Pubdate: Fri, 16 May 2014
Source: Globe and Mail (Canada)
Copyright: 2014 The Globe and Mail Company
Contact:  http://www.theglobeandmail.com/
Details: http://www.mapinc.org/media/168
Author: Justin Giovannetti
Page: Front Page

B.C. FRETS GROW-OP TAXES WILL GO UP IN SMOKE THROUGH LLAMA LOOPHOLE

It's informally called the Llama Loophole. But a legal oddity named 
for the tall, woolly mammal is now raising concerns in a far 
different realm: that of marijuana grow-ops and municipal taxes.

Mayors across British Columbia have long warned of a conflict between 
how properties are zoned municipally and how they are assessed for 
tax purposes by provincial authorities. With a flood of new grow-ops 
expected, the issue has taken on new urgency: Municipalities fear 
that due to the inconsistency, grow-ops could avoid paying nearly all 
property taxes.

The loophole was revealed in 2012 when a Chilliwack, B.C., business 
owner placed llamas on his land and successfully argued to the 
province that his commercial property was being used for agriculture. 
The province assesses property taxes by use, not zoning. According to 
city records, the tax bill for Chilliwack's Trackside Holdings fell 
to $1,400 in 2013 from $156,800 in 2012 - a 99 per-cent drop. 
Incensed city officials maintain the llamas were only on the property 
on a "temporary" basis.

On May 8, a group of 33 B.C. municipalities voted unanimously to 
demand that the provincial government close the loophole and stop 
reclassifying business lands as agricultural, regardless of their current use.

Health Canada is reviewing 168 applications from B.C. businesses 
looking to open grow-ops in the province. B.C is second only to 
Ontario in such applications under federal legislation that came into 
effect on April 1.

Under the new federal rules, marijuana production has been 
centralized in larger secured facilities where plants must be grown 
indoors and storefronts are prohibited. Local officials say the rules 
favour construction on sites currently zoned as industrial. "It puts 
a strain on our financial resources when lands are being taxed based 
on use and not zoning," said Jason Lum, a Chilliwack councillor who 
is championing the motion to the province.

The largely rural municipality has created a special industrial zone 
to manage new marijuana grow-ops alongside slaughterhouses and a 
waste treatment plant. The councillor said it "wasn't unreasonable" 
to ask that large-scale marijuana grow-ops be classified as 
industrial or pharmaceutical. Unless provincial authorities respect 
the special zone, Mr. Lum said large swaths of industrial land 
formerly paying high taxes could be reclassified as agricultural. 
Officials say taxes on farmland are only 10 per cent of what they are 
for other uses, while taxes on farm buildings are only 12.5 per cent 
of the business rate.

Tim Morrison, spokesman for B.C. Assessment, said businesses need to 
show that a certain amount of their income is derived from farm 
activity, which is monitored to ensure compliance. As for the influx 
of marijuana, municipalities looking for an industrial designation 
may have reason for concern. "If they are growing a product, just 
like any other plant, it's agricultural," Mr. Morrison said.

Any changes to the current system would need to be legislated by the 
ruling B.C. Liberals.

James Poelzer said the debate is guided by old stereotypes. The COO 
of Agrima Botanicals hopes to soon have permission to begin growing 
medical marijuana at a modern, nondescript facility in Maple Ridge, 
B.C. Under federal law, it's barred from emitting any smells or 
pollen. The high-tech security and fire-suppression system is 
reviewed by federal inspectors. All byproducts are composted on site. 
"This isn't a great big grow-op with smells and crime. It's quite the 
opposite," he says. "Some municipalities have a preconceived notion 
of a grow-op. We're working really hard to get rid of that stigma."
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MAP posted-by: Jay Bergstrom