The city’s claims that cannabis legalization is going to be a big money loser for them should certainly not be taken with a grain of salt, but rather, a few kilos of it.
Or, to put it another way, what are they smoking down at city hall?
A council committee last week heard the details on administration’s latest estimates around the cost of legalization: about $10 million or so a year, or about the equivalent of a one per cent increase in property taxes.
For those who don’t smoke weed and don’t plan to start, that’s unlikely to go over well.
And, of course, the answer to all of this – at least according to Mayor Naheed Nenshi – is for the province and the feds to hand over a big chunk of the cannabis-related taxes they’ll be collecting.
Mind you, given that the city has been looking at ways of saving money, it shouldn’t surprise us that they’d love to have a few million dollars land in their lap. A less urgent tone probably reduces the likelihood of that happening.
The city claims that their figures include increased costs for policing, bylaws and administration. Nenshi insists that they haven’t “padded this number” — that it’s legit and it’s – in his words – a “very big deal.”
The rest of us should be skeptical, however. First of all, this would imply that there are similar costs around alcohol: policing around bars and nightclubs, zoning regulations, etc. The city does not receive a cut of the provincial liquor markup or the federal alcohol excise tax, nor have they made a big show of demanding such a thing. That’s telling.
But the claims deserve even more scrutiny. For example, what new policing costs would the city anticipate come next year? Anything cannabis-related that will still be illegal after July 1, 2018 – like cannabis-impaired driving, giving or selling pot to kids, or running an illegal grow op – is illegal right now. Conversely, though, there are certain cannabis crimes that will vanish altogether, thus resulting in less enforcement.
Prohibition has been a costly enterprise, and freeing up police and court resources is, in fact, a powerful argument for not punishing consenting adults for possessing or using cannabis.
Furthermore, as I’m sure any business owner in Calgary would tell you, the city is not in the habit of doing things for free. Any sort of required licensing or inspection inevitably entails fees. That will be no different for these new cannabis retail outlets.
And perhaps this is the biggest factor being overlooked. There are, for example, upwards of 400 liquor stores in Calgary. It’s unlikely that the number of cannabis retail outlets will approach that amount, but at a minimum, we’re talking about a sudden injection of dozens of new businesses into the city. Those businesses, of course, will pay property tax.
With all the handwringing from various municipal and provincial governments, there’s now a running joke ahead of legalization that only the government could manage to not make money from the sale of drugs.
Along the same lines, perhaps it should now be noted that only the government could turn the creation of dozens of new businesses into a bad news story.
I’m sure if all of these cannabis entrepreneurs were to do the city a “favour” and burden surrounding municipalities instead with their business licence and zoning applications, Calgary officials would be lamenting how we’re missing out on all of this economic activity.
I don’t think the city wants that to happen, though. In a perfect world, they’d pocket the property taxes these businesses will bring, and then top it off with an additional windfall of provincial and federal cannabis revenue sharing.
Can’t blame them for asking, I guess. However, that doesn’t — and shouldn’t —give them a free pass on making these rather specious financial projections.
Afternoons with Rob Breakenridge airs weekdays on NewsTalk 770. email@example.com