Business owners usually lavish praise on governments that slash fees.
Vancouver city council’s move to cut business licence fees for legal cannabis retailers by 60%, however, is getting at best begrudging industry acknowledgements that it is moving in the right direction.
Cannabis retailers this year must pay $33,958 per store for business licences to operate in Vancouver. That is more than 79 times the $429 that the city charges liquor retailers to operate.
Changes set for next year drop the per-store fee for cannabis retailers to $13,500 – 30 times higher than the $450 fee that liquor sellers must pay.
Staff say the city needs to charge cannabis retailers higher fees because:
•approving licences for cannabis retailers is more complicated and requires staff time to communicate with provincial authorities;
•staff need more training to process the applications because of the added complexity of confirming criminal record checks and speaking with provincial officials;
•the more complicated business licence approval process means more applications fail and therefore take up staff time;
•city staff spend time monitoring illegal cannabis stores and reporting that to the province; and
•the provincial government does not share with cities the 10% excise tax that it receives from the federal government for each legal cannabis transaction in B.C.
Ontario and Alberta share with municipalities the cannabis excise taxes that those provinces receive from the federal government. This is in part why the City of Toronto does not charge cannabis retailers any business licence fees.
Vancouver cannabis retailers and their advocates do not accept the City of Vancouver’s rationale.
Association of Canadian Cannabis Retailers executive director Jaclynn Pehota told BIV that she remembers early consultation meetings that the city held with industry representatives. City staff at the time, she said, conceded that the higher fee was a way to be “covering their asses on the budget.”
Several cannabis retailers told BIV that they do not believe the city spends time working to shut down illegal cannabis retailers because when they have reported black market stores to the city, the city tells them to alert the province.
“For the city to claim that it is involved [in helping shut down black market stores] when its official stance is that it is not, it is just ridiculous,” said Evergreen Cannabis Inc. owner Mike Babins.
Even if city staff does spend some time to limit illegal business activity, cannabis retailers told BIV they do not think they should have to foot the bill for those actions.
“Why the hell am I paying for other stores to be shut down?” asked CottonMouth Boutique Cannabis Store owner Jason Gaudin. “Where else on the planet Earth does that happen?”
He added that restaurant owners are not having to pay higher business licence fees now that city staff are spending more time monitoring that sector for compliance with COVID-19 restrictions.
“Cannabis retailers are in survival mode, like any other business, due to the pandemic,” said Krystian Wetulani, chief development officer at Wildflower Brands Inc.
He said that being forced to pay a business licence fee that is 30 times what liquor sellers have to pay will be “challenging for most operators.” Cannabis customers have options, he said, adding that black market competitors do not pay any taxes, licence fees or quality control and testing costs.
“They can sell untested products for significantly lower prices.” •
