Since legalization last year cannabis-growing facilities have received a tax exemption as agricultural operations.
Cannabis plants are shown at Sundial Growers facility in Olds. Dean Pilling / Postmedia
Commercial cannabis producers in Alberta will have to start paying property taxes, a move that is being welcomed by Alberta municipalities.
The provincial government announced the change Wednesday at the Rural Municipalities of Alberta convention in Edmonton. Municipal Affairs Minister Kaycee Madu said as of the 2020 tax year, cannabis producers will no longer be classified as agricultural businesses and so won’t qualify for a tax exemption.
“This change responds directly to the concerns of municipalities, who asked for this distinction in provincial tax regulations. While cannabis is a burgeoning industry, it is important that cannabis-production facilities — which are heavy users of municipal services — pay their share for those services,” Madu said in a news release.
Prior to the legalization of cannabis, commercial cannabis businesses did not exist. Since legalization on Oct. 17, 2018, cannabis-growing facilities have been treated as farm buildings and received a tax exemption as agricultural operations. However, municipalities with large cannabis production facilities within their boundaries have been lobbying for a change to the tax law.
“(We) welcome this announcement, as we’ve been asking the government to put cannabis-production facilities on equal footing with other industrial businesses since legalization,” said Al Kemmere, president of the Rural Municipalities of Alberta and an elected councillor for Mountain View County. “I’m glad the government listened to our concerns and acted swiftly.”
Agriculture buildings in Alberta are currently taxed at zero per cent in rural municipalities, while agricultural land is taxed at a regulated rate based on the cost of production.
The changes announced by Madu Wednesday mean that, like other commercial facilities, buildings that house cannabis production will be assessed at market value and taxed at non-residential rates.
The tax change will not apply to greenhouse operations or industrial hemp cultivation, nor does it affect any other sectors of the agricultural industry.
– With files from the Canadian Press