Sharing is caring: YYC Matters highlights gap in cannabis revenue sharing with province
Since cannabis became legal in Canada last October, The City of Calgary has found itself in a position shared by many municipalities across the country: tackling the operational and cost implications of legalization. As many as 17 City of Calgary departments are impacted by the new world of legal cannabis which brings changes in planning, licensing, and enforcement, including cost increases for police training and equipment, bylaw enforcement, additional building inspections, land-use zoning issues for retail outlets, and more.
“Since day one, The City of Calgary has been hard at work changing bylaws, building capacity and engaging citizens,” said Matthew Zabloski, business strategist with Calgary Community Standards. “Balancing the need to keep Calgarians safe and well-served, while managing deployment and enforcement has been and remains our priority, despite a widening funding gap.”
Late last year, the federal government recognized that legalization deployment and enforcement costs are, in practice, passed down to municipalities. It reduced its share of the cannabis excise tax from 50 per cent to 25 per cent, and capped its revenue at $100 million. Provinces receive 75 per cent of the excise tax up to $100 million and 100 per cent above $100 million. The Province of Alberta collects not only the excise tax, but also a provincial sales tax on cannabis, and further profits as the sole distributor and online retailer in the province.
Alberta is one of only three provinces whose provincial government passes some of the cannabis revenue down to municipalities in the form of a grant, however the contribution is far from adequate to address the costs of legalization. From April 1, 2018 to Dec. 31, 2019, The City estimates that its spending on cannabis enforcement (both policing and administrative costs) will be $10.44 million. Over the same period of time, the province is providing $3.84 million to The City as part of its Municipal Cannabis Transition Program (MCTP). The gap is $6.6 million.
With the provincial election around the corner, The City is looking at the province for a more equitable balance on cannabis enforcement costs to reduce the amount of spending on cannabis enforcement and apply those dollars to other initiatives. It is unknown what the MCTP will provide after 2019.
“The City bears much of the cost of cannabis legalization, while the province receives the majority of the revenue,” adds Zabloski. “Federally, the process of legalizing edible, topical and extracted cannabis products is underway, which will add to The City’s administrative and enforcement costs. We are looking for the province to recognize this with a greater commitment to offsetting the costs of legalization.”
For more information on the YYC Matters initiative, visit YYCMatters.ca.