What you file, and what was paid before you bought
Retailers do not remit cannabis excise duty. Licensed producers pay it, the stamp on every package proves it, and the cost reaches you inside the OCS wholesale price. That has two filing consequences. First, excise never appears on any return you sign; it lives in cost of goods sold, which is why a cannabis store's gross margin looks nothing like other retail. Second, your inventory carries that duty in its carrying value, so when product is written down or written off, the deduction is larger than the sticker on the jar suggests. What you do file is the T2 corporate return, HST returns, and T4s for staff, and we prepare them from books that already hold the excise-paid cost correctly.
HST: collected on the full price, recovered on the inputs
Cannabis and accessories are fully taxable, so an Ontario store charges 13% HST on a retail price that already contains the producer's excise duty, a tax computed on a number that includes another tax. The compensation is that nothing you sell is exempt, so unlike clinics or brokerages there is no ITC restriction: HST paid on rent, utilities, security monitoring, insurance, POS fees and the entire build-out comes back as input tax credits. Two practical points matter. A construction-heavy opening period usually produces HST refunds, and the CRA routinely reviews refund claims, so invoices must be in the corporation's name and filed where you can find them. And filing frequency is a choice worth making deliberately: monthly filing accelerates refunds during the build-out, then a quarterly rhythm can take over once you are trading.
The build-out on your T2, class by class
A compliant store is expensive to open, and the spend lands in different capital cost allowance classes with very different write-off speeds:
| What you bought | CCA class | How it writes off |
|---|---|---|
| Leasehold improvements: walls, secure storage room, millwork | Class 13 | Straight-line over the lease term |
| Display cases, shelving, safes, cameras | Class 8 | 20% declining balance |
| POS terminals and back-office computers | Class 50 | 55% declining balance |
| A delivery vehicle | Class 10 | 30% declining balance |
Getting the split right at the first year-end matters, because misclassifying a secure storage room as equipment, or the reverse, distorts every return that follows. CCA is also claimed at your option each year, a timing lever we cover in Tax Planning & Advisory rather than burying it in the filing.
Inventory, shrink and the year-end count
Year-end inventory is valued at the lower of cost and market, and for a cannabis store both sides of that test have teeth. Cost includes embedded excise, and market can fall fast when a format loses favour and the OCS list price on replacement stock drops. Shrink is the other pressure point: stolen or destroyed product is deductible when the loss is reasonable and documented, but this is the one retail sector where the CRA can compare your deduction against a monthly loss figure you already reported to Health Canada and records the AGCO expects you to keep. We make sure those numbers agree before any return is filed, and our CRA Audit & Review Support handles the questions if they ever come.
One calendar, no surprises
Our Corporate Tax Filing service runs the whole compliance calendar: the T2 due six months after year-end with tax generally payable earlier, HST on the frequency we chose together, T4 slips by the end of February for your CannSell-certified team, and instalments once the corporation owes enough to trigger them. Where the store's profits flow into your personal return, we file that too, so the dividend or salary decision made in the corporation lands correctly on the T1. Everything is quoted in writing after a free 15-minute discovery call, and we work with cannabis retailers across Mississauga and the GTA.
