Cannabis Revenue Sharing with Local Governments

Year
2019
Category
Community and Resources
NCLGA Ref#
R2
UBCM Ref#
A2

Status

NCLGA Executive Recommendation: Endorse | Endorsed by the NCLGA and UBCM Memberships

Details

Whereas only the federal and provincial governments are receiving tax revenue from the recently legalized sale of recreational cannabis, despite local governments encountering increased costs of the associated implementation;

And whereas the Union of BC Municipalities endorsed a resolution (2018-SR1) calling for a principled approach to guide the negotiation of a cannabis excise tax revenue sharing agreement with the Government of British Columbia, and recommending that BC local governments receive 40% of the projected excise tax revenue in the short term, which has not received any response from the Province:

Therefore be it resolved that the NCLGA and UBCM urge the provincial government to expedite a fair provincial-local government excise tax revenue sharing agreement regarding the sale of recreational cannabis.

Responses

The Resolutions Committee notes that the UBCM membership has consistently endorsed resolutions seeking an equitable share of cannabis taxation revenue to address costs and responsibilities resulting from the legalization of non-medical cannabis (2018-SR1, 2017-SR1, 2016-A3).

In response to 2018-SR1, the Ministry of Finance indicated that "cannabis taxation is not expected to generate significant provincial revenues," and that discussions would commence once all orders of government were able to quantify their costs during the post-legalization period.

UBCM's short-term strategy calls on the Province to provide 40% of its projected excise tax revenue to BC local governments for 2-years, with money distributed on a per capita basis. The long-term strategy seeks an agreement beyond year 2 that either continues with the same excise tax distribution framework or explores a new agreement to increase the provincial sales tax from 7% to not more than 10%, with a commitment of this portion to local governments (in place of excise tax revenue sharing). UBCM also commits to the development of a reporting template for cannabis related incremental costs, as part of the Local Government Division's annual financial reporting process.

UBCM continues to place a high priority on cannabis excise tax revenue sharing with local governments. Advancing UBCM's short- and long-term strategies was a top priority during UBCM's annual advocacy meetings with provincial MLAs in February 2019.

North Central Local Government Association