City awaiting marijuana taxation revenue sharing plan

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Since legalized marijuana began to be sold throughout British Columbia last October, B.C. municipalities are still waiting to hear how much cannabis related taxation money they'll be able to use. 

Having legal cannabis means some cities have seen extra costs related to the recreational addition, and are wondering if they'll have funds to pay for it. 

The delay in determining a solid plan for revenue sharing between the provincial and local governments has been slow for a number of reasons. 

The Ministry of the Attorney General admits significant funds from marijuana aren't expected right away, given the associated start-up costs with legalization, and only a few stores in operation. 

City of Kamloops Corporate Services Director, Kathy Humphrey, says with the later start to legalization, they knew revenue would be later as well. 

"I suspect it'll take a year or so before all the stores are open. I mean in Kamloops, we only have a couple, so you can imagine, across the province there's not a lot (of profit)."

Compared to alcohol licensing, marijuana still lags behind.

Councillor Mike O'Reilly says 17 pot shop applications have come before city council, while 69 establishments in Kamloops are able to sell liquor. 

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O'Reilly notes the city's eagerness to find an agreement doesn't stem from wanting to make money off of taxation.

He says the revenue sharing would hopefully mean the city won't lose money with legal pot operational costs.

"We're not looking for this to be a cash cow. That's not what this is for. This is for enforcement, education and safety," he explains. "And those costs are very real to the City of Kamloops already, before this revenue sharing agreement takes place."

Entering a new taxation frontier like legal cannabis and determining how the money should be divided between the Union of B.C. Municipalities and the B.C. Government has been a slow process. 

After expecting the plan to be announced with the provincial government's February budget, and not seeing it happen, UBCM President Arjun Singh says a general idea of how to split the revenue should be decided as soon as possible.

"No matter what comes in, and what comes out, we should have a broad formula in place," he explains. "Because a lot of local governments across the province are starting to incur costs and getting more worried about how they're going to cover those things."

As those negotiations continue, City of Kamloops Business License Inspector Dave Jones says cities will aim to paint a better picture of what kind of costs they're facing. 

"The UBCM and the province is working on a tool that will track that better, so we're expecting to present something back to the province in May."

When that money sharing agreement is set, it will be given a two-year trial period to see if the associated costs are covered, which O'Reilly says could include policing and regulating fees. 

"So an example is: Perhaps everyone starts driving impaired and we need to increase our policing costs. And it could become a health issue. So we need to reevaluate after two years," he says. "Having that clause in there is incredibly important to all municipalities across British Columbia."

Even determining an amount for municipalities to request in order to cover legal marijuana related costs has been tricky, according to Humphrey. 

"We didn't really do an estimate, because we didn't know how many stores there would be, or how much it would be used, and where people would use it," Humphrey explains. "It was kind of a: 'Things are different, things are going to be different, and we'll just kind of play it by ear'."

As more legal cannabis retail operations get up and running, the City of Kamloops will be watching closely to see just what kind of revenue sharing agreement the province and UBCM comes up with.

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