Cities, counties sort out taxes, laws around recreational pot

Independence to prepare ballot measure to collect 3 percent sales tax on marijuana sales in town

POLK COUNTY — Between Feb. 1 and March 4, the Oregon Department of Revenue collected $3.48 million in taxes on recreational marijuana.

Part of that — 10 percent to cities and 10 percent to counties — will be distributed to Polk County and its cities, based on population.

At least until July 2017, when distribution will be based on the number of licensees.

And in Dallas, where development codes prohibit businesses that do not comply with federal law, essentially banning marijuana businesses, none of that money will come.

Dallas, Falls City, Independence and Monmouth city councils each passed a local tax on both medical and recreational marijuana in 2014 prior to Measure 91 passing, in an attempt to boost general funds and pay for additional law enforcement.

Those laws are null and void, said Mark Pettinger, marijuana spokesman with the Oregon Liquor Control Commission.

“There is an opportunity for local cities and counties that do license recreational sales to tack on a local sales tax up to 3 percent,” he said. “That has to be referred to local voters. It can’t be done automatically.”

According to the Oregon law on marijuana, a 3 percent local sales tax may be approved by

Tax distribution

The revenue from the sales tax on marijuana will be split up by:

• Common School Fund: 40 percent.

• Mental Health Alcoholism and Drug Services: 20 percent.

• State Police: 15 percent.

• Cities that have not opted out: 10 percent.

• Counties that have not opted out, for law enforcement: 10 percent.

• Oregon Health Authority: 5 percent.

voters in a general election, so cities and counties will have to wait two more years if they don’t get a measure on the ballot for November, Pettinger said.

Independence City Recorder Karin Johnson said the city is already working on a measure for the November ballot to approve a 3 percent sales tax.

Independence has two medical marijuana dispensaries, Blackbird Indica and Healing Green, both of which have sold recreational products since Oct. 1.

At the end of the year, medical dispensaries will not be able to sell recreational products, Pettinger said, but recreational sellers will be able to offer medical-grade cannabis products.

“It is expected that many medical marijuana dispensaries will be converting to recreational license retail stores,” he said. “The idea is to still be able to provide medicine to folks who have a medical need for cannabis.”

The city of Monmouth has not put any restrictions on locations for either medical dispensaries or recreational stores, Monmouth City Manager Scott McClure said, noting that a shop could locate anywhere on Main Street in downtown, for example.

“A couple retailers have tried, but couldn’t work out anything with the land owner,” he said.

Dallas has not passed an ordinance against marijuana dispensaries or retail shops, but has relied on the development code to prevent marijuana business because it does not comply with federal law.

“The fact of the matter is, until the feds change their laws and make it so it’s not against the law, it’s going to remain in place as far as the city council is concerned,” Dallas City Manager Ron Foggin said.

Pettinger said cities have to go through the formal process of opting out, including sending an opt-out waiver to the OLCC and putting it on the ballot during a general election.

For those cities and counties where 55 percent or more voted no on Measure 91, an ordinance may have been passed by Dec. 27, 2015, opting out of allowing marijuana licenses. Polk County voters did not fall into that category.


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