The Madras and Redmond City Councils recently concluded their deliberations on a marijuana sales tax – should Measure 91 pass on November 4. Voter approval of 91 would authorize the possession, manufacture and sale of marijuana to adults (age 21 and over) in Oregon.
The rush to pass local sales tax ordinances on cannabis is due to the language contained in Measure 91 – prohibiting local taxing authorities from levying cannabis related taxes, should voters approve the measure (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).
Municipalities believe that their actions to pass these ordinances prior to the prospective passage of 91 will “grandfather” their respective decisions.
If Measure 91 passes, all cannabis related activity (licensing, production, processing, wholesale distribution, and retail sale) will be regulated by Oregon Liquor Control Commission (OLCC). A statewide marijuana tax is also in the mix. According to the Tax Foundation in Washington, D.C. , Oregon’s measure would result in a tax of approximately 15 percent.
The State excise tax will be levied on all marijuana sold by marijuana producers at wholesale. The tax on cannabis flowers is specified at $35 per ounce; marijuana leaves at $10 per ounce; and a $5 per plant tax on immature plants. The tax revenues and fees collected by the State will be distributed as follows: 40 percent to Common School Fund, 5 percent to the Oregon Health Authority, 20 percent for mental health/substance abuse services; 15 percent for state police and 20 percent for local law enforcement.
According to the Oregon League of Cities, as of October 24 there are in excess of 60 Oregon cities that have passed and/or proposed local marijuana sales tax ordinances – in an amount averaging around 10 percent. Last week, Madras, in a unanimous decision, passed an ordinance taxing medical marijuana at 5 percent and recreational marijuana at 10 percent. LaPine decided upon a 5 percent tax on medical marijuana and a 15 percent tax on pot sold for recreational use. Bend decided not to adopt a cannabis tax as this action would require voter approval – a timeframe deemed unrealistic.
Redmond began their public deliberations on the marijuana sales tax issue at their October 14 City Council meeting. During this session, City Councilors Ed Onimus and Joe Centanni made impassioned pleas to consider the multi-dimensional implications that inhabit the passage of a municipal cannabis tax. Onimus lamented, “the 5 percent sticks in my gut. I will continue to press for zero on medical marijuana,” referring to Redmond’s proposed 5 percent tax on medical marijuana.
Centanni added, “I don’t want to pass a tax on the sale of marijuana in Redmond at all. We really don’t know what the impacts might be. My recommendation is a 5 percent tax on both medical and recreational marijuana.” Mayor George Endicott opined, “We need to protect ourself – in case….” Councilor Camden King added, “We are flying blind here and are being forced to make a decision.”
The Council voted to conduct a second reading of the proposed ordinance at their October 28 meeting. The ordinance passed on a 5-1 vote. The tax in Redmond will be 5 percent on medical marijuana and 15 percent on pot sold for recreational use.
Oregon’s neighbor to the north, Washington State, has levied a tax on marijuana deemed so exorbitant, it has failed to accomplish one of the primary objectives of State regulated pot sales: Undermine the black market. Oregon’s state levied tax structure contained in Measure 91 is intended to do just that. What the authors of Measure 91 did not anticipate were local municipalities adding to the tax burden prior to the prospective passage of this change.
When the smoke clears, how will this all turn out?