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Fight for legal marijuana revenue heats up, as cities make their case – Politics

The federal government’s plan to legalize marijuana has already generated a spat with the provinces over how potentially lucrative tax revenue will be divided.

Now a new player has entered the fray: Canada’s cities are demanding they be given a share of the revenue pie to help cover costs associated with legalization.

In a letter from the Federation of Canadian Municipalities to Finance Minister Bill Morneau, Canada’s cities say they also want the federal government to cover start-up costs of transitioning to a new regime.

“Municipalities cover almost 60 per cent of Canada’s policing costs,” FCM president Jenny Gerbasi wrote in the letter dated Nov. 2. “Preparing the bulk of Canada’s police forces to enforce new cannabis rules — with appropriate training, systems and resources — is a massive and costly undertaking.”

Gerbasi says the $161 already million earmarked by the federal government for training is a start, but it remains unclear how much of this commitment may flow to municipalities for local training needs. Furthermore, training is only one component of the start-up challenge local governments now face.”

Counc. Jenny Gerbasi

Jenny Gerbasi, Winnipeg’s deputy mayor, is serving as president of the Federation of Canadian Municipalities. She wrote a letter to Finance Minister Bill Morneau to ask that cities receive a share of revenues from cannabis taxation. (CBC News )

The federation said cities are on board with the Trudeau government’s objectives and have been pre-emptively altering bylaws as they try to prepare for the changes on many fronts, despite a paucity of information.

Gerbasi, who is also deputy mayor of Winnipeg, said some cities will have to make changes to as many as 17 different departments, from policing to human resources to transit.

Tax windfall up for grabs

The federal government has proposed setting the excise tax on pot at 10 per cent and sharing the revenues 50-50 with the provinces. Some provincial governments have already voiced their displeasure with that formula, arguing they should see a larger share.

The addition of municipalities to the debate could further complicate things. But municipalities can make a good case that many of the costs associated with legalization will accrue to them.

“Our cities are where cannabis will be used and sold,” Gerbasi told CBC News. “So local governments are responsible for administering and enforcing where cannabis can be sold, ensuring private retail stores are safe to visit and work in, enforcing impaired driving and public nuisance rules, policing, it goes on and on. We’re on the front lines of this.”

Gerbasi said cities need money to come “from somewhere to cover these costs.”

“We’re the ones who are facing this, and so we need to part of this discussion prior to everything being decided and rolled out and shown to us.”

Gerbasi said the federal government has shown itself open to talking with municipalities but the issue remains unresolved.

She said because so many details of the roll-out remain unknown it is very difficult for municipalities to estimate exactly how much the shift to legalization will cost. For now, the federation has published a primer to help its member municipalities prepare where they can.

Feds say they’re listening

Chloé Luciani-Girouard, Morneau’s director of communications, said the finance minister met Wednesday with FCM officials to discuss the issues.

“We are working with partners, including municipalities, to make sure our approach to legalizing, regulating and taxing cannabis achieves our goals of keeping it out of the hands of kids and profits out of the hands of criminals,” Luciani-Girouard said.

Gerbasi said the FCM is encouraged that it’s at least being heard, but wants more concrete commitments around money. In her letter to Morneau, she pointed out that legalization in the U.S. has always been accompanied by money for cities.

“There is ample precedent here,” she wrote. “All eight U.S. states that have legalized recreational cannabis have adopted predictable funding allocations for their local governments.”

The federal government is expected this morning to announce public consultations over its proposed excise tax. The next high-level discussion of how the tax revenues will be divided will probably occur on Dec. 10 when federal and provincial finance ministers meet.

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