File photo by THE CANADIAN PRESS                                Alberta Urban Municipalities Association says taxpayers are subsidizing the cost of municipal services for cannabis production facilities.

File photo by THE CANADIAN PRESS Alberta Urban Municipalities Association says taxpayers are subsidizing the cost of municipal services for cannabis production facilities.

Municipalities oppose property-tax-free status for cannabis growers

Red Deer County waits for province to make changes

Property tax exemption for cannabis production facilities has municipalities calling on the province to change the rules.

The facilities are lumped in with agricultural buildings, like greenhouses and barns, which are tax exempt in rural areas, and the taxation of farm buildings will be phased out totally in urban areas in a few years.

“We don’t have a problem with facilities that are actually growing food. We recognize there’s a societal benefit of not taxing areas that are growing food,” said Barry Morishita, president of the Alberta Urban Municipalities Association and mayor of Brooks.

“But for cannabis, which is a commercial operation, it’s not a food item. It’s a commercial business and should be taxed as such.

“There’s no benefit for the community. That’s not acceptable.”

He said spaces within cannabis facilities that are taxable are areas not used for production, such as offices or shipping areas.

But the majority of square footage in the large facilities is used for growing. Meanwhile, municipalities provide roads, services, maintenance and emergency services.

“The services required to grow cannabis are in fact subsidized by every other taxpayer in a municipality.”

Olds has approved about five cannabis production facilities to be located in its southeast industrial park, including the Sundial Growers plant that will be about 500,000 square feet when its complete.

Olds Mayor Mike Muzychka said property taxes are definitely a concern, but said cannabis companies have been fantastic corporate partners so far.

“They all pretty much have (property taxes) built into their business model. They assumed it wasn’t going to stay agriculture forever. I think they are in support of our lobbying to have it changed,” Muzychka said.

Red Deer County Mayor Jim Wood said the ability for cannabis producers to pay taxes is a whole lot different than farmers.

“When a cannabis production comes into the county, they are under the same rules as if they were growing tomatoes in that building. I don’t think it’s right,” Wood said.

“I do think it’s something the province should change.”

Construction has began on the STIGMA Pharmaceuticals site in Clearview Industrial Park in Red Deer County.

Morishita said the AUMA has been lobbying the province about the property tax for more than two years, along with getting a larger share of federal tax revenue.

He said the province is providing $11 million over two years in cannabis transition funding to municipalities. That helped, but provinces are receiving 75 per cent of cannabis revenue from the federal government with the understanding that it be shared with municipalities.

“(Transition funding) wasn’t available to anybody with under 5,000 people and it was only available by application. It wasn’t a transfer of money. You had to apply and be approved,” Morishita said.

Muzychka said Olds used its funding to bolster policing and for administration to get bylaws in place. It wasn’t a huge amount, but every little bit helps.



szielinski@reddeeradvocate.com

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