Cannabis duty – Apply for a cannabis licence from the CRA

Even if you have a Health Canada licence, you must apply for a CRA cannabis licence to produce cannabis products for both medical and non-medical (recreational) purposes.

If you will be packaging cannabis products, you must also register for the cannabis stamping regime prior to the sale of any packaged cannabis products.

For more information, see Register for the cannabis stamping regime.

How long is the cannabis licence valid?

Your licence is valid for a maximum of five years. Your licence will not be automatically renewed. To renew your licence, you must apply for a licence renewal no later than 30 days before the expiration date of your current licence. You must continue to meet the requirements of the licence during the period you are licensed.

For more information, see Excise Duty Notice EDN52, Obtaining and Renewing a Cannabis Licence.

Eligibility conditions for a cannabis licence

To apply for or renew a cannabis licence, you must meet all of the following conditions:

• You are not the subject of a receivership of your debts
• You have not failed to comply with any Act of Parliament (other than the Excise Act, 2001) or of a provincial or territorial legislature that deals with the taxation or control of alcohol, tobacco products, cannabis products, or vaping products or any regulations under it in the past five years
• You have not acted to defraud His Majesty in the past five years
• Each individual involved is at least 18 years of age
• You have a valid business address in Canada
• You provide a list of all premises that will be cultivating, producing and/or packaging cannabis products
• You have sufficient financial resources to conduct your business in a responsible manner
• You hold a valid licence/permit from Health Canada issued under the Cannabis Act
• You provide a business plan (including a business industry overview, operating plan, financial plan or source of funds, and a sales and marketing plan)
• You provide acceptable security to cover one month of cannabis duty liability (minimum of $5,000 and a maximum of $5 million)

Security requirement

The minimum amount of security required for licensees who are only cultivating and/or producing cannabis products would be $5,000. The maximum security amount would be $5 million for cannabis licensees who package cannabis products.

For a new cannabis licence application, security would be calculated as:

[(estimated number of grams of dried cannabis to be sold over the first 12 months x $1 per gram) + (estimated number of milligrams of total THC to be sold over the first 12 months x $0.01)] ÷ 12 months

For a renewal application, security would be the highest amount of cannabis duties payable for a calendar month in the previous 12 calendar months.

If you have specific questions on how to calculate the security amount, send an email to cannabis@cra-arc.gc.ca or call 1-866-330-3304.

For more information, see Excise Duty Notice EDN52, Obtaining and Renewing a Cannabis Licence.

After you apply for a cannabis licence

The CRA will review your application to determine if you are eligible for a cannabis licence based on the information provided on your Form L300. The CRA may contact you if more information is necessary.

Upon meeting the eligibility criteria, you will receive a letter to confirm your CRA cannabis licence approval and tell you your new excise duty program account number.

Your application for a cannabis licence is not an approval to start your business activities relating to cannabis. You can only start to produce cannabis products after you receive licences from both the CRA and Health Canada. For more information on how to register with Health Canada, go to Cannabis in Canada.

Your responsibilities as a cannabis licensee

As a cannabis licensee, you must:

• register for the cannabis stamping regime (if you are packaging cannabis products for final sale or another licensee is packaging and/or stamping your cannabis products for final sale on your behalf under an authorized service agreement)
• calculate the duties imposed on cannabis
• report (send) and remit (pay) the duty payable on cannabis using Form B300, Cannabis Duty and Information Return
• report your unpackaged and packaged cannabis product inventories using Form B300
• keep all your supporting documents for at least six years to support all aspects of your operations
• apply for a licence renewal at least 30 days before the expiry of your licence (your licence is valid for a maximum of five years)

You must tell the CRA immediately if any information you provided in your licence application has changed or is no longer accurate. For the contact information of the regional excise offices, go to Contact Information – Excise Duty, Excise Taxes, Fuel Charge and Air Travellers Security Charge.

For more information, see Excise Duty Notice EDN52, Obtaining and Renewing a Cannabis Licence.

Conditions to suspend or cancel your cannabis licence

The CRA can suspend or cancel your licence if you no longer meet the conditions to be a licensee. These reasons include but are not limited to:

• You are bankrupt
• You stop cultivating, producing or packaging cannabis products
• You fail to comply with any Act for the taxation or control of alcohol, tobacco, cannabis, or vaping products
• You act to defraud His Majesty
• You fail to notify the CRA of any changes to your licensing information as required by legislation

If a change of legal entity occurs (for example, a proprietorship incorporates), you would have to apply for a new licence using Form L300 and your existing cannabis licence would be cancelled.

If a licence is not being cancelled at your request, the CRA will send you a written notice at least 90 days before the proposed cancellation date of your licence. You have 90 days from the date of notification to provide the reason why the licence should not be cancelled.

For more information, see Excise Duty Notice EDN52, Obtaining and Renewing a Cannabis Licence.