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Saskatoon city council passed its Cannabis Licensing Bylaw Monday, including a contentious $20,000 licensing fee for marijuana retailers.
The bylaw also includes a provision for a $10,000 annual renewal fee, but that portion is subject to review amid concerns raised by some members of council.
Council typically passes bylaws in two stages. First, they debate a motion, presenting arguments and voting on what direction to give administration when it comes to writing the bylaw. From there, council then votes on the bylaw as a whole.
During the debate portion, councillors narrowly approved the proposed fee structure, but added language asking administration to report back on the justification for the annual $10,000 renewal fee.
The vote passed 6-5, with councillors Darren Hill, Hilary Gough, Sarina Gersher, Bev Dubois, Mairin Loewen and Zach Jeffries supporting the controversial licensing cost.
A regular business licence fee costs $125, with an annual renewal of $85.
Ward 3 Councillor Ann Iwanchuk spoke out against the higher fees for the cannabis industry, saying it was unfair to treat the businesses differently than others in the city.
She proposed reducing the licensing cost to $500, aligning it with the fees charged to adult service providers and pawn shops.
“This does not make us a business-friendly community,” she said of the $20,000 fee.
Her motion failed 6-5, but she garnered the support of Mayor Charlie Clark and councillors Randy Donauer, Troy Davies and Cynthia Block in the process.
Administration maintained the higher business fees are required to help recoup the costs of regulating the brand new legal cannabis industry.
Community Services General Manager Randy Grauer said the city has already spent around $150,000 in the past year preparing for legalization.
Iwanchuk questioned Grauer about those costs, confirming the work has been done by an existing city employee, with other projects put on the back burner, rather than hiring a new staff member.
“I don’t see the cost,” she said.
Coun. Hill noted the Saskatoon Police Service has estimated the additional cost of enforcement for impaired driving and other items at a minimum of $500,000.
“Where’s the money going to come from?” he said, adding costs haven’t been projected for edibles or home-grown cannabis either.
Several councillors who supported the fee said they didn’t want taxpayers on the hook for the costs of cannabis regulation.
“I support business,” Coun. Dubois said. “But if we don’t (charge $20,000), this will go on the mill rate.”
Councillor departure adds drama to final vote
With the $20,000 licensing fee only squeaking by 6-5 during debate, the final bylaw also looked set to pass by just one vote.
However, Coun. Hill had to leave early to catch a flight out of Saskatoon, potentially leaving the supporters of the higher licence fee without the votes to pass the bylaw.
Under council rules, a 5-5 tie would have meant the entire cannabis bylaw was defeated.
This prompted several councillors to change their votes in the interest of avoiding further delays.
The bylaw passed by a vote of 7-3 with Hill absent.
Mayor explains decision to switch vote
Mayor Charlie Clark was among those who spoke against the $20,000 licence fee during debate, but ultimately voted in support of the bylaw.
He explained his decision Tuesday during an interview with 650 CKOM.
“I felt like it wouldn’t have been in the spirit of the process to defeat the whole thing and leave us nowhere under the circumstances, where there is a need to get this bylaw in place so there’s clarity out there,” he said.
With regulatory environments also changing around businesses like ride-sharing and Airbnb, Clark said the issue of how the city uses business licensing fees to recoup costs is one that needs to be looked at further.
He said the same concerns also applied back when the city introduced regulations for food trucks.”We don’t think taxpayers should be covering the costs of an adjusting and changing business environment,” he said.
Despite concerns about covering new costs, Clark said he still didn’t think pot shop owners should be on the hook for the entire price tag of the city’s adjustment to new regulations.
“I think it would be better to get those revenues through provincial and federal excise taxes that are in place,” he said.
In the absence of money from other levels of government, Clark said he’d prefer to see the costs spread out.
This was also an idea floated by the NSBA – an organization representing Saskatoon business owners.
In a presentation to council ahead of Monday’s vote, NSBA research and policy analyst Andrew Shaw said many in the business community would prefer to have the base cost of a business licence raised by $20 for everybody, rather than see a specific type of business targeted with a fee in excess of 100 times higher than normal.
While it wasn’t his idea of a perfect bylaw, Clark repeated Tuesday that it was better to have some certainty for retailers moving forward.
He said he took some comfort from the fact none of the seven retailers licensed to sell cannabis in Saskatoon had raised any objection to the proposed fee.
“It appears at least, based on the silence that we’ve got from the industry…that this is something they’ve factored in,” he said.
—With files from 650 CKOM