Cannabis Assessment and Taxation
IT IS THEREFORE RESOLVED THAT the Alberta Urban Municipalities Association request the Government of Alberta to amend appropriate legislation and regulations to clearly enable municipalities to assess and tax cannabis grow operations at fair market value.
WHEREAS the legalization of cannabis has led to the development of cannabis grow operations in Alberta communities;
WHEREAS cannabis grow operations are industrial-scale facilities that represent considerable servicing costs for municipalities;
WHEREAS current wording in the Municipal Government Act and Matters Relating to Assessment and Taxation Regulation does not clearly enable municipalities to tax cannabis grow operations; and
WHEREAS other ratepayers will be forced to subsidize the servicing of cannabis grow operations unless municipalities are clearly enabled to tax them at fair market value.
The legalization of cannabis for both medicinal and recreational purposes has led to the development of federally licensed grow operations across Canada, including a number in Alberta. These facilities are major, industrial-scale developments consisting of large structures resembling factory environments. Given their scope and intensity of use, cannabis grow operations represent considerable municipal servicing costs.
Despite the high costs for municipalities associated with cannabis grow operations, it is not currently clear whether they can be appropriately taxed. Currently, Section 298 (1) of the Municipal Government Act states that no assessment is to be prepared for the following property:
(w) growing crops;
(y) farm buildings, except to the extent prescribed in the regulations;
The Matters Relating to Assessment and Taxation Regulation provides through Section 30 (f) that the taxation of farm buildings will be phased out in urban municipalities over five years, culminating in a 100% exemption in 2022. As significant property value is tied to the industrial-scale structures used in cannabis grow operations, this represents a large loss of taxation base.
Given the large scale and high intensity of use of cannabis grow operations, it would be inappropriate to classify them as typical agricultural uses. As a result of the exemption of the exemption of land used for growing crops and the phase-out of taxation of farm buildings, this classification would mean that other ratepayers are required to subsidize the servicing of cannabis grow operations.
It is not appropriate for homeowners and other businesses to shoulder the burden of servicing cannabis grow operations. In order to address this issue, the Government of Alberta needs to make appropriate legislative and regulatory amendments to clearly enable municipalities to tax cannabis grow operations at fair market value. While the Minister of Municipal Affairs has stated that he is "with us" on this issue, no changes have yet been made. Given that cannabis grow operations continue to proliferate across the province, it is vital that changes are made now.
In response to advocacy led by AUMA, with the support of RMA and the Alberta Assessors' Association, on November 13, 2019 Municipal Affairs announced updated definitions in the Matters Related to Assessment and Taxation Regulation to allow for the assessment and taxation of cannabis production facilities at fair market value.
The updated regulation (see section 2.1) has been posted on Alberta Queen’s Printer.
Accepts government response – no further action required
AUMA is pleased that the province took positive action to respond to our persistent advocacy for amendments to the Matters Related to Assessment and Taxation Regulation to ensure that cannabis grow operations can be assessed and taxed at fair market value.