Calgary

Is cannabis a crop or commercial product? Why rural municipalities want growers to pay more taxes

Cannabis producers in Alberta pay very little in property taxes for their grow operations. Especially if those greenhouses are in rural parts of the province. Groups that represent municipalities are now saying that producers should be taxed at the commercial rate.

Some groups are saying growers shouldn't be taxed at the agricultural rate

The argument over taxes hinges on whether cannabis is an agricultural business; that term, and the tax breaks it brings, is usually reserved for food producers. (Travis McEwan/CBC)

Cannabis producers in Alberta pay very little in property taxes for their grow operations. Especially if those greenhouses are in rural parts of the province.

Groups that represent urban and rural municipalities are now saying that producers — such as Aurora Cannabis — should be paying more.

"They are right now at the agricultural rate, which is based on the rate applied to most agriculture operations that are producing food and food-like products," Albert Kemmere, president of the Rural Municipalities of Alberta, told the Calgary Eyeopener.

Kemmere said large cannabis growers may look like a greenhouse, but they are not producing food.

Not producing food

"They are growing a product but this is not intended to feed the people, it's a recreational product and in some cases used for medicinal purposes," he said. "But directly not a food product, and that's where we draw the distinction."

The tax rate argument hinges on this agricultural distinction.

"What we've been asking is to have the legislation amended," Kemmere said. "To be similar to what it is in British Columbia, where they have a system that taxes these operations much like a commercial operation that would be providing product, rather than like the traditional lower tax rated operations that they are right now."

Kemmere, who lives just outside Olds in Mountain View County — home to six cannabis growing facilities — is also a councillor for Mountain View County representing rural Olds.

Al Kemmere, a councillor in Mountain View County and the President of the Rural Municipalities of Alberta, thinks cannabis producers should be taxed at the commercial rate. (@akemmere/Twitter)

He says this is not just a rural issue — it affects both rural and urban municipalities and the taxes they can bring in.

"It depends on what the legislation looks like, but it could it could be a matter of an increase in their taxes, you know six to seven-fold," he said. "I don't have a dollar rate because every municipality charges their own agriculture rates."

Kemmere said it's also about the facilities.

"The big difference, as much as anything, is the assessment that gets applied to these facilities more than the tax rate itself."

Aurora Cannabis, which employs 1,500 people, is just one of six cannabis producers in Mountain View County. Aurora Cannabis, and large producer Sundial Growers, were unavailable for comment at press time.

Infrastructure costs

"I think the employment piece is important," Kemmere said.

"That's six operations in the towns and in the county within my area … but along with the employment comes the necessary services to provide for that employment and the services to provide for these operations that are moving in, and every other every other business that comes in is expected to pay those costs of servicing, and presently that's not the same for the growing operations.

Kemmere said infrastructure costs are significant for these new operations and the people they employ.

"It is the commercial taxation piece that helps support the cost of the residential taxation piece, and so we need to have that balance," he said. "Other businesses are paying their taxes and nobody likes to pay taxes, but they are paying their taxes, and presently there is a different level of taxation on this. 

"We just need to have corrected that's all."


With files from the Calgary Eyeopener.

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