The Union of B.C. Municipalities, under the leadership of Sooke Mayor Maja Tait, has called for a two-year agreement with the province that would see 40 per cent of the tax from legalized cannabis sales be given to local governments.
That money, they say, should be paid now.
The move comes after the completion of a local government survey that measured municipal costs related to cannabis legalization, a survey requested by the province. The purpose was to establish that municipalities were incurring costs related to the administration and policing of legalized cannabis outlets.
It’s a move that rankled Sooke chief administrative officer Norm McInnis.
“This (the sharing of excise tax) was all supposed to be based on a formula and there was never any suggestion that we would have to track our costs. The province certainly hasn’t had to do any of this stuff to justify their share. Why are we being asked to justify ours?” McInnis asked.
That observation was echoed by Tait who questioned the province’s request for cost details and who made the decision not to participate in the survey.
‘Having to complete that survey was just another cost, another download to put the staff time and effort into compiling this information,” Tait said.
In December 2017, most provinces and territories signed the two-year Federal-Provincial-Territorial Agreement on Cannabis Taxation. That agreement saw the federal government retain 25 per cent of excise taxes, up to $100 million a year.
The remaining 75 percent was to go to the provinces, where it was assumed some of that revenue would go to municipal governments to cover their costs.
But only Alberta, Ontario and Quebec have committed to sharing that tax revenue with local governments.
The UBCM survey, however, clearly indicates revenue sharing is justified.
Between May and August, the UBCM received responses from 34 communities, representing 44 per cent of B.C.’s population.
The information obtained from participating municipalities showed they experienced significant costs as a result of cannabis legalization.
The survey estimated that B.C. local governments will be on the hook for about $11.5 million per year or about 29.8 per cent of the province’s excise tax revenue projection.
Those estimates are based on the cost of municipal administration of cannabis legislation, local government enforcement, planning and zoning, and policing costs.
In Sooke, one example of such costs was seen in August when 642 Cannabis was shuttered by the province. The process was carried out by the provincial Community Safety Unit, but the Sooke RCMP was required as support for the better part of the day.
“Sooke covers 70 per cent of policing costs. Those officers would have been performing other duties in the community, and this support cost us money,” McInnis said.
He said other administrative costs also exist, citing the consideration of applications from micro-growers and zoning reports fo cannabis outlets.
“Someone in the planning department, for example, has to do this at a time when we have a lot on our plate in a rapidly growing community.”
In the wake of the survey results, the UBCM has recommended that B.C. Finance Ministry immediately transfer a portion of cannabis taxation to local governments, given that there has always been an expectation that such transfers would take place.