Pubdate: Sun, 16 Nov 2014
Source: Seattle Times (WA)
Copyright: 2014 The Associated Press
Contact:  http://seattletimes.nwsource.com/
Details: http://www.mapinc.org/media/409
Author: Nigel Duara, The Associated Press
Page: B2

OREGON DEBATES PRE-VOTE POT TAXES

Measure 91 Sets Up Clash With State

Cities' Maneuver to Curb Dispensaries

PORTLAND (AP) - Cities scrambled to pass taxes on marijuana before a 
legalization measure went before voters. Their bet: That the taxes 
would get grandfathered in.

But Measure 91, passed by voters Nov. 4, has a clause forbidding any 
taxation on marijuana except by the state. Now, those cities say they 
are prepared to defend their taxes in court.

Attorney Dave Kopilak helped draft the law and is studying the 
response. Ashland City Manager Dave Kanner was one of the first to 
propose such a tax, which passed in Ashland this year.

Fairview Mayor Mike Weatherby was one of the supporters of his city's 
40 percent marijuana tax, which he says is intended to keep 
recreational-pot dispensaries out of the city. Cities may opt out of 
hosting dispensaries, but Weatherby said the city is trying to "cover 
all of (its) bases."

One thing they all agree on is that the Legislature, sooner or later, 
will likely have to step in.

Each took questions from The Associated Press. Their answers have 
been edited for clarity and length.

Q: Is the tax applicable under the law?

Kopilak: Somebody got it in their heads that if ordinances were 
adopted before Election Day, that there would be some sort of 
grandfathering in. That's just not true.

The imposition of such taxes is inconsistent with the main themes of 
Measure 91, which is to minimize the illegal market. If you have 
dozens and dozens of jurisdictions imposing all kinds of different 
taxes at different rates, it essentially makes any type of cohesive 
state policy impossible.

Kanner: When I first read the initiative language, it immediately 
seemed clear to me that the pre-emption language (prohibits) the 
adoption of a local tax in the future, but it does not repeal an 
existing tax. I realize that others may interpret it differently.

There's another section of the initiative that repeals any city 
ordinance or charter provision in conflict with the measure. However, 
the measure taxes production of marijuana, and our tax is a 
gross-receipts tax on retail sales. Therefore, I do not believe it is 
in conflict with the measure. Whether lawyers or the courts will 
agree with that, I don't know.

Q: What was the impetus behind the tax?

Kanner: Ashland already has a food and beverage tax, so we had a 
template for a gross-receipts tax on retail sales of marijuana. By 
the end of February, members of the City Council were asking me if we 
shouldn't be considering a tax.

Weatherby: The idea is to keep marijuana dispensaries out of 
Fairview. Absolutely. We're trying to cover all of our bases.

Q: Has the city generated a revenue estimate for the tax?

Kanner: Any numbers I could provide would be a wild guess. I'm 
showing $824,511 annually from a tax on recreational marijuana, but 
who knows? I estimate (based on Legislative Revenue Office 
projections and the formula in the ballot measure) that the state tax 
would generate $20,000 to $25,000 a year for Ashland. Weatherby: We 
have not. Q: What happens if the matter goes to court as a lawsuit 
brought by a dispensary?

Kopilak: The act allows local jurisdictions to opt out, so if you 
want to do that, then do that. But I would say, don't do it this way. 
Do it the way the act intended. On the other hand, if the city or 
county is determined to see this through, unless the Legislature is 
willing to make a change, they won't win in court. It will be 
spending tax dollars to defend a suit that's unwinnable.

Kanner: That would be a decision the council will have to make 
if/when there's a legal challenge. Bear in mind that there are now, I 
believe, about 60 cities that have adopted marijuana taxes, so who 
knows whether a testcase challenge would be in Ashland or elsewhere.

More troubling is the aforementioned provision that repeals existing 
ordinances and charter provisions that are in conflict with the 
measure. That's a direct attack on cities' constitutional home-rule 
authority that, in my opinion, should be totally unacceptable to all 
cities, regardless of how they feel about marijuana and marijuana 
taxation. I would hope that if the Legislature does not move to amend 
or remove that language, that cities and the League of Oregon Cities 
will band together to fight it.

Weatherby: It would be the same as challenging a gas tax or a city 
sales tax. Attorneys differ on this, and it's their opinions, just as 
doctors differ on their opinions. I think it would have to come down 
to what's going to happen in the Legislature.
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MAP posted-by: Jay Bergstrom