Pubdate: Sun, 26 Oct 2014 Source: Oregonian, The (Portland, OR) Copyright: 2014 The Oregonian Contact: http://www.oregonlive.com/oregonian/ Details: http://www.mapinc.org/media/324 LOCAL TAXES ON RECREATIONAL POT? NO WAY The prospect of so many Oregonians shopping in stores for once-illicit weed produces civic munchies of another kind: money hunger. A curious phenomenon has swept across Oregon: More than a dozen towns and cities have decided to tax the sale of recreational marijuana if the drug is legalized by voters on Nov. 4. That's despite the fact that no local government would be allowed to do that under the terms of Measure 91 to place a tax on the sale of marijuana. Why? Because the state already would, and handsomely, likely generating more than $30 million in the first year of legalized recreational sales - with a portion of the new state revenue sent back to Oregon's towns and cities to help out with local costs associated with policing. But fear clouds judgment. And the prospect of so many Oregonians shopping in stores for once-illicit weed produces civic munchies of another kind: money hunger. Springfield, east of Eugene, decided to slap a tax on any recreational pot sales not long after the city of Ashland, at the southern end of the state, voted to do so. Portland last week moved to adopt a 10-percent tax on all recreational pot sales after deciding, beneficently, to leave those buying medical marijuana untaxed. All jurisdictions, apparently, share the belief that by some legislative or judicial miracle local taxing authorities on pot will be grandfathered into the law. It's called the we-were-here-first strategy - to be employed only if needed. Never mind that it signals to Oregon voters they might, in their cluelessness, approve a measure seen as fiscally punitive to their very own cities. The reasons cited for local taxing center on regulating and policing new businesses that would operate as pot shops. Portland Mayor Charlie Hales told sympathetic commissioners he anticipates "extraordinary costs" associated with regulating the pot industry in Portland - this despite the fact that Measure 91 stipulates the Oregon Liquor Control Commission would collect state taxes directly from marijuana producers, leaving taxation far away from distributors and the retail shops in town. In a report by The Oregonian's Andrew Theen, Hales laid it on: "This is not just about marijuana. It's about our relationship with state government." In the same report, the city's revenue director estimated it would cost Portland as much as $1 million to ramp up an adequate system for collection of a local tax and to hire sufficient staff to field regulatory complaints. Oregonian editorials Editorials reflect the collective opinion of The Oregonian editorial board, which operates independently of the newsroom. Members of the editorial board are N. Christian Anderson III, Mark Hester, Helen Jung, Erik Lukens and Len Reed. To respond to this editorial: Post your comment below, submit a commentary piece, or write a letter to the editor. If you have questions about the opinion section, contact Erik Lukens, editorial and commentary editor, at or 503-221-8142. Local taxation flies in the face of Section 42 of the pot measure, which states: "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." For Measure 91 to have a shot at winning passage by Oregon voters, taxation provisions within it must be plain and serve the first goals of marijuana legalization. Premier among those goals - and a key reason this newspaper's editorial board has urged voters to approve Measure 91 - is to remove marijuana from criminal life and criminal enterprise. That is, do to marijuana what was done long ago and successfully to alcohol: End prohibition. But killing off marijuana's black market, in which lives are often ruined and nobody receives tax revenue, will take time. If legalized, marijuana will become a price-sensitive agricultural commodity vulnerable to market forces, like beer or wine. In plainspeak: If the retail price of legal, recreational marijuana is too high owing to the addition of local taxes on top of the state tax levied on producers, customers would have an incentive to stick with their gray and black market dealers, who operate illegally - and, did we mention, pay no taxes. A challenge already reported by one marijuana shop in Washington state is that the business is sometimes undercut by illegal drug dealers in the store's parking lot. That's called unintended consequence of the really bad kind. And yes, local police are called in for such moments, running up the tab on police service. Even without local taxes, it would take a few years for the illegal sellers to substantially give up their market share, a recent report by Portland-based ECONorthwest predicts. But legalization would remove impediments to marijuana's production and distribution statewide, bringing efficiencies that would drive marijuana's price down and ultimately work to remove pot from criminal control. That is, if it's not too expensive by being over-taxed. Oregon cities are right to fret about potential complications in regulation, store siting and policing. But it is unreasonable, and disrespectful to voters, to throw down a marker that does little but reserve a taxpayer-subsidized day in court to fight to locally tax a single product. It seems a stoner thought in its own right. - --- MAP posted-by: Richard