Excise Duties on Cannabis Regulations: SOR/2019-78

Canada Gazette, Part II, Volume 153, Number 7

Registration
SOR/2019-78 March 26, 2019

EXCISE ACT, 2001

P.C. 2019-217 March 25, 2019

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to sections 304^{footnote a} and 304.1^{footnote b} of the Excise Act, 2001^{footnote c}, makes the annexed Excise Duties on Cannabis Regulations.

Excise Duties on Cannabis Regulations

Interpretation

Definitions

1 The following definitions apply in these Regulations.

Act means the Excise Act, 2001. (Loi)

base amount means, in respect of a cannabis product and a listed specified province,

(a) if the cannabis product is delivered or made available to a person that obtains it otherwise than by means of a purchase, the fair market value of the cannabis product; and
(b) in any other case, the amount determined by the formula

[(A − B) − C] × [100%/(100% + D)]

where

A is the total determined for A in paragraph (a) of the definition dutiable amount in section 2 of the Act in respect of the cannabis product,
B is the total determined under section 1 of Schedule 7 to the Act in respect of the cannabis product,
C is
- (i) if the listed specified province is Ontario, the amount determined under section 1 of Schedule 1 in respect of the cannabis product,
- (ii) if the listed specified province is New Brunswick, the amount determined under section 1 of Schedule 4 in respect of the cannabis product,
- (iii) if the listed specified province is Prince Edward Island, the amount determined under section 1 of Schedule 6 in respect of the cannabis product,
- (iv) if the listed specified province is Saskatchewan, the amount determined under section 1 of Schedule 7 in respect of the cannabis product,
- (v) if the listed specified province is Alberta, the amount determined under section 1 of Schedule 8 in respect of the cannabis product,
- (vi) if the listed specified province is Newfoundland and Labrador, the amount determined under section 1 of Schedule 9 in respect of the cannabis product, and
- (vii) if the listed specified province is Nunavut, the amount determined under section 1 of Schedule 12 in respect of the cannabis product, and
D is
- (i) if the listed specified province is Ontario, the percentage set out in section 5 of Schedule 1,
- (ii) if the listed specified province is New Brunswick, the percentage set out in section 5 of Schedule 4,
- (iii) if the listed specified province is Prince Edward Island, the percentage set out in section 5 of Schedule 6,
- (iv) if the listed specified province is Saskatchewan, the percentage set out in section 5 of Schedule 7,
- (v) if the listed specified province is Alberta, the percentage set out in section 5 of Schedule 8,
- (vi) if the listed specified province is Newfoundland and Labrador, the percentage set out in section 5 of Schedule 9, and
- (vii) if the listed specified province is Nunavut, the percentage set out in section 5 of Schedule 12. (montant de base)

listed specified province means any of the following specified provinces:

(a) Ontario;
(b) New Brunswick;
(c) Prince Edward Island;
(d) Saskatchewan;
(e) Alberta;
(f) Newfoundland and Labrador; and
(g) Nunavut. (province déterminée désignée)

Cannabis Product Definition

Cannabis product — exclusions

2 For the purposes of the definition cannabis product in section 2 of the Act, the following substances, materials or things are not included:

(a) a test kit, as defined in subsection 1(2) of the Cannabis Regulations, for which a registration number has been issued, but not cancelled, under those Regulations; and
(b) a reference standard, being a highly purified and standardized form of a given substance used as a measurement base to confirm the identity, strength, quality or purity of a substance,
- (i) that contains a known quantity or concentration of a chemical component of cannabis, such as cannabidiol, cannabidiolic acid, delta-9-tetrahydrocannabinolic acid or THC,
- (ii) that is designed to be used during the course of a chemical or analytical procedure for a medical, laboratory, industrial, educational, law administration or enforcement, or research purpose, and
- (iii) that is not intended to be consumed or administered.

Additional Cannabis Duty

Dutiable amount — prescribed percentage

3 (1) For the purposes of subparagraph (i) of the description of C in paragraph (a) of the definition dutiable amount in section 2 of the Act, the prescribed percentage in respect of a specified province is

(a) in the case of Ontario, the total of
- (i) the percentage set out in section 2 of Schedule 1, and
- (ii) the percentage set out in section 5 of Schedule 1;
(b) in the case of Quebec, the percentage set out in section 2 of Schedule 2;
(c) in the case of Nova Scotia, the percentage set out in section 2 of Schedule 3;
(d) in the case of New Brunswick, the total of
- (i) the percentage set out in section 2 of Schedule 4, and
- (ii) the percentage set out in section 5 of Schedule 4;
(e) in the case of British Columbia, the percentage set out in section 2 of Schedule 5;
(f) in the case of Prince Edward Island, the total of
- (i) the percentage set out in section 2 of Schedule 6, and
- (ii) the percentage set out in section 5 of Schedule 6;
(g) in the case of Saskatchewan, the total of
- (i) the percentage set out in section 2 of Schedule 7, and
- (ii) the percentage set out in section 5 of Schedule 7;
(h) in the case of Alberta, the total of
- (i) the percentage set out in section 2 of Schedule 8, and
- (ii) the percentage set out in section 5 of Schedule 8;
(i) in the case of Newfoundland and Labrador, the total of
- (i) the percentage set out in section 2 of Schedule 9, and
- (ii) the percentage set out in section 5 of Schedule 9;
(j) in the case of Yukon, the percentage set out in section 2 of Schedule 10;
(k) in the case of the Northwest Territories, the percentage set out in section 2 of Schedule 11; and
(l) in the case of Nunavut, the total of
- (i) the percentage set out in section 2 of Schedule 12, and
- (ii) the percentage set out in section 5 of Schedule 12.

Dutiable amount — prescribed circumstances

(2) For the purposes of paragraph (b) of the definition dutiable amount in section 2 of the Act, if a cannabis product is delivered or made available in a specified province to a person that obtains it otherwise than by means of a purchase and if an amount in respect of the cannabis product is to be determined under any of sections 2 and 6 of Schedules 1, 4, 6 to 9 and 12 and section 2 of Schedules 2, 3, 5, 10 and 11, the dutiable amount of the cannabis product is equal to the fair market value of the cannabis product.

Specified province

4 For the purposes of the definition specified province in section 2 of the Act, the following provinces are prescribed:

(a) Ontario;
(b) Quebec;
(c) Nova Scotia;
(d) New Brunswick;
(e) British Columbia;
(f) Prince Edward Island;
(g) Saskatchewan;
(h) Alberta;
(i) Newfoundland and Labrador;
(j) Yukon;
(k) the Northwest Territories; and
(l) Nunavut.

Subsections 158.2(1) and 158.27(3) of Act — prescribed circumstances

5 (1) For the purposes of subsections 158.2(1) and 158.27(3) of the Act, a duty in respect of a specified province is imposed under those subsections on cannabis products produced in Canada if the cannabis products are for consumption, use or sale to consumers in the specified province.

Subsections 158.2(1) and 158.27(3) of Act — calculation of duty

(2) For the purposes of subsections 158.2(1) and 158.27(3) of the Act, the amount of duty imposed under those subsections in respect of cannabis products produced in Canada and in respect of a specified province is determined as follows:

(a) in the case of Ontario, the amount that is equal to the total of
- (i) the amount that is the greater of
  - (A) the amount determined in respect of the cannabis products under section 1 of Schedule 1, and
  - (B) the amount determined in respect of the cannabis products under section 2 of Schedule 1, and
- (ii) the amount determined in respect of the cannabis products under
  - (A) section 5 of Schedule 1 if the amount determined under clause (i)(A) is greater than or equal to the amount determined under clause (i)(B), or
  - (B) section 6 of Schedule 1 in any other case;
(b) in the case of Quebec, the amount that is equal to the greater of
- (i) the amount determined in respect of the cannabis products under section 1 of Schedule 2, and
- (ii) the amount determined in respect of the cannabis products under section 2 of Schedule 2;
(c) in the case of Nova Scotia, the amount that is equal to the greater of
- (i) the amount determined in respect of the cannabis products under section 1 of Schedule 3, and
- (ii) the amount determined in respect of the cannabis products under section 2 of Schedule 3;
(d) in the case of New Brunswick, the amount that is equal to the total of
- (i) the amount that is the greater of
  - (A) the amount determined in respect of the cannabis products under section 1 of Schedule 4, and
  - (B) the amount determined in respect of the cannabis products under section 2 of Schedule 4, and
- (ii) the amount determined in respect of the cannabis products under
  - (A) section 5 of Schedule 4 if the amount determined under clause (i)(A) is greater than or equal to the amount determined under clause (i)(B), or
  - (B) section 6 of Schedule 4 in any other case;
(e) in the case of British Columbia, the amount that is equal to the greater of
- (i) the amount determined in respect of the cannabis products under section 1 of Schedule 5, and
- (ii) the amount determined in respect of the cannabis products under section 2 of Schedule 5;
(f) in the case of Prince Edward Island, the amount that is equal to the total of
- (i) the amount that is the greater of
  - (A) the amount determined in respect of the cannabis products under section 1 of Schedule 6, and
  - (B) the amount determined in respect of the cannabis products under section 2 of Schedule 6, and
- (ii) the amount determined in respect of the cannabis products under
  - (A) section 5 of Schedule 6 if the amount determined under clause (i)(A) is greater than or equal to the amount determined under clause (i)(B), or
  - (B) section 6 of Schedule 6 in any other case;
(g) in the case of Saskatchewan, the amount that is equal to the total of
- (i) the amount that is the greater of
  - (A) the amount determined in respect of the cannabis products under section 1 of Schedule 7, and
  - (B) the amount determined in respect of the cannabis products under section 2 of Schedule 7, and
- (ii) the amount determined in respect of the cannabis products under
  - (A) section 5 of Schedule 7 if the amount determined under clause (i)(A) is greater than or equal to the amount determined under clause (i)(B), or
  - (B) section 6 of Schedule 7 in any other case;
(h) in the case of Alberta, the amount that is equal to the total of
- (i) the amount that is the greater of
  - (A) the amount determined in respect of the cannabis products under section 1 of Schedule 8, and
  - (B) the amount determined in respect of the cannabis products under section 2 of Schedule 8, and
- (ii) the amount determined in respect of the cannabis products under
  - (A) section 5 of Schedule 8 if the amount determined under clause (i)(A) is greater than or equal to the amount determined under clause (i)(B), or
  - (B) section 6 of Schedule 8 in any other case;
(i) in the case of Newfoundland and Labrador, the amount that is equal to the total of
- (i) the amount that is the greater of
  - (A) the amount determined in respect of the cannabis products under section 1 of Schedule 9, and
  - (B) the amount determined in respect of the cannabis products under section 2 of Schedule 9, and
- (ii) the amount determined in respect of the cannabis products under
  - (A) section 5 of Schedule 9 if the amount determined under clause (i)(A) is greater than or equal to the amount determined under clause (i)(B), or
  - (B) section 6 of Schedule 9 in any other case;
(j) in the case of Yukon, the amount that is equal to the greater of
- (i) the amount determined in respect of the cannabis products under section 1 of Schedule 10, and
- (ii) the amount determined in respect of the cannabis products under section 2 of Schedule 10;
(k) in the case of the Northwest Territories, the amount that is equal to the greater of
- (i) the amount determined in respect of the cannabis products under section 1 of Schedule 11, and
- (ii) the amount determined in respect of the cannabis products under section 2 of Schedule 11; and
(l) in the case of Nunavut, the amount that is equal to the total of
- (i) the amount that is the greater of
  - (A) the amount determined in respect of the cannabis products under section 1 of Schedule 12, and
  - (B) the amount determined in respect of the cannabis products under section 2 of Schedule 12, and
- (ii) the amount determined in respect of the cannabis products under
  - (A) section 5 of Schedule 12 if the amount determined under clause (i)(A) is greater than or equal to the amount determined under clause (i)(B), or
  - (B) section 6 of Schedule 12 in any other case.

Subsection 158.22(1) of Act — prescribed circumstances

6 (1) For the purposes of subsection 158.22(1) of the Act, a duty in respect of a specified province is imposed under that subsection on imported cannabis products if the person that is liable under subsection 158.22(2) of the Act to pay the duty is resident in the specified province.

Residence

(2) For the purposes of subsection (1), a person is deemed to be resident in a province if the person is deemed under section 132.1 of the Excise Tax Act to be resident in that province for the purposes of Part IX of that Act.

Subsection 158.22(1) of Act — calculation of duty

(3) For the purposes of subsection 158.22(1) of the Act, the amount of duty imposed under that subsection in respect of imported cannabis products and in respect of a specified province is determined as follows:

(a) in the case of Ontario, the amount that is equal to the total of
- (i) the amount that is the greater of
- (ii) the amount determined in respect of the cannabis products under section 7 of Schedule 1;
(b) in the case of Quebec, the amount that is equal to the greater of
- (i) the amount determined in respect of the cannabis products under section 1 of Schedule 2, and
- (ii) the amount determined in respect of the cannabis products under section 3 of Schedule 2;
(c) in the case of Nova Scotia, the amount that is equal to the greater of
- (i) the amount determined in respect of the cannabis products under section 1 of Schedule 3, and
- (ii) the amount determined in respect of the cannabis products under section 3 of Schedule 3;
(d) in the case of New Brunswick, the amount that is equal to the total of
- (i) the amount that is the greater of
- (ii) the amount determined in respect of the cannabis products under section 7 of Schedule 4;
(e) in the case of British Columbia, the amount that is equal to the greater of
- (i) the amount determined in respect of the cannabis products under section 1 of Schedule 5, and
- (ii) the amount determined in respect of the cannabis products under section 3 of Schedule 5;
(f) in the case of Prince Edward Island, the amount that is equal to the total of
- (i) the amount that is the greater of
- (ii) the amount determined in respect of the cannabis products under section 7 of Schedule 6;
(g) in the case of Saskatchewan, the amount that is equal to the total of
- (i) the amount that is the greater of
- (ii) the amount determined in respect of the cannabis products under section 7 of Schedule 7;
(h) in the case of Alberta, the amount that is equal to the total of
- (i) the amount that is the greater of
- (ii) the amount determined in respect of the cannabis products under section 7 of Schedule 8;
(i) in the case of Newfoundland and Labrador, the amount that is equal to the total of
- (i) the amount that is the greater of
- (ii) the amount determined in respect of the cannabis products under section 7 of Schedule 9;
(j) in the case of Yukon, the amount that is equal to the greater of
- (i) the amount determined in respect of the cannabis products under section 1 of Schedule 10, and
- (ii) the amount determined in respect of the cannabis products under section 3 of Schedule 10;
(k) in the case of the Northwest Territories, the amount that is equal to the greater of
- (i) the amount determined in respect of the cannabis products under section 1 of Schedule 11, and
- (ii) the amount determined in respect of the cannabis products under section 3 of Schedule 11; and
(l) in the case of Nunavut, the amount that is equal to the total of
- (i) the amount that is the greater of
- (ii) the amount determined in respect of the cannabis products under section 7 of Schedule 12.

Subsection 158.25(2) of Act — prescribed circumstances

7 (1) For the purposes of subsection 158.25(2) of the Act, a duty in respect of a specified province is imposed under that subsection on cannabis products if the location of the cannabis products at the particular time referred to in that subsection is in the specified province.

Subsection 158.26(2) of Act — prescribed circumstances

(2) For the purposes of subsection 158.26(2) of the Act, a duty in respect of a specified province is imposed under that subsection on cannabis products that cannot be accounted for if the last known location of the cannabis products before the particular time referred to in that subsection is in the specified province.

Subsections 158.25(2) and 158.26(2) of Act — calculation of duty

(3) For the purposes of subsections 158.25(2) and 158.26(2) of the Act, the amount of duty imposed under those subsections in respect of cannabis products and a specified province is determined as follows:

(a) in the case of Ontario, the amount that is equal to the total of
- (i) the amount that is the greater of
  - (A) the amount determined in respect of the cannabis products under section 1 of Schedule 1, and
  - (B) the amount determined in respect of the cannabis products under section 4 of Schedule 1, and
- (ii) the amount determined in respect of the cannabis products under section 8 of Schedule 1;
(b) in the case of Quebec, the amount that is equal to the greater of
- (i) the amount determined in respect of the cannabis products under section 1 of Schedule 2, and
- (ii) the amount determined in respect of the cannabis products under section 4 of Schedule 2;
(c) in the case of Nova Scotia, the amount that is equal to the greater of
- (i) the amount determined in respect of the cannabis products under section 1 of Schedule 3, and
- (ii) the amount determined in respect of the cannabis products under section 4 of Schedule 3;
(d) in the case of New Brunswick, the amount that is equal to the total of
- (i) the amount that is the greater of
  - (A) the amount determined in respect of the cannabis products under section 1 of Schedule 4, and
  - (B) the amount determined in respect of the cannabis products under section 4 of Schedule 4, and
- (ii) the amount determined in respect of the cannabis products under section 8 of Schedule 4;
(e) in the case of British Columbia, the amount that is equal to the greater of
- (i) the amount determined in respect of the cannabis products under section 1 of Schedule 5, and
- (ii) the amount determined in respect of the cannabis products under section 4 of Schedule 5;
(f) in the case of Prince Edward Island, the amount that is equal to the total of
- (i) the amount that is the greater of
  - (A) the amount determined in respect of the cannabis products under section 1 of Schedule 6, and
  - (B) the amount determined in respect of the cannabis products under section 4 of Schedule 6, and
- (ii) the amount determined in respect of the cannabis products under section 8 of Schedule 6;
(g) in the case of Saskatchewan, the amount that is equal to the total of
- (i) the amount that is the greater of
  - (A) the amount determined in respect of the cannabis products under section 1 of Schedule 7, and
  - (B) the amount determined in respect of the cannabis products under section 4 of Schedule 7, and
- (ii) the amount determined in respect of the cannabis products under section 8 of Schedule 7;
(h) in the case of Alberta, the amount that is equal to the total of
- (i) the amount that is the greater of
  - (A) the amount determined in respect of the cannabis products under section 1 of Schedule 8, and
  - (B) the amount determined in respect of the cannabis products under section 4 of Schedule 8, and
- (ii) the amount determined in respect of the cannabis products under section 8 of Schedule 8;
(i) in the case of Newfoundland and Labrador, the amount that is equal to the total of
- (i) the amount that is the greater of
  - (A) the amount determined in respect of the cannabis products under section 1 of Schedule 9, and
  - (B) the amount determined in respect of the cannabis products under section 4 of Schedule 9, and
- (ii) the amount determined in respect of the cannabis products under section 8 of Schedule 9;
(j) in the case of Yukon, the amount that is equal to the greater of
- (i) the amount determined in respect of the cannabis products under section 1 of Schedule 10, and
- (ii) the amount determined in respect of the cannabis products under section 4 of Schedule 10;
(k) in the case of the Northwest Territories, the amount that is equal to the greater of
- (i) the amount determined in respect of the cannabis products under section 1 of Schedule 11, and
- (ii) the amount determined in respect of the cannabis products under section 4 of Schedule 11; and
(l) in the case of Nunavut, the amount that is equal to the total of
- (i) the amount that is the greater of
  - (A) the amount determined in respect of the cannabis products under section 1 of Schedule 12, and
  - (B) the amount determined in respect of the cannabis products under section 4 of Schedule 12, and
- (ii) the amount determined in respect of the cannabis products under section 8 of Schedule 12.

Prescribed specified provinces — offences

8 For the purposes of subparagraph (i) of the description of C in paragraph 218.1(2)(a) of the Act and subparagraph (i) of the description of C in paragraph 218.1(3)(a) of the Act, the listed specified provinces are prescribed.

Prescribed specified provinces — penalties

9 For the purposes of paragraph (a) of the description of C in section 233.1 of the Act, paragraph (a) of the description of C in section 234.1 of the Act and subparagraph 238.1(2)(b)(iii) of the Act, the listed specified provinces are prescribed.

Coming into Force

September 17, 2018

10 (1) These Regulations, except for sections 2 and 8, are deemed to have come into force on September 17, 2018, except that, before October 17, 2018, section 9 is to be read without reference to “paragraph (a) of the description of C in section 234.1 of the Act”.

June 21, 2018

(2) Section 2 is deemed to have come into force on June 21, 2018, except that, before October 17, 2018, paragraph 2(a) is to be read as follows:

(a) a test kit, as defined in subsection 2(1) of the Narcotic Control Regulations, that contains cannabis and for which a registration number has been issued, but not cancelled, under those Regulations; and

Publication

(3) Section 8 comes into force on the day on which these Regulations are published in the Canada Gazette.

SCHEDULE 1

(Section 1 and paragraphs 3(1)(a), 5(2)(a), 6(3)(a) and 7(3)(a))

Additional Cannabis Duty in Respect of Ontario

1 Any cannabis product produced in Canada or imported: the amount equal to the total of

(a) $0.75 per gram of flowering material included in the cannabis product or used in the production of the cannabis product,
(b) $0.225 per gram of non-flowering material included in the cannabis product or used in the production of the cannabis product,
(c) $0.75 per viable seed included in the cannabis product or used in the production of the cannabis product, and
(d) $0.75 per vegetative cannabis plant included in the cannabis product or used in the production of the cannabis product.

2 Any cannabis product produced in Canada: the amount obtained by multiplying the dutiable amount for the cannabis product by 7.5%.

3 Any imported cannabis product: the amount obtained by multiplying the value of the cannabis product by 7.5%.

4 Any cannabis product taken for use or unaccounted for: the amount obtained by multiplying the fair market value of the cannabis product by 7.5%.

5 Any cannabis product produced in Canada: the amount obtained by multiplying the base amount for the cannabis product and for Ontario by 3.9%.

6 Any cannabis product produced in Canada: the amount obtained by multiplying the dutiable amount for the cannabis product by 3.9%.

7 Any imported cannabis product: the amount obtained by multiplying the value of the cannabis product by 3.9%.

8 Any cannabis product taken for use or unaccounted for: the amount obtained by multiplying the fair market value of the cannabis product by 3.9%.

SCHEDULE 2

(Paragraphs 3(1)(b), 5(2)(b), 6(3)(b) and 7(3)(b))

Additional Cannabis Duty in Respect of Quebec

1 Any cannabis product produced in Canada or imported: the amount equal to the total of

(a) $0.75 per gram of flowering material included in the cannabis product or used in the production of the cannabis product,
(b) $0.225 per gram of non-flowering material included in the cannabis product or used in the production of the cannabis product,
(c) $0.75 per viable seed included in the cannabis product or used in the production of the cannabis product, and
(d) $0.75 per vegetative cannabis plant included in the cannabis product or used in the production of the cannabis product.

2 Any cannabis product produced in Canada: the amount obtained by multiplying the dutiable amount for the cannabis product by 7.5%.

3 Any imported cannabis product: the amount obtained by multiplying the value of the cannabis product by 7.5%.

4 Any cannabis product taken for use or unaccounted for: the amount obtained by multiplying the fair market value of the cannabis product by 7.5%.

SCHEDULE 3

(Paragraphs 3(1)(c), 5(2)(c), 6(3)(c) and 7(3)(c))

Additional Cannabis Duty in Respect of Nova Scotia

1 Any cannabis product produced in Canada or imported: the amount equal to the total of

(a) $0.75 per gram of flowering material included in the cannabis product or used in the production of the cannabis product,
(b) $0.225 per gram of non-flowering material included in the cannabis product or used in the production of the cannabis product,
(c) $0.75 per viable seed included in the cannabis product or used in the production of the cannabis product, and
(d) $0.75 per vegetative cannabis plant included in the cannabis product or used in the production of the cannabis product.

2 Any cannabis product produced in Canada: the amount obtained by multiplying the dutiable amount for the cannabis product by 7.5%.

3 Any imported cannabis product: the amount obtained by multiplying the value of the cannabis product by 7.5%.

4 Any cannabis product taken for use or unaccounted for: the amount obtained by multiplying the fair market value of the cannabis product by 7.5%.

SCHEDULE 4

(Section 1 and paragraphs 3(1)(d), 5(2)(d), 6(3)(d) and 7(3)(d))

Additional Cannabis Duty in Respect of New Brunswick

1 Any cannabis product produced in Canada or imported: the amount equal to the total of

(a) $0.75 per gram of flowering material included in the cannabis product or used in the production of the cannabis product,
(b) $0.225 per gram of non-flowering material included in the cannabis product or used in the production of the cannabis product,
(c) $0.75 per viable seed included in the cannabis product or used in the production of the cannabis product, and
(d) $0.75 per vegetative cannabis plant included in the cannabis product or used in the production of the cannabis product.

2 Any cannabis product produced in Canada: the amount obtained by multiplying the dutiable amount for the cannabis product by 7.5%.

3 Any imported cannabis product: the amount obtained by multiplying the value of the cannabis product by 7.5%.

4 Any cannabis product taken for use or unaccounted for: the amount obtained by multiplying the fair market value of the cannabis product by 7.5%.

5 Any cannabis product produced in Canada: the amount obtained by multiplying the base amount for the cannabis product and for New Brunswick by 0%.

6 Any cannabis product produced in Canada: the amount obtained by multiplying the dutiable amount for the cannabis product by 0%.

7 Any imported cannabis product: the amount obtained by multiplying the value of the cannabis product by 0%.

8 Any cannabis product taken for use or unaccounted for: the amount obtained by multiplying the fair market value of the cannabis product by 0%.

SCHEDULE 5

(Paragraphs 3(1)(e), 5(2)(e), 6(3)(e) and 7(3)(e))

Additional Cannabis Duty in Respect of British Columbia

1 Any cannabis product produced in Canada or imported: the amount equal to the total of

(a) $0.75 per gram of flowering material included in the cannabis product or used in the production of the cannabis product,
(b) $0.225 per gram of non-flowering material included in the cannabis product or used in the production of the cannabis product,
(c) $0.75 per viable seed included in the cannabis product or used in the production of the cannabis product, and
(d) $0.75 per vegetative cannabis plant included in the cannabis product or used in the production of the cannabis product.

2 Any cannabis product produced in Canada: the amount obtained by multiplying the dutiable amount for the cannabis product by 7.5%.

3 Any imported cannabis product: the amount obtained by multiplying the value of the cannabis product by 7.5%.

4 Any cannabis product taken for use or unaccounted for: the amount obtained by multiplying the fair market value of the cannabis product by 7.5%.

SCHEDULE 6

(Section 1 and paragraphs 3(1)(f), 5(2)(f), 6(3)(f) and 7(3)(f))

Additional Cannabis Duty in Respect of Prince Edward Island

1 Any cannabis product produced in Canada or imported: the amount equal to the total of

(a) $0.75 per gram of flowering material included in the cannabis product or used in the production of the cannabis product,
(b) $0.225 per gram of non-flowering material included in the cannabis product or used in the production of the cannabis product,
(c) $0.75 per viable seed included in the cannabis product or used in the production of the cannabis product, and
(d) $0.75 per vegetative cannabis plant included in the cannabis product or used in the production of the cannabis product.

2 Any cannabis product produced in Canada: the amount obtained by multiplying the dutiable amount for the cannabis product by 7.5%.

3 Any imported cannabis product: the amount obtained by multiplying the value of the cannabis product by 7.5%.

4 Any cannabis product taken for use or unaccounted for: the amount obtained by multiplying the fair market value of the cannabis product by 7.5%.

5 Any cannabis product produced in Canada: the amount obtained by multiplying the base amount for the cannabis product and for Prince Edward Island by 0%.

6 Any cannabis product produced in Canada: the amount obtained by multiplying the dutiable amount for the cannabis product by 0%.

7 Any imported cannabis product: the amount obtained by multiplying the value of the cannabis product by 0%.

8 Any cannabis product taken for use or unaccounted for: the amount obtained by multiplying the fair market value of the cannabis product by 0%.

SCHEDULE 7

(Section 1 and paragraphs 3(1)(g), 5(2)(g), 6(3)(g) and 7(3)(g))

Additional Cannabis Duty in Respect of Saskatchewan

1 Any cannabis product produced in Canada or imported: the amount equal to the total of

(a) $0.75 per gram of flowering material included in the cannabis product or used in the production of the cannabis product,
(b) $0.225 per gram of non-flowering material included in the cannabis product or used in the production of the cannabis product,
(c) $0.75 per viable seed included in the cannabis product or used in the production of the cannabis product, and
(d) $0.75 per vegetative cannabis plant included in the cannabis product or used in the production of the cannabis product.

2 Any cannabis product produced in Canada: the amount obtained by multiplying the dutiable amount for the cannabis product by 7.5%.

3 Any imported cannabis product: the amount obtained by multiplying the value of the cannabis product by 7.5%.

4 Any cannabis product taken for use or unaccounted for: the amount obtained by multiplying the fair market value of the cannabis product by 7.5%.

5 Any cannabis product produced in Canada: the amount obtained by multiplying the base amount for the cannabis product and for Saskatchewan by 6.45%.

6 Any cannabis product produced in Canada: the amount obtained by multiplying the dutiable amount for the cannabis product by 6.45%.

7 Any imported cannabis product: the amount obtained by multiplying the value of the cannabis product by 6.45%.

8 Any cannabis product taken for use or unaccounted for: the amount obtained by multiplying the fair market value of the cannabis product by 6.45%.

SCHEDULE 8

(Section 1 and paragraphs 3(1)(h), 5(2)(h), 6(3)(h) and 7(3)(h))

Additional Cannabis Duty in Respect of Alberta

1 Any cannabis product produced in Canada or imported: the amount equal to the total of

(a) $0.75 per gram of flowering material included in the cannabis product or used in the production of the cannabis product,
(b) $0.225 per gram of non-flowering material included in the cannabis product or used in the production of the cannabis product,
(c) $0.75 per viable seed included in the cannabis product or used in the production of the cannabis product, and
(d) $0.75 per vegetative cannabis plant included in the cannabis product or used in the production of the cannabis product.

2 Any cannabis product produced in Canada: the amount obtained by multiplying the dutiable amount for the cannabis product by 7.5%.

3 Any imported cannabis product: the amount obtained by multiplying the value of the cannabis product by 7.5%.

4 Any cannabis product taken for use or unaccounted for: the amount obtained by multiplying the fair market value of the cannabis product by 7.5%.

5 Any cannabis product produced in Canada: the amount obtained by multiplying the base amount for the cannabis product and for Alberta by 16.8%.

6 Any cannabis product produced in Canada: the amount obtained by multiplying the dutiable amount for the cannabis product by 16.8%.

7 Any imported cannabis product: the amount obtained by multiplying the value of the cannabis product by 16.8%.

8 Any cannabis product taken for use or unaccounted for: the amount obtained by multiplying the fair market value of the cannabis product by 16.8%.

SCHEDULE 9

(Section 1 and paragraphs 3(1)(i), 5(2)(i), 6(3)(i) and 7(3)(i))

Additional Cannabis Duty in Respect of Newfoundland and Labrador

1 Any cannabis product produced in Canada or imported: the amount equal to the total of

(a) $0.75 per gram of flowering material included in the cannabis product or used in the production of the cannabis product,
(b) $0.225 per gram of non-flowering material included in the cannabis product or used in the production of the cannabis product,
(c) $0.75 per viable seed included in the cannabis product or used in the production of the cannabis product, and
(d) $0.75 per vegetative cannabis plant included in the cannabis product or used in the production of the cannabis product.

2 Any cannabis product produced in Canada: the amount obtained by multiplying the dutiable amount for the cannabis product by 7.5%.

3 Any imported cannabis product: the amount obtained by multiplying the value of the cannabis product by 7.5%.

4 Any cannabis product taken for use or unaccounted for: the amount obtained by multiplying the fair market value of the cannabis product by 7.5%.

5 Any cannabis product produced in Canada: the amount obtained by multiplying the base amount for the cannabis product and for Newfoundland and Labrador by 0%.

6 Any cannabis product produced in Canada: the amount obtained by multiplying the dutiable amount for the cannabis product by 0%.

7 Any imported cannabis product: the amount obtained by multiplying the value of the cannabis product by 0%.

8 Any cannabis product taken for use or unaccounted for: the amount obtained by multiplying the fair market value of the cannabis product by 0%.

SCHEDULE 10

(Paragraphs 3(1)(j), 5(2)(j), 6(3)(j) and 7(3)(j))

Additional Cannabis Duty in Respect of Yukon

1 Any cannabis product produced in Canada or imported: the amount equal to the total of

(a) $0.75 per gram of flowering material included in the cannabis product or used in the production of the cannabis product,
(b) $0.225 per gram of non-flowering material included in the cannabis product or used in the production of the cannabis product,
(c) $0.75 per viable seed included in the cannabis product or used in the production of the cannabis product, and
(d) $0.75 per vegetative cannabis plant included in the cannabis product or used in the production of the cannabis product.

2 Any cannabis product produced in Canada: the amount obtained by multiplying the dutiable amount for the cannabis product by 7.5%.

3 Any imported cannabis product: the amount obtained by multiplying the value of the cannabis product by 7.5%.

4 Any cannabis product taken for use or unaccounted for: the amount obtained by multiplying the fair market value of the cannabis product by 7.5%.

SCHEDULE 11

(Paragraphs 3(1)(k), 5(2)(k), 6(3)(k) and 7(3)(k))

Additional Cannabis Duty in Respect of the Northwest Territories

1 Any cannabis product produced in Canada or imported: the amount equal to the total of

(a) $0.75 per gram of flowering material included in the cannabis product or used in the production of the cannabis product,
(b) $0.225 per gram of non-flowering material included in the cannabis product or used in the production of the cannabis product,
(c) $0.75 per viable seed included in the cannabis product or used in the production of the cannabis product, and
(d) $0.75 per vegetative cannabis plant included in the cannabis product or used in the production of the cannabis product.

2 Any cannabis product produced in Canada: the amount obtained by multiplying the dutiable amount for the cannabis product by 7.5%.

3 Any imported cannabis product: the amount obtained by multiplying the value of the cannabis product by 7.5%.

4 Any cannabis product taken for use or unaccounted for: the amount obtained by multiplying the fair market value of the cannabis product by 7.5%.

SCHEDULE 12

(Section 1 and paragraphs 3(1)(l), 5(2)(l), 6(3)(l) and 7(3)(l))

Additional Cannabis Duty in Respect of Nunavut

1 Any cannabis product produced in Canada or imported: the amount equal to the total of

(a) $0.75 per gram of flowering material included in the cannabis product or used in the production of the cannabis product,
(b) $0.225 per gram of non-flowering material included in the cannabis product or used in the production of the cannabis product,
(c) $0.75 per viable seed included in the cannabis product or used in the production of the cannabis product, and
(d) $0.75 per vegetative cannabis plant included in the cannabis product or used in the production of the cannabis product.

2 Any cannabis product produced in Canada: the amount obtained by multiplying the dutiable amount for the cannabis product by 7.5%.

3 Any imported cannabis product: the amount obtained by multiplying the value of the cannabis product by 7.5%.

4 Any cannabis product taken for use or unaccounted for: the amount obtained by multiplying the fair market value of the cannabis product by 7.5%.

5 Any cannabis product produced in Canada: the amount obtained by multiplying the base amount for the cannabis product and for Nunavut by 19.3%.

6 Any cannabis product produced in Canada: the amount obtained by multiplying the dutiable amount for the cannabis product by 19.3%.

7 Any imported cannabis product: the amount obtained by multiplying the value of the cannabis product by 19.3%.

8 Any cannabis product taken for use or unaccounted for: the amount obtained by multiplying the fair market value of the cannabis product by 19.3%.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

On October 17, 2018, cannabis for non-medical purposes became available for legal retail sale in Canada. In connection with legalization, regulations are required to implement the coordinated cannabis taxation framework that was agreed upon in principle by most federal, provincial and territorial Finance Ministers in December 2017, and formalized through the signing of Coordinated Cannabis Taxation Agreements (CCTAs) with most provincial and territorial governments. As well, in order to ensure the proper functioning of the excise duty framework for cannabis products and to respond to issues brought to the attention of the Department of Finance Canada by taxpayers and their representatives or by the Canada Revenue Agency, certain modifications to this framework need to be made by way of regulation.

Background

An additional duty on cannabis products is to be imposed in coordinated provinces and territories (i.e. provinces and territories that have entered into a CCTA with Canada) under federal legislation and administration. The CCTAs are federal-provincial and federal-territorial agreements that detail the parameters, including the rates of the additional cannabis duties, agreed upon between the coordinated parties to govern the imposition of the cannabis duties in the coordinated provinces and territories. Among other things, the CCTAs stipulate that the tax base for the federal cannabis duty and for the additional cannabis duty in respect of the coordinated province or territory is to remain common. The Excise Act, 2001 (the Act) provides that the rates for this additional duty and the circumstances under which this additional duty applies are to be set out in regulation. As well, the Act provides that certain modifications to the excise duty framework for cannabis products may be made by way of regulation.

Objectives

The Excise Duties on Cannabis Regulations (the Regulations) are made under the Act to

formalize and give legal effect to the decision of provinces and territories to join the coordinated cannabis taxation framework; and
provide that cannabis products that are test kits or reference standards are relieved from the excise duty framework on cannabis products.

Description

The Regulations contain rules relating to the additional cannabis duties that apply in respect of coordinated provinces and territories. In particular, the schedules to the Regulations relate to the rates of additional duty and the Regulations provide rules that are used in determining the amount of the additional duty imposed on cannabis products in respect of the coordinated provinces and territories under various sections of the Act. There is one schedule for each of the coordinated provinces and territories.

The additional cannabis duty rates for each province or territory also include the rate of a sales tax adjustment if one has been requested by the province or territory. Under the CCTAs, provinces and territories that do not impose a general sales tax, or that have a general sales tax rate that is lower than the highest prevailing provincial general sales tax rate in Canada, can request, subject to certain conditions, that Canada apply an adjustment to the additional cannabis duty to account for all or part of this difference.

The Regulations also specify the circumstances in which the additional cannabis duty in respect of a coordinated province or territory would be imposed. Generally, for cannabis products manufactured in Canada additional duties in respect of a province or territory would be imposed if the cannabis products are for consumption, use or sale to consumers in the province or territory, and for imported cannabis products additional duties in respect of a province or territory would be imposed if the person that is liable under the Customs Act to pay customs duties on the importation is resident in the province or territory.

The Act provides for provinces and territories to be prescribed by way of regulations in order that the appropriate method applies in the determination of the amounts of fines and penalties for certain contraventions of the Act that occur in coordinated provinces and territories. The Regulations prescribe the provinces and territories that have a sales tax adjustment as described above for this purpose.

The Regulations also contain certain modifications to the excise duty framework on cannabis products that the Act indicates may be made by regulation. In particular, the Regulations provide that test kits and reference standards are relieved from the cannabis taxation framework.

A test kit is an apparatus that contains a very small amount of a controlled drug or substance that is generally used to confirm the presence or concentration of that drug or substance, such as cannabis. Under the Regulations, a product containing cannabis that meets the definition of a test kit as per the Cannabis Regulations and for which a registration number has been issued under those Regulations is relieved from the cannabis duty framework.

A reference standard is a highly purified and standardized form of a given substance used as a measurement base to confirm the identity, strength, quality or purity of a substance. Under the Regulations, cannabis-based reference standards that are generally designed to be used for scientific or research purposes (e.g. calibrating scientific equipment), and are not intended for human consumption, are relieved from the cannabis duty framework.

Regulatory development

Consultation

The rules in the Regulations relating to the additional cannabis duties that apply in respect of coordinated provinces and territories are designed to reflect the respective provincial and territorial decisions to join the coordinated cannabis taxation framework, as announced by Finance Ministers in December 2017 and subsequently formalized through the signing of CCTAs, and were developed in consultation with provincial and territorial governments. Finance Canada released the Regulations for consultation on September 17, 2018, along with other draft regulatory and legislative proposals relating to the taxation of cannabis. Six comments were received from stakeholders or their representatives in response to this release, none of which were directly relevant to the proposals contained in the Regulations.

Modern treaty obligations and Indigenous engagement and consultation

For this proposal, no impacts have been identified in respect of the government’s obligations in relation to Indigenous rights protected by section 35 of the Constitution Act, 1982, modern treaties or international human rights obligations.

Instrument choice

The Regulations are consequential to the decision of the provinces and territories to join the coordinated cannabis taxation framework. Under the CCTAs, additional cannabis duty rates in respect of the coordinated provinces and territories have been agreed to and Canada agreed to propose regulatory changes to implement them. Furthermore, the Act allows for certain modifications to the excise duty framework for cannabis products to be made by way of regulation. Therefore, there is no alternative to regulations to implement this proposal.

Regulatory analysis

Benefits and costs

Pursuant to the Treasury Board of Canada Secretariat’s Canadian Cost-Benefit Analysis Guide: Regulatory Proposals, taxes and charges, because they constitute transfers from one group to another, are not considered to be economic costs. Furthermore, the Regulations will be administered and enforced as part of the cannabis excise duty regime under the Act, so there are no incremental costs for their administration and enforcement.

Small business lens

The small business lens does not apply, because the Regulations do not result in new incremental compliance or administrative costs for small businesses.

“One-for-One” Rule

The Regulations implement the additional cannabis duties in respect of coordinated provinces and territories consequential to the provincial and territorial decisions to join the coordinated cannabis taxation framework. Overall, the coordinated cannabis taxation framework minimizes the compliance and administrative burden imposed on businesses by avoiding ongoing substantial duplicative provincial requirements.

Furthermore, as per the Treasury Board of Canada Secretariat’s Canadian Cost-Benefit Analysis Guide: Regulatory Proposals, taxes and charges, because they constitute transfers from one group to another, are not considered to be compliance or administrative costs.

Accordingly, the Regulations do not increase or decrease the level of administration burden imposed on business, and therefore the “One-for-One” Rule does not apply.

Regulatory cooperation and alignment

The Regulations are not related to a work plan or commitment under a formal regulatory cooperation forum.

Strategic environmental assessment

In accordance with The Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.

Gender-based analysis plus (GBA+)

No GBA+ impacts have been identified for this proposal.

Implementation, compliance and enforcement, and service standards

The Regulations will be implemented, administered and enforced by the Canada Revenue Agency and, at the border, by the Canada Border Services Agency as part of the cannabis excise duty regime.

Contacts

Gregory Smart
Sales Tax Division
Department of Finance Canada
90 Elgin Street
Ottawa, Ontario
K1A 0G5
Telephone: 613‑369‑3794

Ron Hagmann
Excise and GST/HST Rulings Directorate
Canada Revenue Agency
Place de Ville, Tower A, 9th Floor
320 Queen Street
Ottawa, Ontario
K1A 0L5
Telephone: 613‑670‑7360