Mississauga mayor fighting for share of legal marijuana revenue
Cannabis to be legalized July 1, 2018

Mississauga.com
Dec. 11, 2017
Rachael Williams

With the federal and provincial governments carving out a revenue splitting formula for marijuana sales, Mississauga is asking for a commitment that municipalities will be given their fair share of the pot tax.

“To date there has not yet been a formal commitment to the amount of revenue that will be shared with municipalities,” reads a statement from Mayor Bonnie Crombie released Monday. “This is concerning as municipalities across Canada work to prepare for the rapidly approaching July 2018 legalization date.”

Federal Finance Minister Bill Morneau reached a deal with the provinces and territories on Dec .11 that would give them 75 cents of every dollar collected in excise tax levied on marijuana sales. This is up from the 50-50 funding formula proposed in October.

It remains unclear what portion of that will be directed to municipalities that will inevitably bear a large portion of the administrative costs to host marijuana stores.

“Municipalities are critical partners in this process,” noted the provincial finance minister Charles Sousa.

But he stopped short of making any firm commitments, saying "...we look forward to continued engagement on local concerns including a reasonable distribution of revenue associated with the legalization of cannabis."

Mississauga was one of the first 14 cities selected to have legal recreational marijuana shops, along with Brampton, Toronto, Vaughan and Hamilton. The federal government predicts 150 standalone LCBO-run marijuana shops will be in place by 2020.

“Cities, like Mississauga, will face cost pressures associated with the legalization of cannabis, including zoning, by-law enforcement, licencing, public health, and policing, to name a few,” said Crombie.

She is pressing the provincial and federal governments to pursue a three-way split, with each level of government receiving one-third of the revenue. This is in line with what was proposed by the Federation of Canadian Municipalities (FCM) in November.

In a letter to the federal finance minister, FCM president Jenny Gerbasi argued municipalities will be on the front lines of the federal initiative to legalize and sell marijuana, with additional resources required for policing and administration.

Without a committed revenue stream to fund these additional operational costs, Gerbasi said the burden would fall on taxpayers.

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

The cost of setting up the system is expected to range between $210 million and $335 million per year for municipalities.

“I urge the provincial and federal governments to come to an agreement that will ensure a greater share of revenue for the provinces to pass along a fair share to municipalities,” stressed Crombie.

Legalized pot will cost Canadians approximately $10 a gram. Each gram will have a $1 tax on sales up to $10. For purchases higher than $10, a 10 per cent tax will apply.

Sousa admitted this number is subject to change, depending on how the illegal market responds to the increased competition.

Recent estimates predict the marijuana tax will bring in as much as $400 million annually.

The revenue sharing agreement between the provincial and federal governments will be in place for two years, effective July 1, 2018.