Ecommerce, Customs and You

Answers to your questions on imports

Blog

What does the future hold for cannabis importing into Canada?

The Canada Border Services Agency released a Customs Notice yesterday regarding the Excise Taxes that will apply to importations of cannabis products. Similar to alcohol, the rates vary by province and can be found on the Department of Finance’s website. These excise taxes are largely a formality at the moment (few parties can legally import cannabis), but they do suggest some dramatic changes to Canada’s import policy regarding cannabis products.

Please find our questions to importing Cannabis after Oct. 17 below:

Who can import Cannabis?

At this stage, only licensed producers with a valid Health Canada permit can import Cannabis products into Canada for commercial use, which has been the case since licensing started.

Under this regime, licensed growers must provide the details of their order to Health Canada, and then wait for the permit to be issued (which can be a long wait). Once issued, the permits must be used before they expire, and only at the port of entry described on the permit.

These permits are also only issued for seeds or other small amounts of cannabis. The importing of bulk quantities of cannabis is still not permitted.

For details on what exactly is required to import, please read here.

Can individuals import Cannabis?

Per D19-9-2, individuals may import cannabis for their own medical use, but only where and when regulations authorize it. Other exemptions can be granted on a case by case basis if a scientific or medical purpose exists and the exemption is granted in advance.

Even travelling across provincial borders could pose problems, as the CBSA has stated: “If you transport cannabis or products containing it across the border, regardless of quantity, and even to or from jurisdictions that have legalized cannabis, you could face prosecution”

What does the future hold for Cannabis importing?

commercial

It seems inevitable that Canada will approve and accelerate the processing of import requests for bulk orders of cannabis, and many licensed growers are already invested in offshore production. One factor preventing this is that other countries will only permit the exportation to Canada to take place if the cannabis is for medical purposes, which would add conditions to re-selling for recreation. Even if that hurdle is overcome, bulk imports will still be subject to Health Canada approval as well as other controls, such as an annual quota system or provincial permits.

For an example of what a quota system would like like, we can use dairy and textiles, which are controlled by Global Affairs: permits are issued using online software, and are available until a specific amount (i.e. 100,000 kgm) is met each year. After that, imports are still permitted, but at a much higher rate of duty, which helps shelter the domestic industry (jobs!) from too much competition.

An alternative would see the provinces take control, as is the case with alcohol. Currently, for a company to import alcohol, they must first order from the appropriate provincial agency (i.e. the LCBO or SAQ). The provincial agency then submits the order to the foreign supplier and controls the shipment and pricing. It is hard to see provinces not fighting for something like this, as it means additional revenue and control.

 

personal

For individuals and travellers, they will also likely be able to import small amounts in the future for recreational use, but will probably be obliged to pay hefty provincial markups as is currently the case with alcohol (this effectively makes importing large amounts impractical).

Read More:

The CBSA’s official memoranda regarding cannabis importing is available on their website.

 

 



The HS Classification of Cannabis Products

With the imports of legal cannabis plants and products set to jump significantly, Statistics Canada has published their list of harmonized system tariff classifications to help importers. Please find a list of the most common items below along with their OGD regulations:

Note that only licensed growers may import Cannabis products. Please check with Health Canada for the admissibility of what you plan to import before ordering.

Description HS Code OGD Requirements**
Live Plants 0602.90.90.90 Health Canada Permit, Phytosanitary Certificate, CFIA
Cannabis Seeds for Sowing 1209.99.10.29 CFIA: Phytosanitary Certificate, Plant Protection Permit, Health Canada Permit, *Seed Analysis (for orders > 500 g)
Cannabis plants, herbs & seeds used in pharmacy 1211.90.90.50 Health Canada Permit, CFIA: No Permit Required Letter, Plant Protection Permit
Cannabis resin or oleoresin 1302.90.00.10 CFIA, Health Canada permit
Cannabis oil, extracts, and tinctures 1302.19.00.10 CFIA, Health Canada permit
Medicaments for retail sale, containing cannabis or cannabinoids 3004.90.00.21 CFIA, Health Canada

**Note that the OGD requirements can vary depending on the country of origin, end use and state (dried, chilled, fresh) of the items you are importing. For more information, please contact our office directly.

 

 



Labelling versus Marking

One of the most popular questions we receive are those concerned with the labelling of imported goods in Canada.

These questions should be split into two parts: ‘marking’ needs to be done before importation and ‘labelling’ before the item is re-sold

Before Importing: Marking

Marking is merely the notation of the country of manufacture on the imported product. This is enough to satisfy Customs officials — the lack of a bilingual or detailed label does not concern them. To be clear, Customs only wants to confirm where your product is made or produced.

If your shipment is inspected, Customs will definitely check that the country of origin is marked on the goods. If they find no such marking, they will hold the shipment until you provide a letter guaranteeing that the marking will be applied. Customs will also issue you a penalty if this is the case (depending on whether it is a first offense, the penalty is $150).

*Most, but not all, imported goods require marking. You can check the appendix here.

**It is possible that Customs can inspect your import — and if they discover that an existing label is misleading or deficient — demand a similar correction from you before releasing the product. (We have yet to experience this phenomenon, but the Food and Drug Regulations does provide for this scenario).

Before you re-sell: Labelling

Once the goods are released into Canada for consumption, it is then up to the importer to determine that the goods meet any specific labelling requirements before being sold at retail. What the label must provide depends on what type of good you are re-selling:

Food: Use the CFIA’s online tool

Note:  “name and address” may be your company — the importer — rather than the manufacturer

Apparel and textile articles: fibre content, care instructions, country of origin, and responsible party (Canadian brands may use a CA#)

FAQ

Does my product need to have a bilingual, detailed label applied before it arrives in Canada?

No. The product or its packaging should be marked with its country of origin, but the additional elements required on a label may be added to a product post-release.

I am importing apparel, does it need to be labelled before arrival?

For clothes, marking is often on the label itself. So, unless the marking of the origin exists elsewhere on the apparel, then a label indicating country of manufacture must be added before importation.

How do I know if my product is ‘marked’?

Is the country of origin clearly indicated on the product or packing? If so, it is marked.

What should I do to ensure that my imported goods are clearly marked?

If you do not trust your vendor, we recommend requesting a photograph of the marking from them before shipping.

Border Bee estimates that less than 1% of all importations into Canada are penalized for lack of marking — but it is always a possibility.

 



Canada – EU Free Trade (Apparel Edition)

Please find below more specific information on how imports of European-Union made apparel will be treated under CETA.

The vast majority of E.U. made apparel will need to pass through a quota system established for the deal. Why?

CETA, similar to NAFTA, contains special provisions for clothing. Due the globalized nature of apparel production, barely any finished clothes are made wholly within a single country (or even a single continent).

Typically, clothes that are “made” in the E.U. are cut and sewn from fabric made in Asia.

The fact that the fabric comes from outside the E.U. disqualifies these products.

Therefore, most E.U. made clothes will still be hit with an 17-18% duty because fabric from outside the E.U. is NOT ALLOWED. The production of fabric creates jobs, therefore Canada and the E.U. are all protectionist about it.**(see footnote)

So… CETA changes nothing for clothes?

Not quite! a quota system (similar to the TPL under NAFTA) will allow a specific amount of clothing each year that is only cut and sewn in Europe to be imported duty-free.
The key to the quota system is that it is typically only open for the first half of the year (it is also specific to the HS code).

Questions to ask yourself before ordering E.U. made clothes in the anticipation of paying only GST:

1. Does my vendor manufacture their clothes within the E.U.?

Yes
No


Additional questions? Still confused? Contact us!

**It should be noted that the actual rules of origin are more complex and consist of specific ‘tariff shifts’ for different subcategories of apparel (i.e. shirts and shoes — very different). The complexity means that a rule of thumb (known as ‘yarn-forward’) is most often used by importers when speaking of these requirements which we used to write this article. This means that your imports/exports may qualify or not be qualified even if they pass our little quiz.

Should you or your vendor have questions regarding their eligibility, they can check the transformation requirements in Annex 5 of the CETA .

Annex 5 contains the requirements for goods to be considered duty-free no matter what the status of the quota system is.
Annex 5-A contains the requirements for goods failing the requirements of Annex 5 but that can still be imported under quota.



Canada – EU Free Trade (what you need to know)

Sept. 21st, 2017 marks a large event in Canadian trade — the coming into effect of the largest trade deal since NAFTA. Similar to the NAFTA agreement, some important exclusions and information are buried in the agreement that importers should be made aware of. Please find below our guide to profiting from the deal:

Note: you are an apparel importer, please read this accompanying article

1. How do we apply?

The duty-free tariff will be applied automatically in most cases, although your vendors will need to reproduce the statement described below on their commercial invoice. Note that for most of your vendors the signature will not be required so long as they supply their REX number (if they have one).

An example of the statement below: 
(Period: from___________ to __________(1)) The exporter of the products covered by this document (customs authorisation No …(2))* declares that, except where otherwise clearly indicated, these products are of …(3) preferential origin. ……………………………………………………………………………………………………(4) (Place and date) …………………………………………………………………………………………………(5) (Signature and printed name of the exporter)**
Statement notes

*REX number goes here (if your vendor does not have a REX number, they can provide their signature)
**If the statement is printed separately from the invoice, it must reference the invoice # as well the items on the invoice that qualify.

2. What if my seller does not include the statement on their invoice?

No problem, they can still provide the statement on a separate page. You may send them this
template to complete.

3. What’s the catch?

Similar to NAFTA, Customs will be performing audits to ensure that no unqualified goods (goods principally made outside the eurozone) are being snuck in using the CETA advantages. Border Bee would like to remind importers that they are ultimately responsible for their own compliance (even if your seller provide faulty information).

4. What if I order European goods from the U.S.?
The items must come directly from Europe to Canada (although an item may be manufactured in one European country and exported from another).

5. Does the CETA cover everything?
Nearly all imported items will have their duties immediately revoked — the exception remains on agricultural goods which will be phased out over a period of seven years.

Textiles and apparel mark another significant exception — please read our separate article here on how the CETA affects apparel importers.

6. Europe is huge, which countries actually qualify?

All official member states of the E.U. are eligible for free-trade, including principalities and newer members.

You may consult the official list on the Canada Gazette’s website.

7. How do I tell if the CETA was claimed on my importation?
To see if the CETA was claimed on your import, check your B3 to see if code 31 has been declared as the tariff treatment.

8. Is it possible for my supplier to provide a ‘blanket’ statement that will cover all of our importations?

Yes, the CBSA has recently clarified that suppliers can provide a ‘blanket’ statement so that a statement does not need to be included with each shipment.

The catch? The blanket statement must include sufficient detail regarding the eligibility under CETA of future orders. The CBSA suggests including an appendix to the blanket statement that identifies which items are covered.

Do you have additional questions about how CETA affects your business? Contact us