"The major difference between a Canadian province and a territory is that a province is a creation of the Constitution Act, while a territory is created by federal law. Thus, the federal government has more direct control over the territories, while provincial governments have many more competences and rights.
Provinces have a great deal of power relative to the federal government, with jurisdiction over health care, education, welfare, transportation (intra-provincial), and the like. They receive "transfer payments" from the federal government to pay for these, as well as exacting their own taxes. The federal government, with its greater powers to tax and spend, can use these transfer payments to influence these provincial areas. For instance in order to receive health care funding under medicare, provinces must agree to meet certain federal mandates, such as universal access to required medical treatment."
**If I recall correctly from my political studies days in university, while provinces receive transfer payments, they are also responsible for more of their own improvements in various areas (roads, subsidised housing, etc.). Because even the largest territory has few people (think I read somewhere it's under 60,000), they would not have the necessary tax revenue coming in from their citizens in order to sustain this. It is beneficial for them to instead accept the more direct control the federal government assumes when dealing with a territory than become autonomous in this instance.