CANNABIS CHARGES & EXCISE FINES
CONTRAVENING CANNABIS LAWS CAN INVOLVE TWO SEPARATE FIGHTS
The legalization of most cannabis sales in Canada comes with a number of statutes and regulations, and a detailed set of enforcement rules for those trying to operate outside the system.
Everyone knows that breaking the laws governing cannabis can lead to criminal penalties. A less well known, but very serious, consequence of noncompliance is the potential for large fines under the Excise Act(“EA”). One Canadian found this out the hard way in a recent Saskatchewan Court of Appeal (“SKA”) case.
R. v. Liu, 2025 SKCA 98 (“Liu”)
The Appellant was pulled over in Saskatchewan. Inside his car, police found growing equipment and approximately five kilograms of cannabis. He was arrested, charged, and convicted of three offences contrary to the Cannabis Act (“CA”). He was sentenced to 13 months in prison. He was also convicted of possessing an unstamped cannabis product contrary to s. 158.11 of the EA and ordered to pay a $10,525(!) fine.
On appeal to the SKA, the Appellant successfully challenged his more serious convictions. His jail sentence was thrown out, with a new trial ordered. His simple possession conviction remained, and he was re-sentenced to the lighter penalty of a conditional discharge. The Appellant also appealed his EA conviction and the $10,525.00 fine. He argued that he had grown and possessed the cannabis for personal, not commercial purposes. Surely, then, the EA does not apply, and he had been under no obligation to pay excise duty.
His argument failed. While the EA carves out an exclusion for personal-use cannabis, it did not apply to the Appellant because he possessed the cannabis in his car—which is a “public place” according to the Cannabis Act. His possession was therefore unlawful, the EA applied, and he still had to pay the $10,525 fine.
Cannabis Act and the Excise Act
Under the EA, those planning to cultivate, produce, or package cannabis products must obtain a cannabis license from the Canada Revenue Agency (“CRA”) beforehand. And before that, a different cannabis licence, from Health Canada, is required to be eligible to get a CRA cannabis licence.
Only a CRA licensee may lawfully possess unpackaged, unstamped cannabis products. Once those products are packed and delivered to a purchaser, the licensee must pay a federal excise duty and apply cannabis excise stamps to the products. Different rates of excise duty apply to different cannabis products. To add to the complexity, each province also has its own cannabis laws, which must be complied with as well. For example, additional cannabis duties are owed in some provinces, but not in others.
Cannabis charges are often paired with tax penalties. One needs both Criminal and Tax experience to deal with both.
Millar Kreklewetz LLP offers this unique combination.
Takeaways
For those caught outside the bounds of Canada’s cannabis system, noncompliance can lead to both criminal charges and heavy fines under the Excise Act. The fines are often harder to fight than the criminal penalties.
Counsel with experience in both criminal law and excise duty can be an important tool in trying to fight one’s charges—and avoid paying excise penalties.
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