Exorbitant cannabis fees too high
Published on March 11, 2021 by David Wylie
The cost of doing business can be revealing.
Take West Kelowna. It has three basic tiers for business licence renewals: one at $60 per year; a second at $135 per year that takes into account a fire inspection; and a third at $360 per year that considers a need for both fire and policing.
Cannabis stores fall into the third category – along with ‘body rub parlours,’ escort services, and nightclubs.
To its credit, West Kelowna is by far one of the most affordable places in the Okanagan to renew a business licence as a cannabis retailer.
Other communities in the Valley single them out with sky-high fees.
Across the bridge in Kelowna, the yearly business licence renewal fee for a cannabis store is $9,465.
Pressure is mounting for municipalities to consider treating them equitably.
Earlier this month, Vancouver councillors voted to lower that city’s whopping $34,000 yearly fee. (In contrast, Vancouver liquor stores pay $429.)
Vernon asked to lower business licence fee for cannabis retail
Sarah Ballantyne, who owns Spiritleaf Vernon, wrote a letter earlier this month to Mayor Victor Cumming requesting the city consider lowering its fees.
“As you know, the Cannabis Retail Application fee for the City of Vernon is $5,000 and the Cannabis Business Licensing fee is set at $2,000/annually,” wrote Ballantyne.
“This fee is much higher than any other business licensing fee in Vernon.”
She argues a liquor store similar in size to her cannabis store would pay a much lower rate of $185 per year.
Ballantyne says keeping the fee so high is unreasonable.
Vernon’s $2,000 renewal fee is more than double any other renewal fee—except that of a casino, which is also $2,000.
The City of Vernon says its administration will be reviewing the fees and reporting back to council. That report is anticipated later this year.
“City fees are supposed to be commensurate with the cost to provide the service,” says city spokeswoman Christy Poirier.
“When the renewal fee of $2,000 was recommended and adopted, the city had the experience of over a dozen retailers in the community pre-legalization. The service process required a great deal of staff time through various departments, including Planning, Building and Licensing, Bylaws, and sometimes Fire, which led to the fee that was recommended.”
Vernon now has 16 licensed cannabis stores. Doing a bit of simple math, that’s $80,000 in initial application fees for the approved stores, plus $32,000 per year to city coffers in renewals—not to mention new channels of tax revenue.
Mayor Cumming has said on the record that he expects some cannabis stores in the city to fail due to the high number that council has approved.
“I believe there will be a shakeout,” he told council earlier this year before voting to approve two more stores.
“I don’t think there are the margins that were expected in the beginning.”
Meanwhile, legal stores are forced to compete with numerous unlicensed cannabis stores operating near the city, particularly along a stretch dubbed ‘The Green Mile.’
Councillor takes pot shots at pot smokers
Despite the local economic benefits legal stores provide, as well as their effect on the black market, there is one Vernon city councillor who makes sport of continually knocking the legal industry—and “pot smokers”—during public meetings.
“Cannabis use shot up by almost a million Canadians in all groups,” said Coun. Scott Anderson, debating a motion to support decriminalization at a recent council meeting.
“Will the same happen with hard drugs? A million new pot smokers is one thing, but a million new addicts is a catastrophe.”
Some of his past comments have been even more pointed.
“I can’t find a redeeming quality in opening yet another pot store,” said Anderson.
“We’re already known as the pot capital in B.C. by virtue of having more stores per capita than anywhere else. This is not the legacy I want to leave behind me.”
It’s clear that there’s still a ways to go before cannabis retail is treated just like any other business.
Municipalities in the Okanagan should look to Penticton, where the yearly business license fee for a cannabis store is $180—the same as other retail stores.
Updated: March 18 with details from other Okanagan municipalities