'Sin tax' on cannabis stores

Photo: Colton Davies

It could soon cost significantly more to purchase a business licence in Osoyoos, as town staff told council Monday they recommend a jump in fees over two years and a hefty price for cannabis shops which one councillor called a "sin tax."

Director of planning and development services Gina MacKay presented a report at a Committee of the Whole meeting that pointed out the town's current licence structure has not been updated since 1997, and much has changed in over two decades. 

"In general, the current fees can’t begin to cover the costs of issuing the business licences let alone the costs of staff time for safety and fire inspections," MacKay wrote in her report. 

The town operates on a multi-level structure for their business licences, meaning there are six categories that require annual fees ranging from $50 to $300, depending on their nature. Cannabis businesses currently do not fit in any of the levels. 

Staff recommended that council direct them to prepare an official new business license bylaw to be prepared and discussed at a future meeting, but provided some sample numbers for the purposes of discussion at Monday's meeting. 

For example, a Level 1 business, like home-based services, personal services such as hair stylists and farm retail businesses, currently cost $50 per year. Staff suggested to council a jump to $150 in 2020 and $300 in 2021. 

And Level 5 businesses, like liquor retail and pubs, could see a jump from $100 to $1,000 over two years. 

Plus, staff recommended an additional category for cannabis retail businesses, which would start off at $1,000 annually. 

MacKay said the business licence fees take into account potential RCMP calls and fire inspection costs, which the town has been subsidizing in recent years. She pointed to hotels as an example, which currently only pay $150 annually for their licence, but which take a significant amount of time from the fire department to properly examine each room and certify their safety. 

MacKay also defended the large hike in liquor-based business licences and the substantial cannabis-related fees by pointing out that RCMP calls to those locations tend to be higher in number.

Councillor Brian Harvey objected to those high fees.

"That comes across as a sin tax, it's not a cost recovery, it doesn't appear to me to be a cost recovery," Harvey said. "I support the notion of changing the license on a cost-recovery basis."

Councillor CJ Rhodes agreed, saying he didn't want the business fees specifically for cannabis businesses to be "punitive."

"I do feel that in a lot of cases we don't charge enough for our businesses," Rhodes said. "But really at the end of the day this is about cannabis and where we're going to fit that, and I would like to see it put in a category that is a general business and have an appropriate fee attached to it and not a separate fee on its own."

After discussion, council voted on a recommendation to direct staff to proceed with a new overhaul of the business bylaw licences based on these recommendations, with a modification to start the cannabis licence at $500, which Harvey and Rhodes voted against but was passed by the rest of council. 

A letter will be sent out to all Osoyoos businesses explaining how they can become involved in the review process. 

A complete proposal from staff with details regarding licensing changes will be brought to council sometime in the new year for further discussion.