GP marijuana sales tax now up to voters in November
By Troy Shinn of the Daily Courier
The Grants Pass City Council gave a thumbs-up on Monday to putting a measure on the November ballot asking voters to decide whether they want a local sales tax on marijuana.
The city has been without a local sales tax of 3 percent since a higher tax of up to 10 percent had to be repealed by the City Council last June over its dubious legality.
Since then, the city has been missing out on tens of thousands of dollars in revenue.
At a presentation Monday, City Attorney Mark Bartholomew said that, based on the best financial research available, each retailer can bring in $15,000 to $25,000 per year. With three local retailers, Grants Pass could be missing out on as much as $75,000.
Officials are well aware of the opportunity that money represents.
"This is a chance to get in on some additional revenue," Bartholomew told the council.
The city can place a marijuana tax measure on the ballot only in even numbered years in the general election. To get a tax in place for next year, voters would need to approve the measure this November. If not, the city has to wait until 2020 to try again.
Passage is likely, since every municipality that has referred a tax measure to voters thus far has passed, and easily, Bartholomew said.
The council plans to seize on the opportunity this year. A final vote formally approving the ballot language is expected in a few weeks.
"I'm in favor of doing it and at 3 percent, let's go for the max," said Councilor Roy Lindsay.
If approved, the local tax would take effect January 2019.
In 2014, the council enacted a 10 percent tax on retail recreational sales and a 5 percent tax on medical sales, just before Oregon voters approved Measure 91, which legalized recreational cannabis.
The local tax was on shaky legal footing for a number of reasons following a 2016 effort by the Oregon Legislature to establish rules on marijuana sales taxation.
State law says that cities and counties, can add up to a 3 percent tax on top of the statewide 17 percent sales tax. Those taxes also can be applied only after voter approval.
Grants Pass, in enacting a tax that was higher than allowed by law and based on a council vote rather than a public one, was not in compliance with state laws — a fact that local retailers were aware of.
When Grants Pass' first two cannabis retailers opened for business last year, the city initially tried to enforce the higher tax. One of the stores was collecting it from customers, but another refused on the grounds that it was illegal.
Fred Tamayo, owner of Southern Oregon Cannabis Connection, did not charge customers at his store for the local rate and threatened to sue the city if it insisted on enforcing the tax.
The city's position was that, if contested in court, the higher tax rate was valid because it was enacted before the lower tax rate was set by the Legislature, therefore the local rate could be grandfathered in.
However, officials quickly walked back that stance and repealed the tax altogether after Tamayo's threatened legal action. Officials came to the conclusion then that state law was "clearly meant to pre-empt any local taxes," Bartholomew said in June.
The only other retailer at that time, Diamond Cannabis — which was charging the tax on the grounds that it didn't want to upset officials — said it has since reimbursed customers or donated the tax money that it collected to a local charity.
Reach reporter Troy Shinn at 541-474-3806 or firstname.lastname@example.org