Cities press Ottawa for slice of pot taxes

Federation says legalization will cost as much as $335M in policing, administration

OTTAWA— Canada’s cities are pressing Ottawa for a share of the revenues from cannabis taxes, saying next year’s move to legalize recreational marijuana will cost them as much as $335 million in policing and administration.

The Federation of Canadian Municipalities wrote to federal Finance Minister Bill Morneau on Thursday, warning that local taxpayers could be left on the hook unless Ottawa and the provinces agree to share the tax proceeds.

Towns and cities will be where nonmedical cannabis will be “produced, sold and consumed” and that puts municipalities on the front lines of the federal initiative to legal marijuana, wrote Jenny Gerbasi, the deputy mayor of Winnipeg and FCM president.

And while Ottawa has already proposed splitting pot taxes 50-50 with the provinces, the municipalities are trying to elbow in on that deal with their own appeal for a one-third share.

“This revenue stream can and should address legalization-related costs borne by all orders of government,” Gerbasi said in the submission.

The FCM expects the costs to fall into two categories — policing and administration.

FCM’s submission lays out the areas where municipalities are already at work on the issue, such as creating and adjusting bylaws and zoning rules for the sale of cannabis. And it lists other areas — as many as 17 different city departments — where it expects staff to get involved, such as enforcement, business licensing, and public-health programs once legalization takes effect next July 1.

On the policing front, municipalities will face additional costs to train officers to recognize motorists impaired by cannabis, new roadside screening equipment and ongoing enforcement of the illegal production and sale of pot.

All that will add up to additional costs of between $210 million and $335 million a year, FCM estimates.

Gerbasi said success of cannabis legalization hinges on municipalities being involved as the policy is developed, and getting financial help as they grapple with new costs “to implement, enforce and administer the non-medical cannabis regime.”

The federal government last month rolled out details of its tax plan for legalized marijuana, proposing a combined federal-provincial excise tax capped at 10 per cent, or $1 per gram, with the revenue haul split equally with provinces.

It estimated that the excise taxes plus the GST/HST, or goods and services tax, could add up to $1billion on a legalized market estimated at 400,000 kilograms of marijuana a year. Now FCM wants to redraw Ottawa’s tax-sharing proposal to ensure some of the revenue goes directly to municipalities. And it wants guarantees that Ottawa will provide financial support if tax revenues fall short of covering all the costs.

“We cannot allow public safety and quality of life to depend on the volume of cannabis sales,” Gerbasi wrote.

Liberal MP Bill Blair, the parliamentary secretary to the minister of justice and the point man on the pot file, said his visits to municipalities across the country have made him keenly aware of the responsibilities they will face under the new cannabis regime.

“They have a role, a significant role to play and we’ve got to make sure they have the resources that they require in order to do what is necessary to make the system work,” said Blair, a former chief of police in Toronto.

Blair declined to comment on FCM’s specific demand. With files from Tonda MacCharles