UBCM is engaged on a number of key policy issues related to cannabis and liquor that affect local governments, primarily through the Cannabis Policy Technical Working Group and Local Government Working Group on Liquor Policy.
The Federal-Provincial-Territorial Agreement on Cannabis Taxation sees the federal government retain 25% of excise tax revenue (up to $100 million per year), with the remaining 75% or more going to provinces and territories. This reflects a federal share that was reduced by 25% in recognition of the costs and responsibilities assumed by local governments. The federal government declined to directly provide local governments a share of excise tax revenue, leaving that responsibility to provinces. Although some provinces have agreed to share a portion of cannabis revenue with local governments, the Province of British Columbia still has not committed to a revenue sharing agreement.
There are several taxes applied to cannabis sold in BC, including the federal excise tax, PST, GST and a 15% provincial mark-up on the landed cost of cannabis. In 2020-21, the Province earned over $46 million in cannabis excise tax revenue.
In addition to the endorsed resolutions sponsored by the UBCM Executive (2017-SR1, 2018-SR1 and 2020-SR2), UBCM's work has included the development of short- and long-term strategies [PDF - 361 KB] (included as part of 2018-SR1), as well as a report [PDF - 845 KB] summarizing findings from UBCM's cannabis costs survey. Survey responses showed that local governments were absorbing significant one-time and ongoing costs related to cannabis legalization.
The federal revenue sharing agreement has expired, although provinces and territories continue to receive their share of excise tax revenue. It is unknown when a new agreement will be reached. UBCM has delivered correspondence to the federal government seeking for future agreements to provide a direct transfer of excise tax revenue to local governments.
In August 2021, the UBCM Select Committee on Local Government Finance released its report, Ensuring Local Government Financial Resiliency, which focussed on key local government cost-drivers. In acknowledging the costs and responsibilities associated with cannabis legalization, the report recommended a “targeted consumption tax that provides local governments a share of provincial cannabis taxation revenue.”
UBCM to Federal Ministers re Cannabis Excise Tax Agreement (Feb. 2021)
UBCM to Minister Carole James re Cannabis Taxation Revenue Sharing (Sept. 2019)
UBCM to Minister Carole James re Pre-Convention Meeting (Oct. 2019)
UBCM to Minister Carole James re Cannabis Revenue Sharing (Aug. 2018)
UBCM to Minister Carole James re Cannabis Revenue Sharing (June 2018)
Findings from UBCM's Cannabis Costs Survey (Oct. 2019)
2018 UBCM Convention: UBCM Position on Excise Tax Revenue Sharing (Sept. 2018)
UBCM Short- and Long-Term Strategies for Cannabis Taxation Revenue Sharing (Sept. 2018)
The Province is examining the possible introduction of cannabis consumption spaces, such as businesses and special events where patrons can purchase and consume cannabis on-site.
Although BC cannabis laws do not currently allow for cannabis consumption spaces (e.g. tasting rooms, lounges, special events), this subject has previously been raised by UBCM as part of its work to inform the development of the provincial non-medical cannabis framework. In a November 2017 submission, UBCM was supportive of the Province developing dedicated places of use (licensed establishments) where individuals could consume cannabis.
The BC Cannabis Secretariat broadly engaged with key stakeholders, including UBCM’s Cannabis Policy Technical Working Group, in the fall of 2021. Formal public and stakeholder engagement will occur in 2022.
If the Province does eventually proceed with this initiative, it will provide the same level of authority to local governments as is included in the retail licensing framework. This means that local and Indigenous government recommendations will be required prior to the Province authorizing cannabis sales.
Announced in 2020, the Province will be seeking to complete work on this policy initiative by 2022. Once implemented, a new licence class (production retail stores) will allow standard micro cultivators to sell their products on-site. Local government recommendations will be required prior to the Province authorizing farm-gate sales.
Policy development is ongoing, and more details will be provided as this initiative is further developed.
Announced at the same time as the farm-gate initiative, direct delivery would entail cannabis producers delivering directly from their production sites to retailers. The Province is still working on determining how this initiative will work administratively and operationally. The intention of this initiative is to help the smaller producers by reducing some of the administrative burden and providing new distribution options.
More information will be provided in 2022, at which time the Province is expected to implement this policy change.
Federal cannabis regulations govern the use of cannabis for medical purposes. Although non-medical cannabis has been legalized, the medical system has not undergone any significant change since legalization. Local governments continue to seek more information from the federal government regarding medical cannabis operations, largely in the interest of community safety.
UBCM will continue to monitor this file in 2022.
For information regarding cannabis production in the ALR, please visit the UBCM Agriculture webpage.
In 2020, the Province introduced a streamlined online application for food primary, liquor primary and manufacturer licensees seeking a Temporary Expanded Service Area (TESA) (e.g. outdoor patio). Local governments were provided the option to further expedite this process by pre-approving all eligible licensees seeking to apply to the Province for a TESA. Those that elected not to opt-in continued to operate under the default process, reviewing and approving requests on an individual basis prior to licensees submitting their applications to the Liquor and Cannabis Regulation Branch (LCRB).
Successful applicants could not increase their approved occupancy loads, and would have to comply with all local government rules and requirements, as well as health and fire regulations. Prior to these changes, a TESA, which requires both provincial and local government approval, could take upwards of 6 months. Since this policy was implemented, over 2,200 TESA patio expansions have been approved.
This policy change was originally intended to be a temporary measure during the COVID-19 pandemic. However, Minister Mike Farnworth’s recent mandate letter includes direction to transition the TESA provision into a permanent option as a means to support restaurants and the hospitality sector. As a result, licensees with a TESA will see this temporary authorization extended until March 31, 2023. This deadline was extended (from June 1, 2022) in response to a UBCM request. Licensees must apply to the Province for a new outdoor patio, permanent structural change (indoor) or manufacturer endorsement if they wish to operate their TESA beyond March 31, 2023.
Because the Province has elected to maintain the current process and simply make it permanent, local governments will be required to use their own tools (e.g. zoning, land use, development permits, bylaws, etc.) to determine if authorized areas should be permanent and/or able to operate year-round.
In 2021, the Province approved the transition of Rural Agency Stores (RAS) to a new Rural Licensee Retail Store (RLRS) licence. Previously, under the umbrella of the Liquor Distribution Branch, RAS were permitted to sell packaged liquor on behalf of the Province in areas where a BC Liquor Store or private store was deemed financially unfeasible. This was the only group of private liquor retailers not regulated by the LCRB. The introduction of this new licence class provides more consistency in provincial regulation. RAS operators who meet eligibility requirements automatically had their licences transferred over on February 26, 2021. The primary impact on affected local governments (predominantly regional districts) is that they will now be responsible for gathering public input to inform the approval process when there is a RAS application submitted that falls within their jurisdiction. Like municipalities, they will have the option of opting out of this new responsibility, and transferring that responsibility to the LCRB.
The Province is expected to consult with the liquor policy working group in advance of any other related changes impacting local governments.