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New year brings changes to state marijuana program

Retail applications open Jan. 4; local taxes likely tossed out


The new year brings inspiration and change, but in Oregon it also signals the next phase in the recreational marijuana market.

Since the recreational market opened in October, people have been able to buy marijuana from medical dispensaries tax free. As of Jan. 4, that changes. Medical purchases remain tax free but recreational sales carry a 25 percent tax.

Online applications become available Jan. 4 for recreational marijuana outlets. This includes six types of permits, from growers, processors and wholesalers to retailers and laboratories.

The number of applications are unlimited, Mark Pettinger, Oregon Liquor Control Commission spokesman said, unlike Washington which capped its retail licenses.

“We'll be handling those in kind of the supply chain,” Pettinger said.

So a grower's application will be processed before a retailer's.

“We're not expecting the application to be perfect. There's going to be some trial and error,” he said of the online system. “The application tool allows for private communication between the investigator and the applicant.”

Say a grower forgets to include the name of the person providing funding. Rather than deny the application, the investigator can contact the applicant and ask for the additional information.

“The whole focus of this it to have a dialogue between the two parties, essentially us and the applicant, because we want them to be successful,” Pettinger said. “It won't be enforcement, it will be education and compliance we will be focusing on.”

Permits will cost $250 regardless of the category, but secondary fees vary from there. A grower with up to 5,000 square feet of indoor space or 20,000 outdoor will pay an additional $3,750. Retailers, wholesalers, processors and laboratories pay $4,750.

“The program has to pay for itself. Likely over the course of time we'll adjust those fees,” Pettinger said. “We're not supposed to exceed the (administrative) cost.”

Taxes

Once recreational marijuana stores begin opening, possibly by October 2016, the tax rate will drop from the original 25 percent rate. The state will collect 17 percent, and there's a 3 percent local option.

The local option might be troublesome for individual cities which passed their own marijuana tax. Pettinger said the state structure voids any local tax.

“Local jurisdictions should be aware of the law ... the taxing authority rests with the state and not with local jurisdictions,” he said.

The majority of Oregon cities approved a 10 percent recreational sales tax and a 5 percent medical marijuana tax.

The city of Gresham discussed the issue Dec. 8, acknowledging its local tax ordinance conflicted state law, and is scheduled Jan. 5 to review amendments. A tax on medical marijuana might pass muster because the state doesn't specifically address a tax on medical sales. There are no current taxes on medical marijuana, although the issue could be raised in 2016.

To implement the 3 percent local option, cities have to refer to the the issue to voters.

For now, the only change consumers will notice is the 25 percent tax on recreational sales. The consumption and possession rules remain the same, and Pettinger said the OLCC is working to compile a comprehensive "frequently asked questions" segment on its website.


KSword@theoutlookonline.com

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