Alberta to Change Property Tax on Cannabis Production Facilities

Cannabis companies with production facilities in Alberta face paying triple the property tax after losing their status as an agricultural operation under new provincial legislation.

Alberta’s property tax rules are governed by the Matters Relating to Assessment and Taxation Regulations (MRAT). Under the previous regulation, cannabis-growing facilities were treated as farm buildings and received a tax exemption as agricultural operations.

Under pressure from the Alberta Urban Municipalities Associations (AUMA) and the Rural Municipalities of Alberta (RMA), the provincial government announced November 13, 2019 it would modify MRAT regulations around farm buildings. The changes will see buildings that house cannabis production assessed at market value and taxed at non-residential rates.

Alberta is currently home to more than 20 licensed growers. Depending on the municipality and the assessed value of the property, a rural producer could see their property tax jump from $202,586 to $626,649 a year under the proposed legislation.

The new rate change is anticipated to come into force January 2020.

Alberta is not alone in moving to reclassify cannabis production facilities: further taxation changes are anticipated across Canada, with many provinces adjusting legislation to exclude cannabis-growing facilities from farmland classification.

Further clarification from the provincial government about tax rates and credits will be required around cannabis production machinery and equipment used for processing.

Correct assessment valuation will be key for cannabis producers moving forward, as they already face a fairly significant tax burden through federal excise tax and cost recovery fees charged by Health Canada.

For more information around the assessment and valuation of cannabis production facilities, contact Giovanni Worsley, Partner, Property Tax Recovery Services, at 403.537.8438 or [email protected]