EDN80 Overview of vaping excise stamps

Excise Duty Notice

November 2024

This version replaces the one dated July 2024. This notice has been updated to add information regarding the amendments to the Excise Duties on Vaping Products Regulations, which were published in the Canada Gazette, Part II on November 6, 2024.

Except as otherwise noted, all statutory references in this publication are to the provisions of the Excise Act, 2001. In addition, all references to the "Regulations" are to the Stamping and Marking of Tobacco, Cannabis and Vaping Products Regulations. The information in this publication does not replace the law found in the Act and its regulations.

If this information does not completely address your particular situation, you may refer to the Act or relevant regulation, or contact your CRA regional excise office for additional information. The offices are listed at Contact information – Excise and Specialty Tax Directorate.

Table of Contents

• Overview
• Definitions
• General information on vaping excise stamps
  • Possession of vaping excise stamps
  • Counterfeit and unlawful supply of vaping excise stamps
• Purpose of the vaping excise stamp
• Requirement to be registered for the vaping stamping regime
• Requirements under the vaping stamping regime
  • Stamping of vaping products
  • Vaping products that do not require a vaping excise stamp
  • Financial security requirements
  • Reporting requirements
  • Cancellation and destruction of vaping excise stamps
  • Unaccounted for vaping excise stamps
• Vaping excise stamp ordering process

Overview

The Canada Revenue Agency (CRA) is responsible for administering and enforcing the excise duty framework for vaping products included in the Excise Act, 2001, including the coordinated vaping duty system with specified vaping provinces. The framework includes the imposition of excise duties that generally apply to vaping products manufactured in Canada or imported into Canada and intended for the duty-paid market. The vaping duty and additional vaping duty, as applicable, apply to vaping products whether or not they contain nicotine.

Definitions

Additional vaping duty means a duty imposed under section 158.58 in respect of a specified vaping province. This is in addition to vaping duty imposed under section 158.57.

Coordinated vaping duty system means the system providing for the payment, collection and remittance of additional vaping duty imposed under any of section 158.58 and any related sections.

Specified vaping province means a prescribed province under the Excise Duties on Vaping Products Regulations. The following are prescribed provinces:

• Ontario
• Quebec
• New Brunswick
• Manitoba
• Prince Edward Island
• Alberta
• Yukon
• Northwest Territories
• Nunavut

 Vaping duty means a duty imposed under section 158.57.

General information on vaping excise stamps

Under section 158.36, the CRA may issue vaping excise stamps to a vaping product licensee or to a vaping prescribed person that is importing stamped, packaged vaping products. Vaping excise stamps have specified colours indicating the jurisdiction in which the vaping product is to be sold. Effective July 1, 2024, a coordinated vaping duty system came into force for the specified vaping provinces of Ontario, Quebec, the Northwest Territories and Nunavut. On January 1, 2025, New Brunswick, Manitoba, Prince Edward Island, Alberta and the Yukon will also join the coordinated vaping duty system. Vaping excise stamps for specified vaping provinces will be available in addition to the peach-colored Canada vaping excise stamp. No person will be issued stamps unless the person has registered for the vaping stamping regime and provided adequate financial security in a form satisfactory to the CRA. The CRA may limit the quantity of stamps to be issued to a person.

For more information on the coordinated vaping duty system, including the calculation and payment of additional vaping duty for specified vaping provinces, refer to Notice EDN95, Coordinated vaping duty system, and Notice EDN99, Additional specified vaping provinces effective November 6, 2024.

Possession of vaping excise stamps

Subsection 158.38(2) of the Act and subsection 4(4) of the Regulations provide that only the following persons are authorized to possess vaping excise stamps that have not been affixed to a vaping product:

• the CRA-authorized stamp provider
• a vaping product licensee or vaping prescribed person, to the extent that the stamps in their possession were issued to them by the CRA-authorized stamp provider
• a sufferance warehouse licensee that possesses vaping excise stamps in their sufferance warehouse on behalf of a vaping product licensee or vaping prescribed person
• any person that transports vaping excise stamps on behalf of the CRA-authorized stamp provider or the person that has been issued the stamps
• a person that has in their possession vaping excise stamps only for the purpose of applying adhesive to the stamps on behalf of the person to which the stamps are issued

Subsection 158.38(1) prohibits any other person from possessing a vaping excise stamp that has not been affixed to a vaping product.

Counterfeit and unlawful supply of vaping excise stamps

Section 158.37 states that no person shall produce, possess, sell or otherwise supply, or offer to supply, anything that is intended to resemble or pass for a vaping excise stamp.

Section 158.39 states that no person shall dispose of, sell or otherwise supply, or offer to supply, a vaping excise stamp other than in accordance with the Act.

Purpose of the vaping excise stamp

The purpose of the vaping excise stamp is to demonstrate that duties has been paid on the packaged vaping products entered into the duty-paid market.

The stamp achieves this by integrating various visible features combined with overt and covert security features. An overview of some of the visible features and overt security features is provided below. In order to protect the integrity of the vaping excise stamp, only certain overt security features and none of the covert security features are identified.  

The visible features include:

• the dimensions of the vaping excise stamp, which are exactly 20 × 40 mm
• the stamp type, which indicates the product on which the stamp must be applied
• the jurisdiction indicator, which includes the jurisdiction's name abbreviation, as well as the jurisdiction's distinctive colour band and background
• the unique identifier, which is a nine character identifier specific to each vaping excise stamp that is made up of three or four capital letters followed by five or six numbers
• the duty-paid status, which distinctively indicates that vaping duty and additional vaping duty in respect of a specified province, were paid on the vaping product

The overt security features include:

• the intaglio latent image, which is an engraved image that creates features with unique tactility and visual effects; on the vaping excise stamp, the letter C is visible with minor movement of the stamp at normal viewing angles
• colour shift ink, which shifts in colour from green to red when the viewing angle is changed by tilting the vaping excise stamp
• anti-copy line work, which provides a distinctive and unique appearance to the vaping excise stamp and makes the stamp extremely difficult to replicate by copying as the quality and clarity of the line work is not carried over to a copied document
• ultraviolet visible ink, which fluoresces under a commercially available black light

Requirement to be registered for the vaping stamping regime

Every person that wishes to purchase vaping excise stamps to be applied to packaged vaping products entering the duty-paid market is required to be registered under the vaping stamping regime.

A person must register for the vaping stamping regime if the person is one of the following:

• a vaping product licensee that packages vaping products manufactured in Canada and intended for sale into the duty-paid market
• a vaping product licensee that imports packaged vaping products for stamping in Canada and intended for sale into the duty-paid market
• a vaping product licensee that imports stamped packaged vaping products intended for sale into the duty-paid market
• a vaping prescribed person that imports stamped packaged vaping products intended for sale into the duty-paid market

A person does not have to register for the vaping stamping regime if the person is one or more of the following:

• a vaping product licensee that packages only vaping products for export
• a vaping product licensee that packages only vaping product drugs that have been assigned a drug identification number under the Food and Drug Regulations
• a vaping product licensee that packages only vaping products to be sold to an accredited representative (for a definition of "accredited representative", refer to the Act)
• a vaping product licensee that does not package vaping products in the smallest package in which they are sold to the consumer

A person may apply to be registered for the vaping stamping regime at the same time they apply for a vaping product licence or vaping prescribed person registration under the Act by completing Form L601, Registration for the Vaping Stamping Regime.

For more information on obtaining a vaping product licence, refer to Notice EDN79, Obtaining and renewing a vaping product licence.

For more information on applying to become a vaping prescribed person, refer to Notice EDN81, Becoming a vaping prescribed person.

Requirements under the vaping stamping regime

Stamping of vaping products

All vaping products entering the duty-paid market must bear a vaping excise stamp.

Effective July 1, 2024, vaping products being stamped or imported for Ontario, Quebec, Northwest Territories, or Nunavut must be affixed with the vaping excise stamp for that province. 

In addition, effective January 1, 2025, vaping products being stamped or imported for New Brunswick, Manitoba, Prince Edward Island, Alberta, or Yukon must be affixed with the vaping excise stamp for that province. 

Vaping products destined for a non-specified vaping province must be stamped with a peach-colored Canada vaping excise stamp.

Since January 1, 2023, no person is permitted to possess unstamped packaged vaping products unless explicitly permitted under the Act.

Under section 158.46, vaping products manufactured or imported for stamping in Canada, must be packaged and stamped by the vaping product licensee prior to entering the duty-paid market. If vaping products manufactured or imported for stamping in Canada are not stamped before the end of the second calendar month following the month in which they were packaged or released under the Customs Act, the vaping products must be entered into the licensee's excise warehouse. The only exception to this is a vaping product drug that has been assigned a drug identification number.

Under section 158.47, vaping products that are being imported into Canada must be packaged and have a vaping excise stamp affixed to the products before they can be released under the Customs Act to enter the duty-paid market. If an imported vaping product intended for the duty-paid market is packaged and not stamped prior to importation, it shall be placed in a sufferance warehouse for the purpose of being stamped by the importer or owner of the imported vaping product. Effective January 1, 2024, an unstamped imported vaping product is not required to enter a sufferance warehouse if the packaged vaping product is imported by a vaping product licensee for stamping in Canada by the vaping product licensee.

Section 4.2 of the Regulations requires that the stamp be affixed:

1. in a conspicuous place on the package
2. in a manner that seals the package
3. in a manner that the stamp remains affixed to the package after the package is opened
4. in a manner that does not interfere with the stamp's security features
5. in a manner that does not obstruct any information required by or under an Act of Parliament to appear on that package

Vaping products that do not require a vaping excise stamp

The following vaping products are not required to bear an excise stamp:

• vaping products that are entered in an excise warehouse, or removed from the premises of a vaping product licensee, for export or delivery to an accredited representative for their personal use. 
• vaping products that are vaping product drugs that are assigned a drug identification number under the Food and Drug Regulations
• vaping products that are imported by a vaping product licensee:
  • for further manufacturing
  • for re-work or destruction in a manner approved by the CRA
  • to be stamped in Canada by the licensee (effective January 1, 2024)
• vaping products that are imported by an individual for personal use within prescribed limits as per section 5.1 of the Regulations

Financial security requirements

Under subsection 158.36(3), vaping product licensees and vaping prescribed persons must provide and maintain adequate financial security in a form satisfactory to the CRA prior to being issued vaping excise stamps. The amount of financial security required, as set out in section 4.11 of the Regulations, is equal to the greater of either:

• the total of:
  • $2 multiplied by the number of vaping excise stamps in respect of any specified vaping province that are either:
    • in the possession of the vaping product licensee or the vaping prescribed person at the time of application for stamps
    • to be issued in respect of the application
  • $1 multiplied by the number of vaping excise stamps, not in respect of any specified vaping province that are either:
    • in the possession of the vaping product licensee or the vaping prescribed person at the time of application for stamps
    • to be issued in respect of the application
• $5,000

The maximum amount of financial security required is $5 million.

Vaping excise stamps considered to be in the possession of a person include stamps:

• physically in the possession of the vaping product licensee or the vaping prescribed person that are not affixed to products
• affixed to products that have not yet been accounted for on the vaping product licensee's monthly duty and information return or the vaping prescribed person's monthly information return
• purchased and currently in transit from the authorized stamp provider

Vaping product licensees may be required to provide additional financial security. For more information, refer to Notice EDN79.

Reporting requirements

Vaping product licensees registered for the vaping stamping regime must report on their vaping excise stamp inventories on a calendar month basis by completing Form B600, Vaping Duty and Information Return.

Vaping prescribed persons registered for the vaping stamping regime must report on their vaping excise stamp inventories on a calendar month basis by completing Form B601, Vaping Information Return – Prescribed Person.

Subsection 206(2.2) requires every person that has been issued an excise stamp to keep all records that are necessary to determine the receipt, retention, location, use or disposition of the stamp. This requirement applies to vaping product licensees and vaping prescribed persons with respect to vaping excise stamps. Subsection 206(7) requires every person that is required to keep records to keep them for six years after the end of the year to which they relate.

Cancellation and destruction of vaping excise stamps

Section 158.4 allows the CRA to cancel a vaping excise stamp that has been issued and direct that it be returned or destroyed in a manner specified by the CRA. Any vaping excise stamps that become unusable must be retained by the vaping product licensee or the vaping prescribed person until they are verified by the CRA.

Unaccounted for vaping excise stamps

Under subsection 238.1(1), a person that is issued vaping excise stamps is liable to a penalty if the person cannot account for the stamps as being in their possession. The penalty applies unless the person can demonstrate that the stamps were affixed to vaping products in accordance with the Act and that duties were paid on the vaping products or, in the case of stamps that were cancelled, the person can demonstrate that the stamps were returned or destroyed as directed by the CRA.

Under paragraph 238.1(2)(c), the amount of the penalty imposed for each vaping excise stamp that cannot be accounted for is in respect of a specified vaping province, $10 and in any other case, $5.

Vaping excise stamp ordering process

Upon receiving approval to be registered under the vaping stamping regime, a vaping product licensee or vaping prescribed person (in this section, referred to as stamp purchaser) is provided with a user name and temporary password to access the online stamp ordering system.

The stamp purchaser can then log on to the online stamp ordering system and place an order for vaping excise stamps by entering the assigned user name and password. For security purposes, it is recommended that the stamp purchaser change this password when they first log on to the system.

Once an order is placed, the stamp purchaser may track the status of their orders online.

The CRA reviews stamp orders received each business day to verify the eligibility of the stamp purchaser and the details of the order. The CRA also periodically performs reconciliations of stamps to determine the level of compliance with the Act and its regulations.

Orders received by noon Eastern Standard Time (EST) each business day are reviewed that business day. Orders received after noon are reviewed on the following business day.

Once an order has been reviewed, the CRA will either:

• approve and release the order to the CRA-authorized stamp provider for processing
• reject the order and provide justification to the stamp purchaser

Stamp purchasers that order vaping excise stamps may elect to receive a notice of approval by email.

When the CRA-authorized stamp provider receives an approved order from the CRA, it processes the order according to the delivery standards set out in the supply arrangement between the stamp provider and the stamp purchaser. All shipping terms are arranged with the CRA-authorized stamp provider as part of the supply arrangement.

Vaping excise stamps are delivered as dry (non-adhesive) individual stamps wrapped in bundles of 500. Once the stamps are delivered to the stamp purchaser or a third party, the stamp purchaser becomes responsible for the vaping excise stamps. The stamp purchaser may choose to contract a third party to add adhesive to the stamps and convert them to a roll format to facilitate application. Any stamps lost or damaged in this process are the responsibility of the stamp purchaser.

Upon receipt of the vaping excise stamps, an authorized person at the stamp purchaser's authorized shipping site must acknowledge receipt of the vaping excise stamps. It is the responsibility of the stamp purchaser to maintain appropriate records to determine the receipt, retention, location, use or disposition of the vaping excise stamps ordered.

The CRA-authorized stamp provider issues an invoice for the vaping excise stamps delivered at pre-established prices plus applicable taxes and delivery charges. The delivery of the vaping excise stamps is done through a secure process, and delivery charges also include the cost of applicable insurance.

In accordance with the contract between the CRA and the CRA-authorized stamp provider, refer to Excise Duty Rates for the unit price of a vaping excise stamp.

Further information