Questions Simmer in Oregon Over Legality of Local Marijuana Taxes
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Measure 91 prohibits local taxes on recreational weed, but that’s not stopping some cities and counties from trying to assert home rule.
PORTLAND, Ore. — When voters in the Beaver State approved Measure 91 last year, the ballot initiative legalizing marijuana tied the hands of local jurisdictions from assessing their own taxes on cannabis sold for recreational use.
But that hasn’t stopped local jurisdictions in Oregon from approving their own marijuana taxes anyways.
Measure 91 doesn’t go into effect on July 1 and the thinking goes that any county or municipal government that approves a local marijuana tax before July will likely be grandfathered in.
More than 70 local jurisdictions in the state, including Portland and many of its suburbs, have done so.
Many even took pre-emptive local action even before the Measure 91 vote, which had been anticipated to pass. (The ballot initiative was approved statewide with 56 percent of the vote.)
A few weeks ago in Jackson County, located in the southwest part of the state, voters approved a special local ballot initiative, Measure 15-133, that would authorize the county government to assess up to a 25 percent tax on recreational marijuana sales in the unincorporated areas of the county. (Medford, the county seat, passed its own local marijuana tax last fall.)
Each year, Jackson County commissioners would set the local tax rate on recreational cannabis.
This past week, county commissioners seemed set that tax rate at zero percent, according to the Mail Tribune newspaper in Medford. At least for the near term.
According to the Mail Tribune:
[Commissioner Doug] Breidenthal said there are a number of factors that shaped the board's decision, including a desire to wait and see if the state legislature passes additional laws clarifying taxation and regulation of the legal marijuana marketplace.
"We don't want to do something and have them reverse it," Breidenthal said.
Additionally, county officials said they have received litigation threats. The number of marijuana growing operations here also isn't available yet, and county officials said they would like to have that number established before setting a rate.
"We don't have an inventory of really what we're going to tax," said County Administrator Danny Jordan.
The situation in Jackson County underscores lingering uncertainties in Oregon over local control when it comes to Measure 91.
Despite the ballot initiative’s specific language leaving marijuana taxation under the authority of the state government, many local officials feel that if enough counties and cities pass their own local marijuana taxes, state lawmakers will be compelled to amend Measure 91 to accommodate local taxation and other related local regulatory action.
State Sen. Jackie Winters, a Republican from Salem, introduced S.B. 542, legislation aimed at giving local jurisdictions the authority to levy local marijuana taxes and ban local marijuana sales.
Winters’ bill is supported by the League of Oregon Cities and the Association of Oregon Counties, which have been pressing the state legislature to give local governments more power on legalized marijuana in their communities.
A joint memo written by the League of Oregon Cities and the Association of Oregon Counties earlier this month outlines the legal justification for more local government control over legal marijuana:
Despite assertions to the contrary, Measure 91 does not clearly preempt local governments. Oregon’s strong home rule principles, the history of the Oregon Liquor Control Act on which Measure 91 appears to be based, and federal law all call into question the preemptive effect of Measure 91. Consequently, if the legislature does not act to clarify and preserve local control, local governments are likely to face litigation regarding their authority to regulate, prohibit, and tax recreational marijuana facilities, resulting in uncertainty for local governments, business owners, and residents alike.
In February, the editorial board of The Oregonian, the largest newspaper in the state, came out against Winters’ bill, saying:
It violates the will of Measure 91's supporters by saying a local governing board can ignore a statewide directive, potentially creating a patchwork of sales areas and undercutting the product availability needed to overwhelm the black market. Measure 91 allows a majority of voters within a jurisdiction to ban pot sales. The senate bill also leaves open the amount any municipality might choose to levy as a tax, thereby adding to the retail cost of marijuana and potentially driving legal customers to a less expensive black market. In these and other respects, the bill defeats Measure 91's first and best purposes. The Legislature should reject it in its current form.
Russ Belville, executive director of Portland NORML, said in a statement: “For the legislature to subvert the clear language and intent of the people is a threat not only to the viability of Oregon’s legal marijuana market, but to the very foundation of Oregon democracy.”
Winters’ bill is currently in a Senate committee.
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