06/06/2014 09:03 EDT | Updated 06/16/2017 01:03 EDT

Marijuana grow ops could cost cities thousands in tax revenue

A report prepared for Metro Vancouver's Regional Planning and Agriculture Committee says large medical marijuana grow operations might avoid hefty property tax bills by classifying themselves as farms.

Regional Planner Tom Pearce says the B.C. Assessment Authority classifies property as farmland is based on use. Pearce says the designation includes land used for production buildings such as laboratories and offices. It also includes the surrounding land that contributes to the production.

Pearce says municipalities might have some control under regulations pertaining to the Classification of Land as a Farm regulation which gives a municipality some zoning leeway if farm use is inconsistent with what's usually permitted in an industrial or commercial zone.

However, according to Pearce, the regulations could also be interpreted as permitting the production and processing of marijuana in industrial or commercial zones.

And that, he says, could cost municipalities at tax time.

His report describes the impact on a 2,000-square-metre warehouse on a half hectare site in an industrial business park in Richmond. Normally the city would earn $33,500 in tax revenue, but would instead only get $395 if it were classified as a farm.

"There is a significant difference in property taxes depending on whether the owner applies for and receives farm class status," Pearce says in the report.

He's says Metro Vancouver should obtain a legal opinion clarifying its options.

On mobile? Click here to read the report [page 114]