Vancouver charges the highest cannabis license fees

Vancouver cannabis retail stores pay the highest business license fees in the country, and retailers are frustrated with the lack of justification for the high number, as well as where that money goes. Any business needs a license from the city to operate, but most charge a few hundred dollars annually. However, selling weed in Vancouver costs a business around $ 35,750 each year. That includes a license fee of $ 33,958, an annual development application fee, and GST.

Canadian municipalities typically levy corporate royalties to cover the cost of overseeing and regulating businesses and are set by the local government. To recoup the cost of regulating a restaurant that sells alcohol and seats 50 people, a license fee can go as high as $ 155. For the Pacific National Exhibition, which attracts more than 700,000 visitors in a regular year, Vancouver sets a license fee of $ 18,856. However, there appears to be a discrepancy between charging $ 916,866 pre-tax license fees to monitor the city's 27 cannabis stores and charging $ 886,584 pre-tax license fees to regulate the city's 1,802 liquor stores, each with an annual fee of $ 492 numbers.

Collects a transfer fee from the 2015 Law on the Distribution of Cannabis "The reason Vancouver has such an exorbitant and disastrously out-of-the-box business license fee from the rest of the country - not to mention the province - is because that license fee is a carryover from its original \[medical marijuana-related use\] Vancouver law was, "explains Jaclynn Pehota, executive director of the Association of Canadian Cannabis Retailers. ACCRES is a not-for-profit association with 34 member brands serving approximately 70 stores across British Columbia. In 2015, Vancouver passed a bill that would allow the regulated sale of medicinal cannabis, with retailers paying a $ 33,000 royalty to help the city regulate and monitor the cost of local, non-federally sanctioned Cover industry.

When entrepreneur Mike Babins heard that the City Hall would license these businesses, he decided to open a pharmacy with his wife. In 2015, he said the city was open about how it would use the fees. "When the royalties started it was great because \[Vancouver\] was the first city to say, 'We're going to find a way to legitimize this,'" Babins told Mugglehead in a telephone interview. "The outrageous fees made sense because they were basically breaking the law on our behalf and performing on our behalf. The legal fees that would be incurred - that made sense." "Besides that, \[Vancouver\] was supposed to be using the royalties to enforce against the unlicensed businesses, and \[the city\] didn't," he says. An unlicensed bakery would close in a day, but it was never the same with cannabis, Babins continues.

And that frustrated him because it felt like the city was unevenly enforcing its rules, letting licensed stores jump through all those tires and pay all those fees while turning a blind eye to unlicensed stores next door. When recreational weed was legalized at the federal level in 2018, Babin's Evergreen Cannabis opened, the first regulated cannabis store in Vancouver. The legalization did not change the annual license fee. In fact, the city increased fees last year. "They didn't conduct a public consultation.

They didn't explain why they raised the fees," he says. "They just told us that they voted to ask us for more money after legalization." This is an issue that Pehota and ACCRES have raised with the City of Vancouver over the past six months. The fees for business licenses are meant to be an act of cost recovery, so it doesn't make sense for the city to charge more now than it did in regulating the business fronts before legalization, she says. Legalizing cannabis put responsibility, and therefore the cost of regulation and oversight, on provincial and federal governments, Pehota says. But Vancouver remains adamant that the $ 35,000 fee is justified, despite Pehota claiming the city refused to provide a detailed breakdown of the costs recouped by the fees.

Royalties are the only income communities have to cover cannabis costs, Vancouver says When Mugglehead asked the city what the fees were used for, Vancouver's Chief Licensing Inspector Kathryn Holm said the fees were used for transitional and operational costs related to cannabis legalization. "The city continues to bear new one-time and ongoing costs for the full transition to legalized cannabis, including license management, enforcement of non-compliant operators, policing and ongoing collaboration with various levels of government to review and develop policy," Holm wrote in a Explanation. Royalties are also the only income communities have to cover the costs of legalization, administration and enforcement, Holm said.

She referred to the 2017 Federal-Provincial-Territorial Cannabis Taxation Agreement, which called on provinces and territories to "work with municipalities according to shared responsibility for legalization." But Vancouver has not yet received any cannabis excise tax revenue from the provincial government, Holm said. That explanation doesn't match Babins, who was told the same thing when he asked why the fees have only increased since he started paying them 10 years ago. "They didn't negotiate with the province, so I have to pay the equivalent of a person's salary every year," he asks. Vancouver isn't the only city bearing the cost of moving from a pre-legalized regulated market to a legal one.

Victoria had a similar system prior to legalization, but now charges a one-time zoning fee of $ 7,500 and an annual license fee of $ 5,000 for the sale of cannabis, according to the city's website. In Kelowna, cannabis dealers pay $ 20,140 to open a store. That change consists of a non-refundable application fee of $ 1,000, a zoning fee of $ 9,495, and an annual business license fee of $ 9,645, according to Greg Wise, City Business Licensing Manager. But Kelowna is currently updating its royalties, so those numbers could change within a year. In Montreal, Toronto, and Halifax, the city council doesn't collect license fees from cannabis dealers because almost everything related to cannabis is provincial. Ontario exempts retailers from municipal fees, but the province requires an upfront Ontario Retail Operator License of $ 10,750 and then an annual fee of $ 3,000.

In Quebec, cannabis can only be bought from the Société québécoise du Cannabis. Montreal doesn't have specific fees to the SQDC, but retailers in the province must pay municipal property tax on any property they own, a city spokesman said. So why is Vancouver still charging such high fees from its cannabis dealers? Pehota says the city could use the “exorbitant” fees to recoup the cost of controlling unregulated businesses: “But that's grossly unfair. For Safeway - it's built into their business license fee to crack down on people who sell fruit the Skytrain station or illegally bottling water? The answer is no. " Pehota says it just requires the city to review the fee structure and keep up with the times.

"I think it is impossible that the cost impact on the city has not changed since legalization went through," she said. "I'm curious why you won't give the justification, if it exists. That seems like a very strange tact. If you want me to go, give me the justification and show that it's fair and reasonable, and we'll go away. Until that happens it's hard to accept that it is the way it is ". When Mugglehead reached out to other retailers on the matter, many expressed concerns about being a squeaky wheel and facing reprisals from the city.

Pehota shakes her head at this, saying the way retailers have been treated is shocking. They compete with the illegal market and cannabis stores in BC but have to deal with 13th month overheads without being held accountable by the city, she says. Because it looks like she won't get any further explanations from city officials, Pehota says her next step is to go to town hall in the fall and speak in front of the council.