Municipal governments hoping for extra funding from Ottawa to offset the expected costs of cannabis legalization would be better off calling their province's leaders instead, federal Public Safety Minister Ralph Goodale suggested Thursday.
Goodale's comments were made to a crowd of police commissioners and oversight board members at the annual conference of the Canadian Association of Police Governance in Winnipeg. He was responding to a question about whether Ottawa would provide additional cannabis legalization funding for municipalities.
Ottawa initially proposed splitting revenue from its cannabis excise tax between the federal and provincial governments on a 50-50 basis, Goodale explained. But the final deal, announced in December, resulted in the federal share of the future tax revenue shrinking to 25 per cent, while the provinces will reap 75 per cent.
"And the expectation is that at least 25 per cent of the total would flow through to municipalities and local police authorities to do what they need to do," Goodale said.
"We will keep making that point to provincial governments, because the federal decision to pull back from 50 to 25 (per cent) was on the assumption that the 25 (per cent) that we were freeing up would be going to municipalities and local authorities to do what they need to do."
The federal government is responsible for regulating cannabis production in Canada, while provincial and territorial governments will oversee the wholesale distribution and retail sale of marijuana after legalization Oct. 17. Local governments across Canada have said many of the costs of legalization will ultimately end up on their books, including costs related to zoning, policing and enforcing local bylaws.
The future revenue from the cannabis excise tax remains unknown, Goodale said.Advertisement
"There are some economists who have made some guesstimates and estimates, but until you actually see the revenue flow, it would be foolish to take that number to the bank just yet."
The question Thursday was put forth by Darren Hill, a Saskatoon city councilor who sits on that city's board of police commissioners. In an interview, Hill acknowledged provincial governments can't "budget around an unknown number," but said municipal governments would appreciate provincial guarantees they'll receive their share of the excise tax revenue.
"We've identified in the two large municipalities in Saskatchewan, Saskatoon and Regina, that the increased operating costs could vary anywhere from $500,000 to $1.2 million a year, for each of those individual police services... with no identified source of revenue for those additional operating costs," he said.
"That's the concern, of course, of municipalities, is should the property taxpayers in each of those areas have to foot the bill for legalization of cannabis? I think the resounding answer you're going to get from anybody you ask is, no, they shouldn't."
In a December letter to federal Finance Minister Bill Morneau, the Federation of Canadian Municipalities estimated legalization could cost local governments between $3 million and $4.75 million per 500,000 population, or a total of $210 million to $335 million per year across the country.
FCM president Vicki-May Hamm said the governments of Quebec and Ontario are "very well-advanced in negotiations" on cannabis tax revenue-sharing with their municipal counterparts.
"But the other provinces are not, yet. And that has to be done for October."
According to Hamm, the negotiations are particularly tricky because the fiscal impact of cannabis legalization is still a mystery.
"What the FCM has been saying... is that there cannot be any costs to the municipality. But then again, you can't have a province turn around and say, 'Okay, well prove to me what the costs are and send me a bill,' or something like that. It can't be like that — it's complicated, and it's different from one region to another."
Goodale did tout new federal funding for local police forces to purchase roadside drug-testing devices and train officers on roadside drug detection.
"We'll be watching this very carefully," he told conference attendees Thursday.
"It's an ongoing, evolving situation... and we share the desire of municipalities and local police forces to make sure that this is properly done and that you have the resources you need to do this responsibly."
The federal-provincial cannabis excise tax will be paid by legal marijuana producers before their product reaches consumers, and will amount to either $1 per gram or 10 per cent of the product's price, whichever is higher. Consumers will also pay regular sales taxes on legal cannabis at the point of sale.