The under construction Aurora Sun facility is seen on November 14, 2019. - Photo by Colton McKee

By Charles Lefebvre

Cannabis tax changes

Tax changes to cannabis producers expected to bring more revenue to city

Nov 14, 2019 | 4:56 PM

MEDICINE HAT, AB — New tax rules from the province could mean additional revenue for the City of Medicine Hat from the Aurora Sun facility.

On Wednesday, the province announced that cannabis facilities will be subject to municipal taxes in cities.

“What happened yesterday with the province was that they defined what should be included in this agricultural definition, and determined cannabis production facilities would be excluded,” said Dennis Egert, commissioner of corporate services with the City of Medicine Hat.

Agriculture operations in Alberta receive a tax exemption. Now, cannabis producers will be subject to full taxation like other non-residential properties.

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“So, their fair market value of their property, land and improvements, would now be taxed at the full commercial industrial tax rate,” said Egert.

With the changes, Egert says the city is preparing an updated budget for 2020 to account for the anticipated revenue increase. Egert estimates Aurora Cannabis could pay between $2 million and $2.5 million in taxes each year.

Egert says the tax revenue from the plant will also help address funding shortfalls from the province in the 2019 provincial budget, specifically in regards to municipal funding.

“We are providing city services to the entire city, including in the area of this facility, so any of that revenue would be welcome to help provide those services,” he said. “It also helps us meet the challenges that we now understand are coming through the 2019 budget cuts from the province.”

Egert says a budget change is expected to come to city council during the meeting on December 16.

CHAT News reached out to Aurora Cannabis for a comment on the tax changes, and were provided with a statement.

“While this news is disappointing, Aurora remains committed to our roots in our home province of Alberta,” wrote Michelle Lefler, VP of Communications with the company. “Our founders are proud Albertans, and are proud to bring continued value to the province through creation of more than 2,000 jobs to date and investment of over $500 million.

“We will continue to work closely with our provincial and municipal partners, and see a bright future for communities across the province as we continue to build the global cannabis industry from right here at home.”

In its most recent update on October 3, 2019, CEO Terry Booth says “Aurora Sun is nearing completion with the majority of capital investment now behind us.”

The 1.62 million square foot facility is projected to produce in excess of 230,000 kilograms of cannabis per year once fully operational. The facility is expected to open next year.