When I was in Canada, and had a lot of "higher" denomination notes that I wanted to exchange for $5 notes, I used the new TD ATM's.
Most times the machine accepted my stamped notes (stamped in either black, red, or blue inks. If they were rejected, (notes with folds also get rejected), I just tried once again. Usually the second or third try it worked.
If not successful, I did the "paper envelope"deposit at another bank.

Any notes that go to "Bank of Canada Return" are usually re-released back into the public as the BOK recognizes that the bill is not damaged. Usually they get distributed around the country by the carriers (Loomis, Wells Fargo, G4S, etc)

Last scenario of course...SPEND THE NOTES.. Pay CASH for most things