General Information – Legislative Amendments With Respect to Vaping Products

Excise Duty Notice EDN89

January 2024

Except as otherwise noted, all statutory references in this publication are to the provisions of the Excise Act, 2001. The information in this publication does not replace the law found in that 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
• Amendments to the Excise Act, 2001 for vaping products
  • Vaping product licence
  • Packaging and stamping of vaping products
  • Unstamped products to be warehoused, exported or delivered to accredited representatives
    • Non-compliant imports
    • Imports for stamping – Delivery to premises
• Imposition of vaping duty
  • Domestic production
  • Importation
• Imposition of additional vaping duty
• Amendments to penalties
  • Contravention of section 158.47
  • Contravention of sections 158.35 and 158.43 to 158.45
  • Contravention of section 158.511
• Stamping and marking of vaping products

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. This 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 applies to vaping products whether or not they contain nicotine.

Amendments to the Excise Act, 2001 for vaping products

Vaping product licence

Prior to January 1, 2024, the Excise Act, 2001 allowed a vaping product licensee to import unstamped vaping products for further manufacturing.

Subject to parliamentary approval, effective January 1, 2024, paragraph 14(1)(f) will allow a vaping product licensee to import packaged vaping products for stamping by the licensee in Canada. No further manufacturing will be required.

Under proposed legislation, any person, including a vaping prescribed person, that intends to import vaping products into Canada for the purpose of stamping will need to apply for a vaping product licence and meet the eligibility requirements set out in the Regulations Respecting Excise Licences and Registrations. A vaping product licence issued for the sole purpose of stamping in Canada will come into force on royal assent of the enacting legislation.

For detailed information on vaping product licensing requirements, refer to Excise Duty Notice EDN79, Obtaining and Renewing a Vaping Product Licence.

Packaging and stamping of vaping products

Prior to January 1, 2024, section 158.46 provided that a vaping product licensee must stamp all vaping products intended for the duty-paid market at the time of packaging to indicate that the vaping duty has been paid.

Under proposed legislation, effective January 1, 2024, subsection 158.46(1) will allow packaged vaping products manufactured in Canada to be stamped by the licensee that packaged the products by the end of the second calendar month following the calendar month in which the vaping products were packaged, if packaged after 2023.

Also, under proposed legislation, the addition of subsection 158.46(2) will require imported packaged vaping products to be stamped by the end of the second calendar month following the calendar month in which the products were released under the Customs Act. The imported vaping products will have to go directly to the vaping product licensee’s facility for stamping. This will apply to products that are imported into Canada or released (as defined in subsection 2(1) of the Customs Act) after 2023.

Unstamped products to be warehoused, exported or delivered to accredited representatives

Prior to January 1, 2024, section 158.49 provided that if vaping products manufactured in Canada are not stamped by a vaping product licensee at the time of packaging, the vaping product licensee must immediately enter the vaping products into the licensee’s excise warehouse.

Subject to parliamentary approval, subsection 158.49(1) will require vaping products manufactured in Canada and packaged after 2023 that are not stamped by the end of the second calendar month following the calendar month in which they were packaged to be entered into the licensee’s excise warehouse by that time.

Also, under proposed legislation, subsection 158.49(2) will require imported packaged vaping products that are not stamped by the end of the second calendar month following the calendar month in which they were released after 2023 under the Customs Act to be entered into the licensee’s excise warehouse by that time.

Under proposed legislation, effective January 1, 2024, subsection 158.5(1.1) requires vaping product markings and other prescribed information to be printed on the container of vaping products being removed from the premises of a vaping product licensee for export or delivery to an accredited representative. As such, vaping products may be exported or delivered to an accredited representative directly from the premises of a vaping product licensee before the end of the second calendar month following the calendar month in which they were packaged if they are properly marked.

Vaping product drugs will continue to be excluded from the above stamping requirements.

For detailed information on obtaining an excise warehouse licence, refer to Excise Duty Notice EDN79.

Non-compliant imports

Subsections 158.51(1) and (2) provide that if an imported vaping product intended for the duty-paid market is not properly stamped at the time of importation, then the product must be placed in a sufferance warehouse for stamping.

Under proposed legislation, effective January 1, 2024, subsection 158.51(3) will be amended to provide that these subsections do not apply in respect of a packaged vaping product that is imported by a vaping product licensee for stamping by the vaping product licensee.

This amendment will apply in respect of vaping products that are imported into Canada or released (as defined in subsection 2(1) of the Customs Act) after 2023.

Imports for stamping – Delivery to premises

Under proposed legislation, effective January 1, 2024, section 158.511 will be added to the Excise Act, 2001 requiring a vaping product licensee that imports a packaged vaping product for stamping in Canada to immediately deliver the vaping product to their licensed premises after it is released by the Canada Border Services Agency.

Subject to parliamentary approval, this amendment will apply in respect of vaping products that are imported into Canada or released (as defined in subsection 2(1) of the Customs Act) after 2023.

Imposition of vaping duty

Domestic production

Section 158.57 imposes duty on vaping products. Prior to January 1, 2024, paragraph 158.57(a) provided that vaping duty is payable on vaping products manufactured in Canada by the vaping product licensee that packaged them at the time the products are packaged.

Subject to parliamentary approval, effective January 1, 2024, the amendment to this paragraph will provide that vaping duty would be payable at the time the products are stamped and will apply to products packaged after 2023.

Importation

Prior to January 1, 2024, paragraph 158.57(b) provided that vaping duty is payable by the importer at the time of importation.

Subject to parliamentary approval, effective January 1, 2024, paragraph 158.57(a.1) will be added and will provide that when packaged vaping products are imported by a vaping product licensee for stamping in Canada, the vaping duty will be payable by the licensee at the time they are stamped. Paragraph 158.57(b) will be amended and will provide that in the case of any other imported vaping products, the vaping duty will remain payable by the importer at the time of importation.

Under proposed legislation, these amendments will apply in respect of vaping products manufactured in Canada that are packaged after 2023 and in respect of vaping products that are imported into Canada or released (as defined in subsection 2(1) of the Customs Act) after 2023.

Imposition of additional vaping duty

Section 158.58 imposes an additional vaping duty in respect of a specified vaping province on vaping products, if applicable. Under proposed legislation, the amendments to this section will provide the timing of when additional vaping duty will be payable to be consistent with the amendments made to section 158.57 described above.

Amendments to penalties

Contravention of section 158.47

Under proposed legislation, the addition of section 233.3 will provide that if a person that is liable to pay a duty on imported vaping products enters the imported vaping products into the duty‑paid market without prescribed information or without being stamped, then that person is liable to a penalty equal to 200% of the applicable duty.

This amendment comes into force on royal assent.

Contravention of sections 158.35 and 158.43 to 158.45

Previously, section 234.2 provided that a person was liable to a penalty equal to 200% of the applicable vaping duty if the person did any of the following:

• manufactures vaping products without a licence
• receives for sale unpackaged and unstamped vaping products from a manufacturer that is not a vaping product licensee
• sells or offers to sell unpackaged or unstamped vaping products

Under proposed legislation, section 234.2 is amended to include the imposition of penalties equal to 200% of the applicable vaping duty if any person did any of the following:

• purchased unpackaged and unstamped vaping products from a manufacturer that is not a vaping product licensee
• disposed of, purchased or had in their possession unpackaged or unstamped vaping products
• distributed unpackaged or unstamped vaping products

This amendment comes into force on royal assent.

Contravention of section 158.511

Under proposed legislation, the addition of section 249.1 will provide that any person that contravened section 158.511, which requires that packaged vaping products imported for stamping in Canada be immediately delivered to the premises of the vaping product licensee for stamping, will be liable to a penalty equal to 50% of the applicable vaping duty.

This amendment comes into force on royal assent and applies with respect to packaged vaping products imported after 2023 for stamping by the vaping product licence.

Stamping and marking of vaping products

The Stamping and Marking of Tobacco, Cannabis and Vaping Products Regulations provide rules relating to the stamping, marking and labelling of vaping products under the Excise Act, 2001.

Section 3.6 of the Regulations prescribes that one of the following be printed on packaged vaping products that were manufactured in Canada:

• the vaping product licensee’s name and address
• the vaping product licensee’s licence number
• if the vaping products are packaged by the vaping product licensee for another person, the person’s name and the address of their principal place of business 

Under proposed legislation, in addition to the previous options for prescribed information, amendments to the Regulations will add the requirement for additional prescribed information as follows:

• the volume in millilitres of the vaping substance in liquid form contained in each vaping device or immediate container in the package
• the weight in grams of the vaping substance in solid form contained in each vaping device or immediate container in the package
• the number of vaping devices and immediate containers in the package

The addition of the requirement to include the volume or weight of the vaping substance and the quantity of devices or containers in a package will come into force six months after the first day of the month following the month of royal assent.

Under proposed legislation, the amendments to section 3.7 of the Regulations will require the following information to be printed on a packaged vaping product imported for the duty-paid market:

• if the vaping product was imported by a vaping product licensee, their name and address or vaping product licence number
• if the vaping product was imported by a vaping prescribed person, their name and address
• the volume in millilitres of the vaping substance in liquid form, and the weight in grams of the vaping substance in solid form, contained in each vaping device or immediate container in the package and the number of vaping devices and immediate containers in the package.

The name and address of the manufacturer that packaged the vaping products will no longer be required as prescribed information for imported vaping products.

The amendments to section 3.7 of the Regulations will come into force six months after the first day of the month following the month of royal assent.

Under proposed legislation, subsection 8(1) of the regulations will be amended to include the markings for subsection 158.5(1.1) which outlines marking requirements for vaping products that are removed from the premises of a vaping product licensee for export and delivery to an accredited representative. The amendments to subsection 8(1) will come into force on January 1, 2024.

Further information