The little stamp that became a big headache
Numerous licensed producers lament government requirement for pot items
TORONTO At a warehouse in Smiths Falls, Ont., a row of sleek-looking machines are in full function, carefully pasting colourful stamps onto packaged cans and packets filled with dried cannabis.
It’s an efficient process that belies what has been a near-universal annoyance for licensed producers in the runup to legalization: the need to paste government-issued excise stamps onto hundreds of thousands of pot packages prior to sale.
“So you gotta put — appropriately so — different excise tax stamps for each province, but then the company that makes the excise tax stamp doesn’t put glue on the back. So now you have to find somebody to attach glue to stick on to the product. … Who would have thought that’s a thing?” lamented Bruce Linton, whose company, Canopy Growth Corp., decided to source machines that would just get the job done as quickly as possible.
A number of licensed producers told the Financial Post the government-mandated excise stamps have thrown a wrench into an already complicated process.
The stamps arrived late, they didn’t fit producers’ package sizes and they had to be manually glued on in a way that seals the package, but also “does not interfere with the stamp’s security features,” or “obstruct any information” on the package, according to the Canada Revenue Agency.
“We got in a whole bunch of stamps, but then we realized that it didn’t fit on our cannabis packages, so we couldn’t use those and then had to reorder more of a different size,” said Jay Wilgar, CEO of Newstrike Resources, which operates licensed producer UP Cannabis. According to Wilgar, the stamps arrived much later than the company had expected, and his staff had to work overnight in order to meet a deadline for their first shipment to the Ontario Cannabis Store.
“It’s the single biggest factor that slowed us down,” he said.
The Canada Revenue Agency runs an online stamp-ordering process for pot firms — once an order is placed, the CRA will verify the eligibility of the licensed producer to get the stamps, and then release an order to one of several authorized providers for processing.
“There’s only one authorized ... provider giving us stamps right now,” Newstrike’s chief quality officer Jennifer Maccarone said in late September. “Getting these stamps has been such an issue for us.”
Indeed, according to the CRA,
there is only one authorized stamp contractor in the country. In preparation for legalization, that stamp contractor printed “in excess of 225 million stamps for cannabis products” in order to meet initial demand. To date, more than 83 million stamps have been bought and delivered to licensed pot producers.
But so far, the CRA says it has not received any complaints from licensed producers about delays in receiving the stamps.
While Newstrike is relying on manual labour to put the stamps on its products, Canopy, with its excise stamp machines, has clearly found a way to accelerate the process. But that too, came with its own issues, according to Linton.
“Those excise stamp machines we have now are great, sure, but then there was one supplier in that whole automation process who said, ‘A lawyer told me that if I sell you the machine, the Americans will come get me and put me in jail ,’” Linton said. “I said, ‘Well, that’s not the case. Now, you have a contract to supply me so either those machines show up, or you have a real problem on your hands.’ ”
The purpose of the excise stamp is simply to indicate to consumers and retailers that an excise duty has been paid by the producer to the government. While it’s a common, if uneventful, part of the supply chain for alcohol or tobacco producers, cannabis producers are still getting used to it.
“It’s a real, real issue,” said Vic Neufeld, CEO of Leamington, Ont.-based Aphria. “You can’t just bring in an army of 50 people and say OK, for the next three weeks we just want you to do this.”
For Chuck Rifici, CEO of the Auxly Cannabis Group and cofounder of Canopy Growth, issues like the stamps are just “little friction points that add execution challenges,” but will iron themselves out in time.