LNG, THC spell prosperity in B.C.’s changing economy

Liquefied natural gas project will generate $320 million in revenue for the province, while legal recreational marijuana will add $75 million annually to provincial coffers

By
Western Investor
October 30, 2018





Vancouver Aerial

Different types of pipes promise to bring a new wave of prosperity to British Columbia as hundreds of kilometres of natural gas pipelines and the legalization of recreational marijuana win government approval.

The green light for the liquefied natural gas (LNG) terminal in Kitimat on the northwest coast, and the 670 kilometres of pipelines that will link the LNG Canada terminal to the northeast gas fields, is the biggest-ever get for the province and the country.

“The announcement by LNG Canada represents the single largest private-sector investment in the history of Canada,” said Prime Minister Justin Trudeau.

Site preparation work on a $14 billion LNG plant in Kitimat is already underway. Construction of the associated $6.2 billion Coastal GasLink natural gas pipeline is slated to begin in early 2019.

The construction alone is forecast to contribute $3.45 billion in GDP to B.C. and generate $320 million in government revenue. Ongoing operations will add another $746 million to B.C. government coffers. In all, 32,716 jobs will be generated to construct the projects and more than 10,000 jobs will be produced during long-term project operations.

Fourteen First Nations in B.C. will each receive $10 million in annual revenue once the project is in service. Over the next 40 years, their take could reach more than $5.6 billion in total benefits. As well, Indigenous businesses are assured of $620 million in contract work by LNG Canada.

Big as it is, the LNG revenues are challenged by the recreational cannabis clout.

The B.C. government expects to rake in $200 million in revenue from cannabis sales taxes by March 2021, it revealed as part of its February 20 budget.

That revenue would start to flow once the federal government legalizes adult use of cannabis, as it did on October 17.

Provincial revenue expectations are much higher than past federal projections and include $50 million in the 2018-19 fiscal year.

The B.C. government expects that in each of the 2019-20 and 2020-21 fiscal years it will generate $75 million from cannabis tax revenue.

The federal government has projected that the cannabis tax would bring in $400 million per year, which it will share with the provinces.

Not all cities will be ready, however.

Ironically Vancouver, long known as the most marijuana-friendly community in Canada, did not have a single private retail outlet for recreational cannabis licensed when weed became legal. 

For most, though, what once seemed like pipe dreams is quickly becoming reality in a radically different British Columbia economy. 


Frank O'Brien is the editor of Western Canada's biggest commercial real estate newspaper, Western Investor, as well as a contributing editor at West Coast Condominium, real estate contributor to Business in Vancouver and a regular media commentator on real estate investment.
Copyright © 2018 Western Investor

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