Coming into full effect as Jan 1, 2023
What is excise tax?
On April 7, 2022, the Federal Government announced excise duty on vaping products. This excise duty (or excise tax) applies to any vaping substances sold in Canada that are intended for use in a vaping device.
All vaping products that are meant for sale in the Canadian duty-paid market are required to have an excise stamp affixed to the product as proof that duties have been paid. Canadian manufacturers and importers are responsible for applying excise stamps to vaping products that are intended for sale in the Canadian duty-paid market and remit payments to the Canada Revenue Agency (CRA).
When will the excise tax be implemented?
Effective October 1, 2022, manufacturers and importers of vaping products sold at retail stores are required to be licensed or registered with the Canada Revenue Agency (CRA).
For retailers, the excise tax regulations will come into effect on January 1, 2023. As a retailer, we have a grace period to sell unstamped products until December 31, 2022. Starting January 1, 2023, all products containing vaping substances sold in our store (including online sales) will require a vaping excise stamp affixed to the product. Manufacturers will be able to sell unstamped products until December 31, 2022. However, they will most likely run out of some or all products before the end of Dec 2022. Full transition to only excise stamped products will occur before December 31, 2022. We will share more details and dates with you as we have them.
How much will the excise tax increase the prices, and how will they be calculated?
The duty is calculated based on the liquid volume of vaping substance contained in a single container (in mL). At this time, duties are charged and collected on the Federal level.
Federal Taxes Calculations
- For the first 10 mL of vaping substance, a duty is applied at a rate of $1.00 per 2 mL of the vaping substance.
- For each additional 10 mL of vaping substance thereafter, a duty is applied at a rate of $1.00 per 10 mL of the vaping substance.
- For a closed pod pack (3 pods cartridges, ie. STLTH Pods), the duty payable will be CAD $1 per 2 mL, which equates to an increase of $3 per closed pod pack.
For Example: 3POD pack of STLTH
- Current Price $13.95-$16.95 Excise Tax Price $16.95-$19.95. (at our average 3pod pack, including excise tax of $14+$3 = $17 the price/ml estimate $2.83) This is only an estimate at this time, we will have a better idea after October 1, 2022. We will continue to update you as we learn more.
It is important to note that the Government has invited the Provinces and Territories to participate. In the event that the Provinces or Territories opt into the excise tax, a new Provincial/Territorial stamp will need to be applied on all products and the duty payable will effectively double.
Using the example above, the same closed pod pack with 6 mL of vaping substance with Federal and Provincial/Territorial duties would be $2 per 2 mL, which equates to $6.
This means it will be a double tax. So if the tax is $3.00 per pod pack it will change to $6 (Federal + Provincial) - At the time of this writing, no Provinces and Territories have participated yet. The Excise Tax is only Federal at this moment.
- A 60 mL bottle of e-liquid at Federal excise duties would be $1 per 2 mL for the first 10 mL, which equates to $5. The remaining 50 mL would be $1 per 10 mL which equates to another $5.
- The total Federal excise duties would be $10. If/when Provincial or Territorial duties are implemented, this would effectively double to $20 of excise tax.
For Example: 60ml bottle of E-juice
- Current Price $20-$30 Excise Tax Price $30-$40 (at our average 60ml bottle price, including excise tax of $26+$10 = $36 the price/ml estimate $0.60) This is still a more inexpensive way to vape at only ~ $0.60 per ml.
Frequently Asked Questions
1) What products are affected by excise tax?
Vaping products that are vaping devices that contain vaping substances or that are vaping substances in immediate containers. Any vaping hardware that is sold separately from the vaping substance will not be impacted.
- Taxed products: closed pods, disposable vapes, e-liquid bottles, or bottles containing any component intended for vaping (nicotine, VG, PG, flavouring).
Products that will not be taxed: device/battery for closed pod systems and any vaping hardware or mods (including chargers, empty cartridges, tanks, and other accessories).
2) Will prices increase?
Yes, the total price will increase.
3) How is the total price calculated?
Product price + excise tax + any applicable provincial taxes and the Federal Goods and Services Tax (HST/GST).
4) What about stores who still sell unstamped products from January 1, 2023 and onward?
The Government is ramping up enforcement and there will be penalties for distributors and retailers who do not comply.
***Non-compliant businesses will potentially be charged up to 200% of the duty owed and have the products seized.*** (Excise Act 2022, c. 10, s. 73)
***Penalties can lead up to having your business license revoked and high penalty fees. This is a serious matter and the CRA will be involved.***
If you have any further questions please feel free to email us at email@example.com