Ontario cities looking for cut of province's pot profits

Municipalities across Ontario are followingToronto's lead andcalling on the province to fund local policing efforts and other responsibilities once new marijuana laws come into effect.

"We're where the rubber meets the road," said Association of Municipalities of Ontario (AMO) presidentLynn Dollin.

Ontario became the first province to proposelegislationregulatinghow recreational marijuana will be sold, with plans to introduce an LCBO-style network of more than 150 stores by 2020.

• Ontario unveils pot plan, including online ordering, 150 stand-alone stores

Meanwhile Ontario Attorney GeneralYasir Naqvihas vowedto crack down on illegal medical marijuana dispensaries across the province, an effort municipal police forces warncould be costly.

There are currently 17 illegal pot dispensaries in Ottawa, and as fast as police shut them down,they open back up.

Ottawa police Chief Charles Bordeleausaid local police forces needmore money andbetter tools to deal with the problem, and the AMO agrees.

"We'll be making sure we get full cost recovery," Dollinsaid.

List of demands

The AMO, which represents more than 400 cities and townsoutside Toronto, has been tasked by its members tostickhandlenegotiations on the issuewith the province, and has come up witha list of demandson their behalf.

"We need the cost provided by the province.It shouldn't be borne by the property tax payer," Dollin said.

Among the changes the AMO is requesting arenew powers to use zoning bylaws to put the dispensaries out of business for good.

Jessica Martin, senior communications adviser toFinance Minister Charles Sousa, said the province is meeting with municipalities to discuss "costs associated with legalizing marijuana."

"At this stage, it would be premature to establish a framework, given that the federal taxation approach has not yet been disclosed," Martin wrote in an email to CBC.

Marijuana task force

Mathieu Fleury, the Ottawa city councillorforRideau-Vanier, is a member of a task force struck by the AMO to delve into the issue.

Fleuryagreed it's too early to discuss figures, but said new sources of revenue will be required.He said the task force is weighing some of the experiences of other North American cities including Denver, Colo., the first jurisdiction on the continent to legalize marijuana.

Denver hasintroduced a3.5 per cent dedicated sales tax on retail sales of the drug, generating $10.5 million in 2016.

• What Ottawa can learn from Denver about regulating marijuana

• Policing pot: What Denver can teach cities like Ottawa

That money is used to fund the growing costs of policing, regulation, educationand affordable housing.

"New revenue streams are attractive," Fleurysaid.

However Ontariodoesn't allow municipalities to levy newtaxes. What's more likely is a negotiated share of the provincial pot tax.

Tax concerns

Ivan Ross Vrana, a former Health Canada employee who worked on the marijuana file, said governments should be very careful when it comes to taxation.

"It's going to have to be a delicate balancing act," said Ross-Vrana, now a vice president with the public relations and consulting firmHill and Knowlton Strategies.

"It will be very easy [for buyers] togo to a black market, which will undercut the price if the price is too high,"Ross-Vrana said.

That could mean little in the way of new revenue for cities unless provincial regulators can find the sweet spot when it comes to pricing.

"We acknowledge that pricing is an important component of how provinces and municipalities will achieve the core objectives of legalization with respect to public health and reducing the illicit market," Martin wrote.