Feds willing to share more pot revenues to compensate municipalities

OTTAWA — The federal 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 during discussions 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 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.

Mike Farnworth, B.C.’s public safety minister and solicitor general, said it’s encouraging that the feds appear to have heard complaints that a 50 per cent share of the tax revenue is insufficient for provinces, which along with municipalities will bear most of the cost.

“The news that Ottawa is starting to move in the direction where the provinces want to go, I think, is positive,” Farnworth 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.

Newfoundland and Labrador’s finance minister, Tom Osborne, called the news “a step in the right direction.”