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Oregon Cities Seek Clarity On Marijuana Taxes

City leaders in Fairview, Oregon passed a 40 percent tax on recreational marijuana sales.
Chris Lehman
Northwest News Network
City leaders in Fairview, Oregon passed a 40 percent tax on recreational marijuana sales.

Dozens of Oregon cities rushed to approve taxes on recreational marijuana before Oregon voters legalized it this fall. But it's not clear whether those revenues will ever materialize since Measure 91 seemingly rules out local taxes on pot.

Next year state lawmakers could weigh in on whether cities and counties can tax marijuana. It's a fight that could ultimately affect the cost of getting high in Oregon.

‘Something we don't need’

If city officials in the suburban Fairview, Oregon, have their way, you won't ever be able to buy pot there.

“To have that kind of an industry come into Fairview is something we don't need,” said Fairview mayor Mike Weatherby.

But the voter-approved Measure 91 doesn't let local officials just ban marijuana dispensaries. So Fairview leaders tried a different strategy: Place a high tax on getting high.

"The first thing that popped up was, how about 100 percent,” Weatherby said. “Well no, that might be a little bit pushing it."

So Fairview settled on a 40 percent tax. It's the highest in the state among cities that rushed to tax marijuana before this fall's election. But Weatherby says in an ideal world, the city would never collect a penny of pot tax revenue.

"It's not for the money,” he said. “The idea being that we just would like people to say hey, let's build it somewhere else.”

A revenue boost to cities?

But if Fairview doesn't actually want revenue from marijuana taxes, plenty of other cities do. The League of Oregon Cities says about 70 cities, including Portland, have approved local taxes on pot. Most are in the 10 percent range.

That would be on top of a state tax. Some of the state tax is earmarked for local governments. But League of Oregon Cities lobbyist Scott Winkels said it won't be enough.

"I don't think anyone knows really what local government costs are going to be,” he said. “And most of the impacts of this are going to be felt at the local level."

That's because even though marijuana arrests may go down, cities say there will be new costs associated with regulating marijuana dispensaries.

Measure 91 bans local pot taxes. Chief petitioner Anthony Johnson said there really shouldn't be any doubt as to its intent.

"Measure 91 is really crystal clear on the fact that the state is the sole taxing agency and that there shall not be any local rules or regulations that conflict with Measure 91,” he said.

And Johnson dismissed the argument from cities that because they acted before the election, the local pot taxes should be grandfathered in to state law.

"I don't think you can grandfather in a tax on something that wasn't legal when the tax was passed,” he said.

Johnson said local taxes will drive up the cost of recreational marijuana to the point that people will simply buy it on the illicit market, which produces no tax revenue for anybody.

So what will happen next? Local governments want state lawmakers to change Measure 91 --they can do that -- to clarify that cities and counties can tax pot if they want.

"I think creating a bright line that avoids litigation would be helpful,” Winkels said. “I think it would be helpful for everybody."

Either way, it's likely to be more than a year before any recreational marijuana stores open in Oregon. Personal possession becomes legal next July.

Copyright 2014 Northwest News Network

Chris Lehman covers the Oregon state capitol for JPR as part of the Northwest News Network, a group of 12 Northwest public radio organizations which collaborate on regional news coverage. Chris graduated from Temple University with a journalism degree in 1997. He began his career producing arts features for Red River Public Radio in Shreveport, Louisiana and has been a reporter/announcer for NPR station WNIJ in DeKalb, Illinois. Chris has also reported from overseas, filing stories from Iraq, Burkina Faso, El Salvador, Northern Ireland, Zimbabwe and Uganda.
Chris Lehman
Chris Lehman graduated from Temple University with a journalism degree in 1997. He landed his first job less than a month later, producing arts stories for Red River Public Radio in Shreveport, Louisiana. Three years later he headed north to DeKalb, Illinois, where he worked as a reporter and announcer for NPR–affiliate WNIJ–FM. In 2006 he headed west to become the Salem Correspondent for the Northwest News Network.