Ottawa willing to give more pot tax revenue to provinces to help cities

Finance Minister Bill Morneau willing to increase share next week with provinces and territories

Growing flowers of cannabis intended for the medical marijuana market are shown at OrganiGram in Moncton, N.B., on April 14, 2016. (Ron Ward/The Canadian Press)

Growing flowers of cannabis intended for the medical marijuana market are shown at OrganiGram in Moncton, N.B., on April 14, 2016. (Ron Ward/The Canadian Press)

The Trudeau government is willing to give provinces and territories a bigger share of the revenue from a federal excise tax on cannabis, provided that the extra money is devoted to helping municipalities cope with the impact of legalizing recreational pot.

The feds have proposed giving provincial and territorial governments half of the estimated $1-billion annual excise tax take once weed becomes legal next July.

But The Canadian Press has learned that Finance Minister Bill Morneau and his officials have signalled a willingness to increase that share when they sit down next week with their provincial and territorial counterparts.

The discussions have been taking place in preparation for a meeting of federal, provincial and territorial finance ministers Dec. 10-11, where the issue of cannabis taxation is expected to be front and centre.

Any increase in the provincial share will obviously mean less for federal coffers. But precisely how much less than 50 per cent the federal government is willing to accept has not yet been revealed.

A government official close to the discussions, who was not authorized to speak publicly about the matter, said it’s too early to float specific numbers. The final decision will rest on an assessment of the needs of the municipalities — and a willingness by provinces and territories to agree to devote the extra revenue to those needs, the official said.

Ontario Finance Minister Charles Sousa agreed that municipalities need to be recompensed for costs associated with marijuana legalization.

“I’ve always said all along that the municipalities and the province need to get a proper share to cover those costs,” he said Monday.

“We have a lot of out of pocket (expenses) right at the start … that needs to be recovered. So we will work closely, we want to make sure that municipalities are covered as well.”

However, before agreeing to anything, Sousa said he needs to see a breakdown of the costs that are going to be incurred and how much of those costs the federal government is prepared to assume. He said he expects to hear more on that front at the finance ministers’ meeting next week.

Mayors across the country have raised concerns about the potential cost to municipalities.

“We all need to know that legalization will not download unsustainable financial or operational burdens to municipalities,” the Federation of Canadian Municipalities says on its website.

Toronto Mayor John Tory has predicted municipalities will face additional costs for policing, enforcement, public health, zoning and licensing. He wrote Ontario Premier Kathleen Wynne last July, asking her to consider dedicating a portion of provincial pot revenues — possibly through a special levy — to municipalities.

“Whatever decisions are made, I have no doubt the result will be increased costs for the City of Toronto,” Tory wrote.

The federal government is sympathetic to the concerns of municipalities, the official said.

Under the current proposal, the federal government would impose an excise tax of $1 per gram of marijuana or 10 per cent of the final retail price, whichever is higher, with half the revenue going to provinces and territories.

Federal and provincial sales taxes would be applied on top of that.

A one-month public consultation period on the excise tax proposal closes Thursday, just ahead of next week’s meeting.

Premiers have been complaining since early October, when Prime Minister Justin Trudeau first unveiled the excise tax plan, that a 50-50 revenue split with Ottawa is not good enough. They maintain their governments will shoulder the lion’s share of the cost of legalization — including public education, policing and road safety — and should, therefore, get the lion’s share of the tax revenue.

Co-ordinating cannabis taxation with the provinces is crucial to the federal objective of drumming organized crime and gangs out of the illegal pot business and keeping marijuana out of the hands of minors. If the price of legal marijuana is not competitive, the black market will continue to flourish.

Under the federal proposal, sales and excise taxes would be levied on both fresh and dried marijuana, pot-infused oils and seeds and seedlings used for home cultivation.

They would also be applied to medical marijuana, on which only HST is currently levied. That proposal has drawn fire but the government argues it’s necessary to ensure there’s no incentive for people to seek out medical pot just because it’s cheaper.

The final price tag for legal weed will vary across the country, since provinces have different levels of sales tax.

Joan Bryden, The Canadian Press

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

During a press event on March 6, Const. Alex Berube, media relations officer for the West Shore RCMP, addressed a deadly shooting that occurred in Metchosin the night before. (Devon Bidal/News Staff)
VIDEO: One man shot dead in ‘targeted incident’ on Sooke Road

Highway 14 reopens following multi-hour closure for investigation

Victoria man Brett Andersen is asking for people’s help to secure him one of eight free tickets to the moon. (Screenshot/@brettandersen Instagram)
Victoria man wants your help securing a free ticket to the moon

Japanese billionaire offering eight people a trip to the moon

A decade into the 100-year blueprint for restoring the Bowker Creek watershed, Soren Henrich, director of the Friends of Bowker Creek Society, feels positive about the future of conservation and daylighting of the creek. (Nina Grossman/News Staff)
Ten years in, Greater Victoria’s 100-year Bowker Creek blueprint gets a boost

Victoria council passes several restoration recommendations

A resurfacing of the tennis court in Metchosin is being eyed for the community. However, funding opportunities still need to be solidified for the project. (Michelle Cabana/Black Press Media)
Renewed surface eyed for Metchosin tennis court

Funding source must first be solidified in order for project to happen

The James C Richardson Pipe Band marches in a Remembrance Day parade on Nov. 11, 2019 in Chilliwack. Wednesday, March 10 is International Bagpipe Day. (Jenna Hauck/ Chilliwack Progress file)
Unofficial holidays: Here’s what people are celebrating for the week of March 7 to 13

International Bagpipe Day, Wash Your Nose Day and Kidney Day are all coming up this week

The Conservation Officers Service is warning aquarium users after invasive and potentially destructive mussels were found in moss balls from a pet store. (BC Conservation Officers Service/Facebook)
Aquarium users in B.C. warned after invasive mussels found at pet store

Conservation officers were told the mussels were found in a moss ball from a Terrace pet store.

Hockey hall-of-fame legend Wayne Gretzky, right, watches the casket of his father, Walter Gretzky, as it is carried from the church during a funeral service in Brantford, Ont., Saturday, March 6, 2021. HE CANADIAN PRESS/Nathan Denette
Walter Gretzky remembered as a man with a ‘heart of gold’ at funeral

The famous hockey father died Thursday at age 82 after battling Parkinson’s disease

Donald Alan Sweet was once an all star CFL kicker who played for the Montreal Alouettes and Montreal Concordes over a 13-year career. Photo courtesy of Mission RCMP.
Ex-B.C. teacher who was CFL kicker charged with assault, sexual crimes against former students

Donald Sweet taught in Mission School District for 10 years, investigators seek further witnesses

(Black Press Media files)
Medicine gardens help Victoria’s Indigenous kids in care stay culturally connected

Traditional plants brought to the homes of Indigenous kids amid the COVID-19 pandemic

Personal protective equipment is seen in the COVID-19 intensive care unit at St. Paul’s hospital in downtown Vancouver. THE CANADIAN PRESS/Jonathan Hayward
$16.9 million invested to improve worker safety, strengthen B.C.’s food supply chain

Money to be used for social distancing, personal protective equipment, cleaning, and air circulation

More than ever before, as pandemic conditions persist, the threat of data breaches and cyberattacks continues to grow, according to SFU professor Michael Parent. (Pixabay photo)
SFU expert unveils 5 ways the COVID-19 pandemic has forever changed cybersecurity

Recognizing these changes is the first in a series of steps to mitigate them once the pandemic ends, and before the next: Michael Parent

Kevin Haughton is the founder/technologist of Courtenay-based Clearflo Solutions. Scott Stanfield photo
Islander aims Clearflo clean drinking water system at Canada’s remote communities

Entrepreneur $300,000 mobile system can produce 50,000 litres of water in a day, via solar energy

Most Read