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Pat Cullen: Marijuana — pain or gain

Now that recreational marijuana will be legal in a day or so, there seems to be no shortage of companies hoping to become our new savior  by setting up cannabis-growing facilities within the province.

It would be acceptable if they were local companies keeping their profits in the province, to benefit the people of the province. But it is hard to stomach Canopy Growth Corporation, described as the largest cannabis company in the world, traded on both the New York and Toronto Stock Exchanges, coming here and working out a deal with the provincial government that entitles them to a maximum of $40 million in tax-remittances from the hard-working people of Newfoundland and Labrador. It is money we will never see because Canopy wants to get back some of its investment in the production facility they are building in the White Hills area of St. John’s. And we will eventually pay the price.

Media reports say the plant will cost $55 million and be fully operational by 2019. It will produce 12,000 kilograms of marijuana a year , 8,000 of which will be sold within the province — the remainder outside. It will create 145 permanent jobs and maintain its investment in the province for at least 20 years, perhaps even permanently. But are the promises of this company, head-quartered in Smiths Falls, Ont. enough to warrant the $40 million tax-break we are giving. That’s $40 million that will never go into our general revenue. It will never make any improvements to our educational, health care and correctional systems. It is gone, swallowed up in exchange for a pot plant and 145 jobs.

And what sort of jobs will Canopy CEO Bruce Linton and his team offer? Will they be well-paying jobs with benefits or minimum-wage positions that offer little more than a paltry paycheque — the sort that create more social problems than they solve? My repeated phone calls and emails to his company inquiring about the types of jobs he will bring to the province were simply ignored.

A story in the May 7 edition of The Telegram says 60 people will be employed in Canopy’s retail outlets. It is believed to own six or eight of these throughout the province under the arrangement with the Ball government. These stores will be subject to the licensing and regulations of the Newfoundland and Labrador Liquor Corporation, the provincial Crown corporation which also controls the province’s distribution of marijuana.

In his email to me, Industry Minister Christopher Mitchelmore mentioned “remittances” as partial return for Canopy’s investment in the production plant and the jobs that go with it, but there was no talk of tax-remittances or tax-credits. That is, however, what they are.

Perhaps to make this deal more palatable, he wrote “… the estimated tax revenue from labour is $51.87 million over 20 years.” That includes the “provincial portion of income tax” from the people working there, additional revenues that will be generated when these workers spend within the province, as well as payroll tax.

The entire arrangement, including inking the deal with Canopy Growth before a request for proposals was made, has the opposition parties seeing red.

By way of explanation, Mitchelmore said there was no licensed producer of cannabis in the province and it was necessary to have a “safe supply” in advance of the federal government’s legalization date. But NDP Leader Gerry Rogers said government could have gotten a supply from local producers, even if they had to set up a partnership with outside interests. She is enraged that people’s money is used to provide recreational marijuana, adding, “every penny of profit will be sucked out of this province.”

PC Leader Ches Crosbie dismissed the arrangement with Canopy Growth as a “sweetheart deal”…which includes a handout of $40 million in taxpayer money to an Ontario-based corporation.” He too said it was money that could be used for health care, education or helping pay down the debt.

As for the request for proposals, Crosbie, like Rogers, was critical of the closed deal which shut out potential local producers.

“…An open RFP for supply should have been issued, giving all stakeholders a chance to benefit. Instead, we have seen a needless handout to Canopy Growth to set up here,” his email read.

Then there is the 75-25 taxation split between the provinces and Ottawa. It will hardly be a windfall for us. Provincial Finance officials explained that Ottawa’s “…portion of the excise tax revenues will be capped at $100 million annually for the first 2 years, with any additional funds above that cap redistributed to the provinces based on their share of sales in a given year.” With a population of around 525,000 and a high proportion of seniors, our share of sales will probably be at the bottom.

There is also that pesky tax-break to Canopy Growth to consider. Once again, we come up short. This fiscal year the Finance department predicts we will receive $5.8 million from the sale of marijuana. The revenues, officials explain, are based on fiscal year projections and we are now halfway through this one.

The CBC quoted Finance Minister Tom Osborne in an April 16 news report as expecting $4 million to be spent on implementation, leaving us with a net revenue of $1.8 million. Officials in his department project revenue for fiscal 2019 to 2020 at $17 million.

We are now seeing commercial grow-ops try to establish all over the area, hoping to employ people in places that have been economically hard-hit. What a pity our local producers were initially shut out and Canopy Growth was asked to move in and set up in St. John’s, an area described by Gerry Rogers as “having the highest employment rate in the province.”

There is a shortage of legal recreational pot throughout Canada and our locals could have helped fill that gap. But they were never given the chance. And we, the masters of mismanagement, never seem to learn our lesson. 

Pat Cullen is a journalist who lives in Carbonear. She can be reached at 596-1505 or cullen.pat1@gmail.com.

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