Image rights: Canada Revenue Agency
Becoming a licensed producer or other cannabis licensee in Canada can already be a complicated process. Cannabis excise stamps are government-issued stamps that need to be pasted onto cannabis product packages prior to sale in Canada. Excise stamps confirm that the producer has paid the federal excise tax to the Canada Revenue Agency (CRA) and allow consumers to confirm that the cannabis product they are purchasing has been legally produced. The stamps come in different colours depending on the province in which the product is intended to be sold in.
Not all cannabis products require an excise stamp – prescription cannabis drugs, low-THC cannabis products, and products intended for export are among those that are exempt.
To obtain the stamps, cannabis licensees need to register with the CRA and order them online in bundles of 500. There is also only one authorized stamp provider in Canada. Cannabis producers must follow a number of measures to make sure that the stamps comply with the CRA’s specifications. The stamp must seal the package, it must be in a conspicuous place on the package, and it must not block any other information on the package.
The cannabis licensee is responsible for ensuring the safekeeping of the excise stamps. Cannabis excise stamps are subject to fairly significant penalties from the CRA if they are lost, damaged or unaccounted for. These penalties apply even if you aren’t at fault for the damage or loss. This would include scenarios such as the stamps being damaged in a fire or lost in transport. The penalties for each stamp vary based on the province they are intended to be sold in. The current penalty prices are:
- MB $1.25/stamp
- BC, NT, NS, QC and YK $5.00/stamp
- ON, NB, PE, SK, AB, NL and NU $30.00/stamp
This can create a possible cannabis insurance coverage gap if you have stamps in your possession. The exposure arises from how steep the penalty is compared to the cost of the stamps themselves, along with the fact that under the insurance policy excise stamps are usually considered “money & securities” instead of “stock”.
When you are inquiring about cannabis insurance, it is important to consider your answers to the following questions to ensure you are covered correctly:
- Do you have any CRA excise stamps in your inventory?
- If so, how many stamps do you typically carry at any one time?
Call Fuse Insurance today to obtain a cannabis insurance quote or to review your current coverage package to make sure there’s no missed exposure. Contact us at 1-866-387-FUSE (3873) or visit our cannabis page.