SUMA urging municipalities to ask for 33% of marijuana excise tax

The president of the Saskatchewan Urban Municipalities Association is urging municipalities to write the provincial government lobbying for a 33 per cent cut of pot revenue.

Not only do Saskatchewan municipalities want a share of the excise tax the province collects on cannabis sales, the Saskatchewan Urban Municipalities Association argues it's a federal expectation.

Gordon Barnhart, president of SUMA, said Ottawa allows the provinces to keep 75 per cent of cannabis tax revenue, with the idea that the provinces would be sharing some of that money with municipalities to offset cannabis-related costs.

Barnhart points to a letter he received from Federal Finance Minister Bill Morneau, dated May 21, to make his case.

In it, Morneau wrote, "The Government of Canada was willing to accept a smaller share of cannabis duty revenues to ensure that provinces and territories would have additional funds to provide to municipalities and local communities, including Indigenous communities, to address cannabis related responsibilities." The 2018 federal budget contained similar wording.

"It is the federal government's expectation that a substantial portion of the revenues from this tax room provided to provinces and territories will be transferred to municipalities and local communities, who are on the front lines of legalization," the letter said.

Barnhart said the Moe government has signalled it won't do that but he is hoping for a change of heart.

"Whenever you're in advocacy, you're always hopeful," he said. "If we weren't hopeful, we wouldn't be doing this at all. And we feel that we are working with a principle that's very, very important to us."

According to SUMA's website, Saskatchewan municipalities have been encouraged to send a letter to Saskatchewan's Minister of Finance advocating for an agreement that would provide municipalities with 33 per cent of the total cannabis excise tax collected in the province.

Barnhart said Alberta, Ontario and Quebec all have deals to share cannabis excise tax revenues with municipalities. He also said things could change when the agreement between the provinces and Ottawa ends in December.

"The federal government, not that long ago, said, 'Well, if the provinces aren't sharing, then what they could do is take their share and pay it directly to the municipalities," he said. "This happens already with the gas tax."

Even though Saskatchewan saw the lowest cannabis sales of any province in the country from October to December, Barnhart argued that makes this the best time to settle on a percentage to be shared with municipalities.

"Right now, even if it's a small amount, is the right time to get that agreement going," he said. "So that later, if it does increase, then it's not going to be such a bitter pill for the province to swallow."

Municipalities already get a cut of the PST: Harpauer

Finance Minister Donna Harpauer said she is "disappointed" this issue keeps coming up.

"They've met with ministers," she said. "We've had the discussion more than once, on more than one occasion."

Harpauer said Saskatchewan municipalities already have the "sweetheart deal of the nation" when it comes to revenue sharing, adding they already get a cut of the PST from cannabis sales.

She said they could discuss going back to the way things were if municipalities want "one-off" agreements instead.

"And we make deals on each and every thing, and they give up the predictability and sustainability of the revenue sharing formula we have now, then fair enough, we can have that discussion," she said.

Harpauer said the province makes so little off cannabis right now, the administration of sharing the excise tax would not be worth it.

"I have given them the numbers of what we've collected in cannabis tax, the excise tax," she said. "It would equate to, in this past budget, about $100 per municipality. Hardly worth the administration of it."

Harpauer accused the federal government of "playing games", and said the provinces never agreed Ottawa could impose a revenue-sharing deal on them.

"It was not part of the deal with the federal government," she said. "And it was not an agreement that the provinces were willing to sign on to if it was part of the deal."

She also said municipalities have not been able to produce evidence of increased cannabis-related costs.

"The municipalities keep alluding and saying publicly there is all this expense that they have," she said.

"I have offered and put out there both publicly and in meetings, 'Show me. Show me where you have had additional expense.'"

"Because not one municipality has stepped up and said, 'Here is how this became a huge expense for us.'"