Case Study

The power of collaboration and a customized approach

CBN delivers Canada’s Tobacco Tax Stamp solution

The Canada Revenue Agency (CRA), like many of its peers across the world, has long recognized that tobacco products are targets for fraudulent activities. The sale of counterfeit and contraband products results in the loss of revenue for both the Federal and Provincial governments and undermines public health initiatives at the same time.

With legislative changes on the horizon and having identified gaps in its current process, CRA issued a tender to address its legacy tobacco marking system. The first challenge was to help the CRA identify its requirements. Although stamping programs are not new, they are built and delivered differently. As part of our process, we conducted a thorough situational analysis and determined that a secure stamp should be an important element of our proposed solution.

A successful program requires collaboration with several key players—from government to industry to law enforcement. The team at CBN conducted exhaustive consultations to understand the subtleties involved to ensure our success. We participated in active dialogue with a number of interested participants regarding stamp security features, size, location on tobacco packaging, verification devices and distribution methods. The team visited the companies that make tobacco manufacturing equipment to understand the requirements of the stamp and the application process. We also engaged with tobacco manufacturers to learn about their operations so we could develop a stamp specification that would minimize the impact on the productivity of their high-speed processing lines. All of this work was done in consultation with government officials to ensure the program was implemented as smoothly as possible.

Once we were certain of, and agreed on all the requirements, we mapped out a fully-customized solution for the CRA. The solution included

  • A new stamp design;
  • Notes on draft legislation as it pertained to the stamp and its performance;
  • Customized stamp application equipment at tobacco manufacturer sites; and
  • Inventory, order management and fulfillment systems.

A key to the success of the program was careful coordination and project management. As always, good communication with stakeholders—particularly as the project evolved over time—meant they were fully informed and onboard with the solution throughout the development and implementation process. Of course our commitment to deliver a superb program doesn’t stop once the production lines start rolling. We continue to communicate and collaborate with the CRA to ensure an ongoing high standard of performance across all aspects of the tax stamp program.

Over 8.3 billion tobacco stamps have been produced since the inception of the program in 2010;

Over 70 Prescribed Persons, organizations manufacturing tobacco products in Canada or importing tobacco products into Canada, are registered and have the ability to order tobacco stamps;

Almost 1.5 billion tobacco stamps are issued to Prescribed Persons annually representing an estimated $8B+ in protected tax revenue for Governments in Canada.

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