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St. Helens modeling pot tax on Scappoose

Councilors, police chief seek to avoid being 'cheapest game in town' if marijuana legalized

Photo Credit: FILE - St. Helens City Hall, where city councilors typically meet for an afternoon work session and evening meeting twice every month. At Wednesday's work session, the St. Helens City Council agreed that proposed taxes on marijuana sales in St. Helens should not be lower than they were set in Scappoose.Members of the St. Helens City Council agreed Wednesday, Oct. 1, that the city should follow the lead of nearby Scappoose in levying higher tax rates on marijuana sales than many other municipalities in Oregon have done.

The Scappoose City Council voted last month to adopt a 20 percent tax on marijuana sales in the city. The rate for sales to card-carrying customers in the state’s medical marijuana program was set at half that.

St. Helens councilors, led by Mayor Randy Peterson and Council President Doug Morten, said they want to adopt the same tax rates as Scappoose in their community.

The decision to pursue the higher rates in a draft ordinance the council is expected to approve Wednesday, Oct. 15, came after St. Helens Police Chief Terry Moss suggested the city could attract marijuana businesses if it adopted lower tax rates than Scappoose, its neighbor to the south.

“It’s also an interesting position to be in, to have a rate that’s cheaper than our neighbors,” said Moss. “And are we going to become a magnet for this sort of thing because we’re the cheapest game in town?”

Councilor Susan Conn, who said earlier in the meeting that she favored following the model of Ashland and a number of other Oregon cities that have instituted a 5 percent tax on sales to medical marijuana patients and a 10 percent tax on other marijuana sales, was initially leery of matching Scappoose’s higher tax rates.

“Then again, do we want to drive things underground and feed a black market, or do we want to be able to regulate?” she asked.

“It’s going to be a black market anyway, regardless,” Councilor Keith Locke countered. “There’s always people who want to bypass the law and the tax that we put on them.”

In contrast to Conn, Locke suggested earlier in the meeting that St. Helens should instead look to Warrenton, where city commissioners were reportedly considering a 100 percent tax on all marijuana sales — something City Administrator John Walsh called “more of a political statement” by the coastal city.

“I’m kind of in line with Warrenton,” said Locke. “Maybe all the cities and all the counties should do a hundred-percent tax and send a statement that we don’t want this, period.”

Moss expressed sympathy for Locke’s position, but counseled caution.

“I think there’s a difficult balance between a tax and forcing what I believe what could become a legitimate industry back underground,” said Moss. “By that I mean, if we put too much of a tax on it, or put a hundred-percent tax on it, people are still going to smoke pot. ... We sort of create an unintentional problem by overtaxing it.”

In the end, both Conn and Locke said they would be satisfied with a 10 percent tax rate for medical marijuana sales and a 20 percent tax rate for non-medical sales, the same rates Scappoose has adopted.

As in Scappoose, the sales tax must be paid to the city administration by sellers of marijuana on a quarterly basis.

Cities and counties throughout Oregon are moving to adopt taxes on marijuana sales ahead of a Nov. 4 ballot initiative that could legalize marijuana for recreational use in the state. Although a similar measure failed in 2012, polls suggest voters lean toward approving Measure 91 this year.

Walsh said the idea behind adopting the ordinance this month is that the taxes will be grandfathered in if Oregon voters change the state’s laws on marijuana next month. Even still, he said, “It’s very likely to be challenged.”

For Warrenton’s part, the City Commission ended up adopting a 10 percent tax on recreational marijuana sales and no tax on sales to medical marijuana patients on Wednesday, according to its city recorder, Linda Engbretson.

Marijuana is classified as an illegal substance under federal law. More than 20 states have legalized marijuana for medical purposes, however, and Colorado and Washington legalized it for recreational purposes in 2012.

Both Washington’s 6.5 percent retail sales tax, which customers must pay, and a 25 percent excise tax, which growers, processors and sellers must pay, are applied to marijuana in Oregon’s northern neighbor.

Retail marijuana stores have already opened in Longview, Wash., and Kelso, Wash., across the Columbia River from Rainier, among other places in Washington.

However, many marijuana users and retailers alike have expressed discontent with Washington’s legalized marijuana industry, citing high prices and variable quality of marijuana products.

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