How to Get a Cannabis Licence from the Canada Revenue Agency
Whether you are cultivating, processing or selling cannabis through a medical sales program, if you are a licence-holder of a commercial cannabis licence from Health Canada, you will also need to obtain what is called a Cannabis Excise Duty Licence from the Canada Revenue Agency.
CRA Cannabis Licence Requirements
You need to obtain a CRA cannabis licence if you conduct any one of these three activities:
- cultivating (you grow cannabis products commercially)
- producing (you produce cannabis products commercially)
- packaging (you package cannabis products commercially)
NOTE: You require a CRA Cannabis Licence whether your activities deal with recreational or medical cannabis.
You must apply for the CRA cannabis licence through an application process that requires you to submit a number of items:
• A Business plan
• An Estimate of yearly production output
• A security deposit – Ranges from $5,000 to $5 Million
The security deposit that you will have to pay depends on whether you anticipate packaging cannabis products with your licence. If you do not plan on doing so, you will have to pay the minimum security deposit of $5,000. Otherwise, the security deposit you pay is based on the amount of cannabis products you anticipate you will package for sale in the next year.
Reasons You Might Be Denied a CRA Cannabis Licence
Understand that you will not be able to obtain a CRA Cannabis Licence unless your company meets the following requirements
- is not the subject of a receivership in respect of their debts;
- has not failed in the 5 years immediately before the date of the licence application 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 tobacco or alcohol, or any regulations made under it; and
- has not acted to defraud Her Majesty in the 5 years immediately before the date of the licence application.
Cannabis Excise Duty Stamping Regime
In addition to obtaining a CRA Cannabis Licence, you will need to register for the CRA excise duty stamping regime if you are packaging cannabis products for final sale. You register for the cannabis excise stamping regime by filling out Form L301, Registration for Cannabis Stamping Regime.
You will need to affix stamps on every cannabis product that you package for final sale. The tricky part is that there is a different stamp for each province, and you must stamp the product with the excise stamp representing the province where the cannabis products are ultimately destined for.
You must purchase stamps through an on-line excise stamping order system run by the CRA. The CRA reviews stamp orders and then authorizes the stamp provider to process the order and arranges delivery to your licence site.
From there, you must affix a cannabis excise stamp to the products at the time of packaging for final sale, calculate the duty payable on cannabis, report and remit the duty payable to the CRA (through Form B300, Cannabis Duty and Information Return), and report on inventory of stamps using Form B300.
Do I need to obtain a CRA Cannabis Licence even if I am not packaging cannabis products for final sale?
The answer is: YES. Whether you are cultivating or processing cannabis, or selling cannabis through a medical sales program, you will need to obtain a CRA Cannabis Licence. If you are not packaging cannabis for final sale, the good news is that your security deposit will only be $5,000.
Do I need to obtain a CRA Cannabis Licence if I am a cannabis retail store?
If you are a provincially-authorized cannabis retail store, such as an AGCO-licensed dispensary in Ontario, you do NOT need a CRA Cannabis Licence and you should not apply for one – your application will be refused and it will be a waste of your time!
Why should I hire a lawyer to complete my CRA Cannabis Excise Licence Application?
A lawyer can not just navigate you through the CRA cannabis licence process, but also provide legal advice and interpret legal statutes and regulations for you.
How can I pay the CRA excise security deposit?
The security deposit can be made in the form of cash, surety bonds issued by an approved entity, certified cheque, or transferable bonds issued by the Government of Canada (non-certificated).
You deserve a dependable and reliable lawyer on your side. Harrison Jordan is a Toronto-based lawyer assisting business with their CRA cannabis licence needs, including dealing with Canada Revenue Agency matters and applications for RA Cannabis licences. Call him at +1 647 371 0032 or email him today. He’ll get back to you as soon as he can.