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B.C. cities to ask Ottawa for cut of legal pot revenue

Homegrown indoor pot plants and leaves

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Some British Columbia municipalities say Ottawa should share eventual tax revenues from the legalization of marijuana and are looking to put the issue on the political agenda through the annual gathering of B.C. municipalities.

A share of marijuana revenues could be a lucrative source of revenue for municipalities looking beyond such traditional sources as property taxes. According to a CIBC World Markets report issued earlier this year, federal and provincial governments could reap as much as $5-billion in revenue when recreation marijuana is legalized, which is expected to happen following legislation next year.

To make the case for a piece of the tax revenue, the B.C. communities of Prince George, Duncan and Nelson have submitted resolutions for debate at September's annual meeting of the Union of British Columbia Municipalities (UBCM). The meeting is expected to draw about 2,000 delegates – 850 of them voting delegates – as well as key provincial and federal politicians, including Premier Christy Clark.

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UBCM President Al Richmond said B.C. is at the forefront of the debate over the issue, noting he has heard nothing on the idea from elsewhere in Canada.

"It's sort of an emerging issue," said Mr. Richmond, noting municipalities are looking for new revenue sources beyond property-based taxation, as well as to finance possible increased policing costs associated with legalization.

Local governments across the country have been forced to deal with an unprecedented range of issues related to the legal, and illegal, sides of marijuana use in recent years, particularly since the federal Liberals' victory on a campaign promise to legalize the drug

Dozens of illegal marijuana dispensaries have set up shop in Vancouver and Toronto, as well as in smaller communities, prompting some to draft regulations to license and control the shops. At the same time, municipal governments have struggled in recent years with where to allow federally approved medical cannabis facilities, and some have already raised concerns about keeping sales away from schools once the sale of recreational marijuana is legal.

When it comes to taxes raised through the new legal regime, Vancouver city councillor Raymond Louie, past president of the Federation of Canadian Municipalities, said he expects municipalities would get some share of pot-related revenues.

"If the federal government improves their revenue position through taxation on marijuana, I would expect that they would be able to better respond to our local government needs," he said in an e-mail statement.

A representative of the Federation of Canadian Municipalities said in a statement that the group is not in a position to comment on the issue, except to note that the organization will consult with its members.

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Prince George Mayor Lyn Hall compared revenue from marijuana taxes to revenue from federal fuel taxes.

"If, in fact, laws change around marijuana and there's an opportunity for a taxation base to be built into that, I think we would view it similarly to how we view the current gas tax and it goes to various things in our community like many others. It could be infrastructure, roads, sidewalks," he said in an interview Tuesday.

He said the UBCM will be a terrific forum for pushing the idea – which, in the Prince George resolution, calls for local government to be part of the "marijuana taxation equation" – given the attendance of federal politicians, and the fact that the approach is coming from various parts of B.C. "I am optimistic about it. The timing couldn't be better," he said, referring to pending consultation on legalization.

Deb Kozak, the mayor of the Southern Interior B.C. city of Nelson, said pot-based revenues, expected to be significant, could be directed to education, health services and infrastructure needs in municipalities.

"That money could be well used in serving communities," she said.

The federal Liberal government has formed a task force, set to report by November, to help in the development of legislation to legalize the recreational use of marijuana by next year.

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Nelson's resolution, for example, asks that the UBCM petition Ottawa for a share of revenues realized from the legalization and regulation of marijuana. It notes that legalization will lead to reduced enforcement costs for dealing with pot, freeing up some revenues.

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About the Author
B.C. reporter

Ian Bailey is a Vancouver-based reporter for The Globe and Mail.  He covers politics and general news. Prior to arriving at The Globe and Mail, he reported from Toronto and St. John’s for The Canadian Press.  He has also covered British Columbia for CP, The National Post and The Province. More

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