Matt Nicholas, owner of Vernon's Black Crow Cannabis, runs one of the many pot shops now open in town. (Jennifer Smith - Morning Star)

Kelowna has highest cannabis fees in Okanagan

Vernon’s 14 stores pay second highest business licence fees

There are some high costs for operating cannabis shops around the Okanagan, but particularly in Kelowna.

Business licence fees are being balked by many retailers, with the City of Vernon recently tasked to review its $2,000 annual cost.

READ MORE: Cannabis shops paying premium to operate in Vernon

In comparison to Vernon, Kelowna charges $9,465. Meanwhile, other retail businesses pay $150-250 in Kelowna ($135-185 in Vernon).

“The higher fees are due to the costs of developing policies, managing this emerging business sector, sorting through applicants and administering it all,” Kelowna’s corporate communications manager Tom Wilson said. “The business licence fee is expected to come down by 2023 as the sector becomes more established and routine to administer.”

Lake Country charges $530.75 for marijuana dispensaries or grow operations, the licence renewal for other storefront businesses is $106.

Yet in Penticton, there is one fee ($185) no matter the type of business.

“When we were originally setting up our cannabis regulations, there was debate about an appropriate rate to charge for stores and it was decided to set the rate the same as any other retail business in the community,” said Penticton’s director of development services Blake Laven.

In West Kelowna, retail cannabis businesses fall under a Tier 3 licensing fee of $360, compared to Tier 1 which is $60 and Tier 2 which is $135.

Despite the high cost of doing cannabis business in Kelowna, it still has nine licenced shops. So does Penticton.

Vernon has the greatest number of shops in the Okanagan at 14.

There are four each in West Kelowna and Salmon Arm, two in Lake Country and Armstrong, Enderby and Lumby each have one. These are just the licenced stores and do not include the many shops on Westside Road.

The Interior is a hot spot for cannabis shops, with the highest number, by far, throughout the province.

According to application statistics from Liquor and Cannabis Licensing, there have been 177 licences issued in the Interior and the North (244 applications have been submitted, with some in the process of being approved). While the Interior/North covers a much larger area, Vancouver Island has had 79 licenses issued (130 submitted), Greater Vancouver has issued 71 (128 submitted) and Surrey/Fraser Valley has eight (36 submitted).

With many cannabis shops now in their second year of business, they are feeling the pinch as they renew their licences. Like Vernon’s Spiritleaf, which opened the Okanagan’s first legal cannabis shop on July 1, 2019. The Greater Vernon Chamber of Commerce has called on Vernon to cut ‘too high’ of fees in support of local business.

“Unless the city can demonstrate that retail cannabis shops place undue financial pressure on city resources such as policing or bylaw compliance, then there is no justification for $2,000 a year, particularly at a time when our community and economy depend on recovery from the pandemic,” Greater Vernon Chamber of Commerce president Krystin Kempton said in a letter to Vernon council. “Maintaining such a high business license fee could threaten the viability of entrepreneurs and employment opportunities.”

On top of increased fees for banking and almost every aspect of business, due to the nature of the business, Black Crow’s Matt Nicholas says it’s not fair how the City of Vernon charges so much.

“Hopefully they drop it, ‘cause $2,000 is ridiculous,” Nicholas said.

But for those who operate in multi-jurisdictions, like Spiritleaf, they do not have to pay the high licence fees in each city. Instead, an inter-municipal (or mobile) business licence fee of $150 is all they need outside of their home municipal business licence.

Aside from the annual fee, new stores pay an application fee for going through provincial approval, which requires local government support.

READ MORE: Lumby greenlights Okanagan’s first cannabis business park


@VernonNews
jennifer@vernonmorningstar.com

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