Municipal Affairs Minister Kaycee Madu announced the changes Nov. 13 at the Rural Municipalities of Alberta convention in Edmonton.
The revisions, which will see cannabis facilities taxed as non-agricultural businesses, respond directly to the needs of municipalities that asked for these properties to be made taxable in provincial tax regulations.
The change in tax status comes into effect in the 2020 tax year.
New industry requires new tax rules
Prior to the legalization of cannabis, commercial cannabis businesses did not exist. The tax regulations did not cover the unique nature of these new industrial operations that do not fall under the traditional definition of agriculture.
“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.”
The change will offer municipalities with cannabis-production facilities a new revenue stream.
“The RMA welcomes this announcement, as we’ve been asking the government to put cannabis-production facilities on equal footing with other industrial businesses since legalization. I’m glad the government listened to our concerns and acted swiftly.”
The government is working to ensure property taxes are fair and equitable for all business types.
- Alberta’s property tax rules are governed by the Matters Relating to Assessment and Taxation Regulation.
- Federal legislation legalizing cannabis use came into effect Oct. 17, 2018.
- Before this tax regulation update, cannabis-growing facilities were treated as farm buildings and received a tax exemption as agricultural operations.
- The definition of farming specified in the regulations has been changed to clarify it does not include commercial cannabis production.
- Like other commercial facilities, buildings that house cannabis production will be assessed at market value and taxed at non-residential rates.
- This tax change does not apply to greenhouse operations or industrial hemp cultivation, nor does it affect any other sectors of the agricultural industry.
- Municipal assessors will be responsible for preparing market value-based assessments for taxation in 2020 and future years.