There’s a year’s grace built in to new provincial rules that medical marijuana production facilities should be taxed at industrial rates, rather than at lower agricultural ones.
This time frame is a good thing, considering the potential for legal challenges from potential producers who bought land or built facilities based partly on their expectations for taxation. There is going to be some fallout from the tax classification change so far after the fact that some producers are already in operation and now face a sudden increase in their annual operating costs.
There’s also that discrepancy to be worked out: growing medical marijuana is now a legal agricultural product within B.C.’s Agricultural Land Reserve. Farmers (yes, even legal pot farmers) expect to be able to operate at a certain tax rate. Change that, and their margins narrow.
This provincial policy should have been announced at the same time the federal government’s allowance for medical marijuana production came into effect — because on the face of it, the taxation change is not a bad idea.
Ever since federal rules around medical pot production changed, people have worried about the social, environmental and economic impacts or large scale, industrial-type production operations. Many have lobbied for governments at any level to class this as an industrial, rather than agricultural, use of land. Or at least imposed the heavier regulations of industrial zones upon the growers. And it would have made perfect sense to introduce industrial tax rates with that change.
For municipalities facing the social fallout in allowing large-scale medical marijuana production facilities, the higher tax rate will help offset the greater impact of the operations.
The timing may be off, but the reasoning is sound.