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