County considering preemptive pot tax

Cannabis leaf.

Credit: Thinkstock/Gety Images
Cannabis leaf.

A ballot initiative that would legalize recreational marijuana in the state of Oregon hasn’t yet been passed by voters, but Hood River County will consider passing its own marijuana tax beforehand just in case they do.

On Monday, the Hood River County Board of Commissioners made a motion to draft an ordinance and hold a public meeting next month on establishing a county tax on marijuana in addition to the state tax, which would be $35 per ounce of dried marijuana flowers, according to the text of Measure 91.

The county is considering following an ordinance passed by the city of Ashland this spring that taxes gross sales of medical marijuana at 5 percent and retail sales for recreational use at 10 percent if Measure 91 is passed statewide this November.

County Administrator David Meriwether explained to commissioners the reason the county is considering passing a tax now instead of after the election is because, “there are provisions in the measure that call for taxation of (marijuana) by the state, but it specifically prohibits that by local governments.”

However, County Counsel Lisa Davies said there were differing opinions around the state of whether the state law would preempt local law in this matter, preventing local governments from instituting their own taxes. She added local governments were “hedging their bets” that state legislators would hopefully iron out the preemption issue during the next legislative session in 2015.

“I think the answer is if we wait until after the November election, there’s no point, because there is a preemption there,” Meriwether told the commission. “There is some discussion as to whether or not this would be preempted anyway.”

Davies added the county would have to decide at what point of the supply chain it would tax marijuana, noting that there was “speculation that a lot of marijuana growers are going to choose to operate as medical marijuana growers” and then sell to retail in order to evade the higher taxes.

Commissioner Karen Joplin asked about why the county shouldn’t just tax marijuana at the grower level before it enters the supply chain.

“Where it goes from there becomes less relevant,” she said.

“Because the wholesale value is very low,” Commissioner Maui Meyer explained.

“It’s also hard to catch it at that point,” Commissioner Les Perkins added.

“Well, it’s going to be hard to catch it at any point,” Joplin replied.

“Retail’s the best one,” suggested Commission Chair Ron Rivers.

Meyer initially wasn’t convinced the local tax would withstand preemption by the state.

“Is it a proper marker or place to hedge our bets?” Meyer asked. “I just can’t imagine that we wouldn’t be preempted.”

“But what if it turns out that there wasn’t a preemption and we didn’t do anything?” Perkins said.

Rivers asked Hood River Mayor Arthur Babitz, who was in the audience, whether the city was considering a similar proposal to the county’s.

Babitz responded that both the city manager and the city attorney had been consulted on the issue and “both were of the opinion that it wasn’t worth the trouble, but we haven’t yet had the discussion as to whether to put it on the agenda for a (city council) meeting.”

Davies noted there was a “split opinion” on whether or not a county ordinance would apply to cities and added that her opinion “had always been that any tax-related ordinance would need to be referred to the voters.”

Babitz said one source he had seen calculated that the county would receive about $45,000 in state tax due to legalization, but may receive less if it decided to instate its own tax.

Maija Yasui, prevention coordinator for the Hood River County Commission on Children and Families, said she was in favor of moving forward with the ordinance and saw it as a good way to provide revenue for programs that combat substance abuse.

“Whatever the outcome is with that particular ballot measure, if we have something to fall back on, we’re in a better position than having nothing to fall back on,” she said. “We’ve been preempted out of all sorts of local options in terms of taxation that could help support prevention, enforcement and treatment.”

Commissioners voted unanimously to direct staff to draft an ordinance similar to Ashland’s and to hold a public hearing on the ordinance during the next county commission meeting on Monday, Oct. 13 at 6 p.m.

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jmeldrum 4 years, 2 months ago

With the state, county, and local governemnts all lining up to get in on the pot profits; I think I'll just continue to buy my marijuana on the black market, tax free, just like I always have.


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