as of October 1, 2019 the firm price of all excise stamps ordered is fixed at the reduced price of $0.0067425 per stamp as outlined in the new contract.

Further information

For all technical publications related to the Excise Act, 2001 and its regulations, go to Excise duties technical information under the Excise Act, 2001.

To make a general or technical enquiry on the new excise stamping contract, contact the following:

Excise Stamp Order Desk
Excise Duties and Taxes Division
Excise and GST/HST Rulings Directorate
Canada Revenue Agency
Place de Ville Tower A 11th floor
320 Queen St
Ottawa ON K1A 0L5

Telephone: 1-866-330-3304 (option 4)
Email:  excise.stamp@cra-arc.gc.ca

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