Manitoba lone holdout on federal pot tax plan

Manitoba is the only province not signing on to a federal-provincial agreement to share the tax revenue from legalized cannabis.

Provincial and territorial ministers met with the federal government in Ottawa Monday to talk about what share of the pot tax revenue should go to the provinces. The federal government and 12 out of 13 provinces and territories signed an agreement to split the marijuana tax pot at least 75/25, up from the initial offer of 50/50.

Despite that increase, Manitoba Finance Minister Cameron Friesen says that's a "challenge" for the province.

He says the two levels of government agree on broad principles, but Manitoba needs more time to decide whether it would be better off under the federal framework or whether it should create its own framework.

"We know that this has never been about revenue generation, this is about the ability that we have to cover our costs. At that revenue-sharing agreement, it means we have more work to do," Friesen said. 

"We simply need more time now to go back to our jurisdiction to understand what this means."

He says this wouldn't affect the July 1 deadline for the sale of legalized marijuana in Manitoba.

In anticipation of legalization, the federal Liberal government — which has long insisted its plans were never about the money, but about keeping pot away from kids — has proposed an excise tax of $1 per gram or 10 per cent of the final retail price, whichever is higher.

Manitoba weighing options

Before the meeting, Friesen said the federal government isn't playing fair over pot proceeds and provinces deserve a bigger share of the dividends, because they shoulder most of the risks and responsibilities.

"Risks and responsibilities in areas like roadside policing and justice, health and mental health regulations" are provincial roles, he said.

Speaking to reporters after the agreement was announced, Friesen said there are still many unknown costs associated with legalized cannabis.

"I can tell you that in this room today, there wasn't a single provincial or territorial finance minister who was able to say with any certainty what the costs will be when the legalization of cannabis hits us."

Friesen also said the short deadline for implementing legalized cannabis adds additional costs to the provinces.

Manitoba would still have flexibility to set up its taxation framework if it signs on to the federal agreement, but a provincial framework would offer more freedom, Friesen said. 

The province also needs more information about how the federal government plans to use its share of the revenue from the marijuana tax, as well as the GST that will also be applied pot sales, he said. Issues such border security and the impact on cross-border trade remain to be discussed, he said.

"It is important for the federal government to give an accounting of where those revenues will be applied for public safety, for addressing the issues of trade and all of these things. It is exactly that discussion that we could not conclude today. It's why we need more time on the clock."

Money to cities

Federal politicians had said they were ready to sweeten the pot so long as the earmarked money goes to municipalities and not provincial coffers. The Federation of Canadian Municipalities says a third of the revenues should be earmarked for cities and municipalities to deal with administrative and policing costs. 

Before the final agreement was announced on Monday, Winnipeg Mayor Brian Bowman said he supported that proposal.

"As you know, cities are on front lines of implementing the federal commitment to legalize cannabis across Canada," he said. "Our communities are where cannabis will be sold and consumed, and my priority is keeping Winnipeggers safe and well served."

The FCM calculated that a city of 500,000 would need to pay $3 million-$4.75 million to implement legalized pot. With a population of more than 700,000, Winnipeg's costs could exceed $5 million, Bowman said.

The final agreement announced on Monday did not specify how much of their share of the revenue provinces should share with municipalities. Friesen wasn't prepared Monday to put a figure on how much municipalities should receive.

"Discussion needs to be about adequate resources going to province of Manitoba, so that we would have maximum flexibility to deal with the costs that we would incur in the province, and that includes provincial and municipal costs," he said.

Friesen said he felt that the federal-provincial-territorial meeting was not the place to discuss the municipal share of the costs, and that those issues would be discussed back back home.

Other provinces sign agreement

Other ministers across the country were hoping the provinces would present a united front Monday, with B.C.'s Carole James saying Sunday she's not sure the feds should retain any portion of the excise tax.

"Before we even get to talking about sharing, we want to hear about what responsibilities the federal government's taking on to justify taking any of the percentage," James said.

Ottawa has already earmarked $274 million to support policing and border efforts related to legalization, and some of the money is to go to the provinces. But it remains to be seen if more federal commitments are on the way.

Last week, federal Finance Minister Bill Morneau told a Senate committee that Ottawa is well aware of the provincial, territorial and municipal challenges and costs associated with the federal decision to legalize pot.

Regardless of how it's divvied up, the excise tax is expected to generate as much as $1 billion per year, by one estimate from Liberal MP Bill Blair, a former Toronto police chief and the Trudeau government's point man on legalizing cannabis.