Provinces not high on pot split

Feds have to prove they deserve share of profits, argue finance ministers taking on most of the costs

OTTAWA — A cross-country squabble over how best to divvy up the proceeds of Canada’s coming legal-weed windfall is about to intensify as finance ministers gather for high-stakes talks in Ottawa.

For the provinces and territories, a key question looms: What entitles Ottawa to claim so much as half of the tax revenues that will start flowing when marijuana is legalized next summer?

In anticipation of legalization, the federal Liberal government — which has long insisted its plans were never about the money, but about keeping pot away from kids — has proposed an excise tax of $1 per gram or 10 per cent of the final retail price, whichever is higher.

An initial offer of a 50-50 split with the provinces was met with equal parts disdain and incredulity.

Provincial and territorial governments should get the lion’s share of the proceeds, since they’ll shoulder most — if not all — of the costs, they argue.

The federal government has since said it’s prepared to sweeten the pot — as long as some of that extra cash goes to cities. The Federation of Canadian Municipalities wants a third of the revenues earmarked to help municipal governments handle administrative and policing costs.

Meanwhile, it’s unclear just how big a share the feds are willing to accept. And to ministers like B.C.’s Carole James, it’s also unclear why they should retain any of it.

“Before we even get to talking about sharing, we want to hear about what responsibilities the federal government’s taking on to justify taking any of the percentage,” James said.

“Certainly, from our perspective the formula put out by the federal government is a no go. That’s very clear.”

Ontario Finance Minister Charles Sousa also wants Ottawa to explain how it plans earn its share.

“I want to know what the feds are going to put in — what they’re going to pay for,” Sousa said.

“I want us to have unity around Canada on this issue and I definitely want to see more because we’re bearing more of the costs.”

The added expenses likely to land with the provinces are expected to include public-awareness campaigns, beefed-up policing, busier court systems and increased road safety efforts.

The federal government might face some “very small” fixed costs, such as those related to its administrative role for taxation, said Manitoba Finance Minister Cameron Friesen.

But that “pales in comparison” to the size of the responsibility and the added risks that will be assumed by the provinces.

Ottawa has already earmarked $274 million to support policing and border efforts related to legalization, and some of the money is to go to the provinces. But it remains to be seen if more federal commitments are on the way.