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City Council passes pot tax

City Council issues preemptive tax following lead of other Oregon cities

The Newberg City Council followed in the footsteps of a growing number of Oregon cities at the Monday meeting in passing a preemptive tax on marijuana sales.

Although the issue was almost tabled when no councilor volunteered a motion to waive the second reading, upon a reminder that Ordinance No. 2014-2777 needed to be in place before the Nov. 4 election, Councilor Bart Rierson decided on second thought to move forward and continue with discussion.

The theme of the council’s concerns was the unknown. As a preemptive tax, it’s not known for sure that Measure 91 — legalizing marijuana in Oregon — will be approved. Taking action Monday night ensured the possibility for Newberg to collect additional taxes on potential future sales — 5 percent on medical marijuana and 10 percent on recreational sales.Photo Credit: PMG FILE - New tax - The Newberg City Council voted Monday to impose a preemptive tax on future marijuana sales.

“Ballot Measure 91 does have language that indicates there is a preemption of an imposition of taxes. As I’ve said to the council, it’s not certain that this will be upheld by the courts,” said City Attorney Truman Stone. “Clearly if the council did not adopt a tax measure prior to the effective date of the ballot measure, assuming the ballot passes, the city will clearly be preempted. It appears under the language of Ballot Measure 91 there is an opportunity to implement a tax in place prior to the effective date.”

What is also not known is if the tax would hold up in court if the measure passes. It’s possible, Stone said, that the tax would be invalidated and the city would have to return any collected funds.

“Basically what you have before you tonight is an opportunity to capture new revenue,” said City Manager Jacque Betz. “We don’t know what’s going to happen with the election in November, but essentially by getting this in place now the city manager and city attorney will be following this in the next few months and come back to you and say, `OK, we are ready to start collecting this revenue.’”

Councilors Mike Corey and Rierson agreed with this logic.

“To me this is cheap insurance,” Rierson said.

Councilor Ryan Howard was the only councilor to speak out directly against the measure, citing numerous reasons, among which included the potential to discourage new businesses.

“I think it does send the wrong message to folks who want to locate a business here,” Howard said. “I would rather have folks not need to drive out of our community to purchase something that will potentially be legal.”

After an hour of discussion and questions, the council voted to pass with Howard and Denise Bacon against and Stephen McKinney refusing to vote and abstaining.

“I’m opposed to the whole concept from beginning to end,” McKinney said.

Regardless of if Ballot Measure 91 passes, the ordinance will still potentially implement a tax on medical marijuana sales beginning Nov. 5.

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