Cannabis Regulation

Current Issues

• Cannabis Taxation Revenue Sharing

  Background
  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. 

  Status
  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.”  

  Correspondence
  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)

  Articles
  Cannabis Tax Advocacy (Sept. 2019)
  Deadline Extended to Complete Cannabis Cost Survey (June 2019)
  For CFOs: Cannabis Costs Survey (May 2019)

  Documents
  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)

• Consumption Spaces

  Background
  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.

  Status
  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.

  Articles
  Province Considering Cannabis Consumption Spaces (Aug. 2021)

• Farm-Gate Sales

  Background
  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.

  Status
  Policy development is ongoing, and more details will be provided as this initiative is further developed. 

• Direct Delivery

  Background
  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.

  Status
  More information will be provided in 2022, at which time the Province is expected to implement this policy change.

• Medical Cannabis

  Background
  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.

  Status
  UBCM will continue to monitor this file in 2022.