Cities won't get direct funding from federal pot tax: Morneau

The federal government won't be sending municipalities an equal share of revenue from its cannabis tax.

But Finance Minister Bill Morneau said Thursday he isn't finished talking with his provincial counterparts about how that revenue will split.

The Federation of Canadian Municipalities has asked the federal government to give cities a third of the revenue generated by the Liberals' proposed excise tax, but Morneau said that isn't going to happen.

"We don't see that as our role," he told the CBC's David Cochrane on CBC Radio's The House.

"The discussion around the split between provinces and municipalities is probably best a discussion between provinces and municipalities."

The Liberals had proposed giving provincial and territorial governments half of the estimated $1 billion annual excise tax take once marijuana becomes legal next July.

That proposal will be on the table early next week when the provincial and territorial finance ministers fly into Ottawa for meetings with Morneau on Sunday and Monday.

Ahead of the meetings, reports have emerged that the federal government is willing to give provinces and territories more than a 50-50 revenue split in order to help municipalities cope.

"There's going to be a negotiation," Morneau said.

"We started out at 50-50, but recognize that we need consider all levels of government, so I expect that that starting point won't be the ending point."

Provinces say they need more 

Then it will be up to the provinces to decide how to dole out money to municipalities based on their unique situations, Morneau said. For example, some cities have their own police, while others are covered by provincial police.

Nova Scotia Justice Minister Mark Furey, who introduced his province's cannabis legalization plans on Thursday, said he'll be asking Ottawa for a different formula.

"I would say the 50-50 split is unreasonable when you consider that 100 per cent of the costs are being borne by the provinces," he said in an interview on CBC News Network's Power & Politics. 

"We don't see a revenue stream here. We see significant costs and the implementation of the legalization of cannabis."

Ontario Finance Minister Charles Sousa said earlier this week that municipalities need to be recompensed for costs associated with marijuana legalization.

"I've always said all along that the municipalities and the province need to get a proper share to cover those costs," he told The Canadian Press.

"We have a lot of out-of-pocket [expenses] right at the start… That needs to be recovered. So we will work closely, we want to make sure that municipalities are covered as well."