Cities and counties in Oregon could more than triple the sales tax they charge on recreational marijuana sold within their borders under a bill scheduled for a vote Wednesday in a Senate committee.
If Senate Bill 864 is signed into law, local governments would still need local voter approval to increase the tax from its current maximum of 3% up to the 10% allowed by the bill.
According to the Oregon Department of Revenue, 95 cities and 11 counties currently tax recreational marijuana. The local tax is in addition to the 17% tax charged by the state, which would not change under the measure before lawmakers.
One of the bill’s biggest supporters is Riley Hill, the mayor of Ontario, which sits on the border with Idaho and which charges a 3% tax on marijuana. Hill said the city racks up more than 1,500 out-of-state marijuana sales each day, leading to congestion on city streets and more demand for city services.
Hill said the city’s nine recreational marijuana shops are on pace to sell more than $100 million worth of cannabis products this year.
“Three percent of $100 million sounds like a tub full of money, and it is,” said Hill. “But it is not enough money to deal with the issues that we have here.”
Other support for the tax hike stems from Measure 110, approved by Oregon voters last year. While the initiative decriminalized the possession of small amounts of some types of drugs, including meth and heroin, it also directed some existing marijuana taxes toward expansion of addiction recovery programs.
According to the League of Oregon Cities, the change in the formula will collectively cost cities and counties about $25 million this year.
But while cities welcome the potential for increasing their local marijuana tax, some object to an amendment to Senate Bill 864 that would require them to distribute 20% of the increased proceeds to their surrounding county.
“While the city of Eugene is responsible to the Eugene voters to understand what those increased revenues would be used for, as written, the amendment does not require any sideboards on how a payment to a county would be managed, expended, or reported on,” said Ethan Nelson, a lobbyist for the city of Eugene during a hearing last month on the bill.
But with only a handful of marijuana retailers located outside city limits, Lane County receives a pittance of local marijuana tax revenue compared to Eugene and Springfield, while at the same time running public health and safety programs that benefit city residents, argued the county’s lobbyist, Alex Cuyler.
“We would love to be able to have enough revenue for our sheriff to actually hire more driving-while-impaired specialists,” he said.
The bill, along with the proposed amendment, is scheduled for a vote Wednesday afternoon in the Senate Finance and Revenue Committee.