Oregon cities want part of the recreational pot tax jackpot

November 20, 2014

Oregon voters on Nov. 4 approved use of small amounts of recreational marijuana in their state. The fight over taxing weed, however, continues.

Marijuana rolled and looseThe ballot initiative that passed by a 56-to-44-percent margin specifically gave the state the exclusive right to tax marijuana. City officials are fighting that provision.

State vs. local taxation: Under Measure 91, which takes effect July 1, 2015, producers will be taxed $35 an ounce for the most potent parts of a marijuana plant. Marijuana leaves will face a $10 per ounce tax, while there will be a $5 levy for plant starts sold to home growers.

The tax rate was deliberately set lower than in neighboring Washington, where recreational marijuana has been legal since July, to better compete with the black market.

Local tax collectors, however, are blocked from any possible weed revenue.

"No county or city of this state shall impose any fee or tax, including occupation taxes, privilege taxes and inspection fees, in connection with the purchase, sale, production, processing, transportation, and delivery of marijuana items," according to Section 42 of the measure.

Getting a hopeful tax jump: That statutory limitation, however, did not stop some local jurisdictions from enacting marijuana taxes anyway.

Some enacted the laws in order to add to their coffers. Others wanted the taxes in place to discourage weed dispensaries within their borders.

Whatever the reasons, many jurisdictions reportedly up to 70 cities, along with several counties — hurried to pass pot tax laws before the statewide election. The hope was that once weed was legal, and taxable, the local taxes would be grandfathered and collectable.

No such luck, thanks to the specifics of the Oregon Legalized Marijuana Initiative.

So now the municipal lawmakers plan to lobby their state colleagues.

Fighting for tax, and other, rights: Opponents of the added city taxes say that the imposition of all kinds of different taxes at different rates would essentially make any type of cohesive state marijuana policy impossible.

Local tax supporters say that the legalization of marijuana is likely to affect law enforcement statewide. The restriction on tax revenue could impose burdens on many localities.

Plus, argue proponents of broadening the marijuana tax base, the issue goes beyond the use, sales and taxation of pot. Measure 91's prohibition, they argue, is a direct and unacceptable attack on cities' state constitutional home rule authority.

If the Oregon legislature doesn't change the law to allow for local marijuana taxes, many city officials say they are willing to take their case to court.

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