The province has plugged a loophole that could have let new medical marijuana producers dodge most of their property tax bills by gaining farm tax status.
They're now excluded from the list of agricultural uses that qualify for the lower agricultural tax rate.
Several Lower Mainland cities had feared they might lose property tax revenue if new cannabis producers set up on industrial land and then ask B.C. Assessment to convert them to farm tax status.
"There's a collective sigh of relief among municipalities," Maple Ridge Mayor Ernie Daykin said of the decision, which takes effect in 2015.
The provincial government is also advising municipalities not to try to ban medical marijuana operators from the Agricultural Land Reserve, cautioning that they might face a court challenge.
Several cities have passed bylaws allowing pot producers to operate only on industrial land, so the highly secure bunker-like buildings don't effectively pave over productive farmland.
While the province views medical pot as a viable ALR use, it would not qualify for farm tax status there either, joining the ranks of gravel pits, wineries and other activities allowed in the ALR but denied the reduced tax rate.
The federal government has so far issued five medical marijuana production licenses in B.C. to operators in Central Saanich, Maple Ridge, Whistler, Nanaimo and Spallumcheen.
Hundreds of other licence applications are under consideration.
But the federal government's shift to a system of commercial growers remains under a legal cloud, awaiting a court challenge by authorized medical pot users who want to retain the right to grow their own.