Cities question tax plan for legal cannabis

There may be as much as $1 billion in tax revenue at stake as Canada readies for legalized marijuana next summer. The cut for cities? So far, zero. Municipalities may be left in the cold when it comes to sharing in the cash from legalized pot sales, with the federal government proposing a 10 per cent excise tax — or $1 per gram, whichever is higher — to be split evenly between the provinces and the feds.

Little has been said about how many, if any, tax dollars will flow to cities bearing the burden of costs associated with policing, licensing and enforcement of marijuana sales after July 1.

Southwestern Ontario leaders are none too pleased.

“Municipalities aren’t even in the equation. It’s this patronizing approach that the provinces take,” Sarnia Mayor Mike Bradley said Monday. “They pass out the gruel when they want to.”

He’s frustrated municipalities weren’t even mentioned in the federal government’s plan for marijuana taxation announced last Friday.

Many of the costs and zoning challenges of legalization will naturally fall to cities, such as London and Windsor, which are both on the list the first 14 cities that will have stand-alone cannabis stores when the program rolls out in July 2018.

“I think it’s important for the feds and province to share revenue with the municipalities,” said Windsor Mayor Drew Dilkens. “At the end of the day, the feds and province have the money and the jurisdiction, and the cities are the places that are going to have the problems.”

“Whether that’s policing costs, implementation costs, social costs — we will be the ones that feel the brunt of that pressure,” London Mayor Matt Brown said, calling for a “significant portion” of any tax revenue to be earmarked for municipalities.

An excise tax, linked to certain goods such as gasoline and tobacco, would be added to pot prices before sales tax under the federal plan. That means an $8 gram of marijuana would sell for $9 plus HST in Ontario. In total, that gram would cost $10.17 with excise and sales tax.

Liberal MP and former Toronto police chief Bill Blair, who’s been tasked with helming the government’s pot plans, told reporters the total revenue, including excise duty and sales tax, could be as high as $1 billion.

The Association of Municipalities of Ontario is advocating for cities and towns to get their fair share.

“We’re going to see the brunt of the work in (legalization). So we’re telling both levels of government that we’re going to be needing some resources to go with the responsibility we’re going to be given,” said Lynn Dollin, president of AMO.

London North Centre Liberal MP Peter Fragiskatos hit back against the criticism, saying the federal government is paying attention to the needs of municipalities.

“We are actively listening,” he said. “We are not ignoring the concerns of cities.”

It’s much too soon to be ringing alarm bells, Fragiskatos said, pointing out that Friday’s announcement kicked off a monthlong consultation period on the proposed tax plan. Provincial and federal finance ministers are slated to meet in the nation’s capital after consultation closes Dec. 7.