PHOTO ILLUSTRATION BY KATHY HUGGINS/Itemizer-Observer
Law enforcement officials in Polk County have concerns about Measure 91, a proposal to legalize recreational marijuana.
As of Wednesday, October 8, 2014
INDEPENDENCE — In his 35 years in government work, David Clyne said he never thought he would be having a conversation with a council about taxing marijuana.
But that was just the sort of conversation the city manager had with the Independence City Council at a special meeting on the morning of Oct. 1.
The city council unanimously passed an ordinance to tax the sale of marijuana, both recreational and medical, in preparation of the Nov. 4 vote on legalizing recreational marijuana.
Because the sale of recreational marijuana is not legal — but might be if Oregon voters pass Measure 91 on Nov. 4 — the tax ordinance may not be needed at all.
Under Measure 91, cities may not tax the sale of marijuana, but city leaders hope that by having an ordinance in place prior to the election, it could be grandfathered in.
“What we’re doing here is preserving our right under home rule to establish a tax,” said Mayor John McArdle. “There is (language) in the measure, a pre-emption about taxation. If cities have an ordinance already in place, we may be able to be grandfathered in.”
The ordinance to tax the sale of marijuana was not an endorsement of the measure or of marijuana by the city, McArdle said.
“This is about taxation,” he said. “Voters will decide the measure.”
Under Measure 91, the state will tax the sale of recreational marijuana, as it does with alcohol and tobacco products. The state distributes revenue from those taxes to cities based on population.
“It’s important that we preserve our rights,” said Councilman Jerry Hoffman. “We need to establish the tax to pay for our enforcement, because the state will likely not give us the money to do that, so we better be prepared to do it ourselves.”
City attorney Lauren Sommers, who was included in the meeting via a conference call, noted that the way the measure is written, 10 percent of the tax will go to the cities, 10 percent will go to counties, 40 percent will go to the state’s school fund, and the rest is distributed to various programs.
Until July 2017, that money will be based on the city or county’s population, she said. After that, it will be based on the number of marijuana licenses.
“If you have no licenses, you arguably get no money (after July 1, 2017),” Sommers said.
A separate ordinance sets the tax rate, Clyne said. The rate was set at 10 percent tax for recreational marijuana and 0 percent for medical marijuana.
Councilman Tom Takacs was conflicted about allowing any language about taxing medical marijuana. Even if Measure 91 does not pass, Takacs said the city would have established a tax on medical marijuana.
“Even if we set the rate at 0 percent, it opens the door to future city councilors to tax medical marijuana,” he said.
The marijuana tax ordinance will take effect Nov. 1, 30 days from the day the council adopted it.
At either its Oct. 14 or Oct. 28 meetings, the council will discuss the possibility of amending the ordinance to include establishing a tax on marijuana sold illegally.
Councilors had a lot of questions about how this would work. Clyne said it was similar in nature to tax evasion.
People selling marijuana illegally are not paying taxes on it. If there was a city tax, they also would be evading paying the city tax, he said.