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Cities wary of medical marijuana property tax pitfall

Production room at MediJean
Production room at MediJean's medical marijuana research facility in Richmond.
— image credit: MediJean

The strategy of several Lower Mainland cities to steer new medical marijuana growers to industrial areas may backfire, one mayor fears, opening up a property tax dodge for pot producers to exploit.

Maple Ridge Mayor Ernie Daykin said the Agricultural Land Commission has deemed medical marijuana to be an agricultural crop and there are early indications that an operation in an industrial area may be able to persuade the B.C. Assessment Authority to apply the farm tax rate, rather than the much higher industrial tax rate.

That might mean a $1-million parcel of industrial land that might normally generate around $110,000 a year in property tax might instead pay just $25,000 if it hosts a pot farm – blowing a hole in municipal budgets.

"There's potential there for lost revenues," said Daykin, who raised the issue March 7 at Metro Vancouver's regional planning committee and asked staff to investigate further.

"The last thing that any of us want is to have millions of dollars of industrial assessment all of a sudden devalued if it becomes assessed at the agricultural rate."

Cities have been busy passing bylaws to control where and how new medical marijuana producers will be allowed to set up shop.

It's part of the federal government's move to outlaw home growing of medical pot as of April 1 in favour of large scale commercial production, which is to be tightly regulated.

While some cities have sought to ban commercial pot growing entirely, several others are limiting it to industrial land only, so the facilities aren't built on productive farmland.

If his hunch is right, Daykin said, municipalities may be better off, at least financially, if they follow Maple Ridge's path and require new marijuana operations instead go on agricultural land.

Richmond has a medical marijuana research facility on industrial land that's now seeking a commercial production production licence, but Coun. Harold Steves said operator MediJean agreed not to convert the property to farm tax assessment.

"We've banned it going onto farmland because we don't want factories on farmland," Steves said. "These are not farms, they're not even greenhouses and they should pay industrial taxes."

The longtime agricultural land defender said he's concerned that putting high-tech pot farms on agricultural land could be a precedent letting pharmaceutical firms – whose products often also originate from plants – also set up on farmland.

"If you allowed the marijuana research facilities to go on farmland why not Pfizer and Bayer and all the others?" Steves asked. "We'd have all these medical factories on farmland paying farm taxes. And it opens up a huge question as to the viability of agriculture for farming."

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