Crime risk and potential lawsuits discussed

SPOKESMAN PHOTO: JAKE BARTMAN - The Wilsonville City Council has yet to decide whether it will retain an ordinance which prevents marijuana-related businesses from establishing themselves in the city.Cash was on the Wilsonville City Council’s mind at a work session Nov. 2, where it discussed whether or not to continue to prevent marijuana-related businesses from taking root in the city.

“The part that gives me pause is the banking piece. It’s not the marijuana piece,” said City Councilor Charlotte Lehan. “That’s where the crime is.”

Lehan was speaking to a side effect of Measure 91, which legalized recreational marijuana across the state. Although recreational marijuana is legal in Oregon, banks risk being accused of money laundering if they accept cash from marijuana-related businesses for as long as marijuana remains illegal on the federal level.

That means that marijuana businesses in Oregon have been forced to conduct their transactions entirely with cash, which makes them prime targets for robbery.

Lehan said that the city’s proximity to Interstate 5 makes it an especially risky place to operate a cash-only business, given how easy it would be for criminals to get out of town.

“If the banking issue is addressed, then it would be easier for me to be enthusiastic about (allowing marijuana businesses),” Lehan said.

The council was granted a certain measure of authority with respect to the question of whether marijuana businesses should be allowed in the city after House Bill 3400 was passed, giving cities more of a say in how Measure 91 would impact communities.

“There was a lot of effort on the part of the lobbyists for legalizing marijuana to take away local controllability and to make this strictly regulated by the state,” Assistant City Attorney Barbara Jacobson said.

HB 3400 allows cities in counties where at least 55 percent of voters cast their ballot against Measure 91 — like Wilsonville — to ban marijuana businesses by a public vote in November 2016. In the meantime, city governments can bar marijuana businesses from establishing themselves.

“This was the compromise they came to, saying, ‘We will let local governments opt out of this and effectively ban it by ordinance, but if they do so, they have to refer that ban to voters,’” Jacobson said.

At present, marijuana-related businesses are kept from establishing in Wilsonville by the City Council’s Resolution 2527, which extended in April an ordinance that bars indefinitely issuance of business licenses to businesses which violate federal law. That approach is not without risks, however, since lawsuits against alleging that such ordinances are illegal have been brought against several Oregon cities.

Pending one such case in the city of Cave Junction, Oregon, which is currently in the process of being appealed, it’s unclear whether that approach will prove a safe one for the city.

Jacobson noted that a city might make use of HB 3400 in the interim, however.

“One of the things that some jurisdictions are doing is they’re taking advantage of House Bill 3400 and enacting (a temporary ban), and if that decision comes out on Cave Junction before the vote comes up, you can always repeal the ordinance,” Jacobson said. “So you’re not committed one way or another until it actually becomes time to put it on the ballot.”

That means that the city could enact a ban on marijuana-related businesses at least until November of next year, with the possibility of extending the ban indefinitely if the court of appeals rules that ordinances barring businesses that violate federal law are legal, or if voters elect to keep out the businesses indefinitely. That approach appealed to members of the council.

“My thinking is, personally, moving toward thinking the greatest protection might be to file under (HB) 3400, watch the appellate court decision and maintain our business license posture as long as that appears viable, knowing that we can pull back from the 3400 at any time we need to,” said Wilsonville Mayor Tim Knapp.

“I’m concerned that we’re more exposed during calendar year 16 under just our current plan, and I think that that could be expensive in terms of potential issues, whether you think they’re probable or not,” he added.

By contrast, if the City Council either elected to allow marijuana-related businesses outright, or if Wilsonville voters vote in 2016 to allow the businesses, then voters will also be given the chance to levy up to a 3 percent tax on marijuana sales. The city has preemptively passed an ordinance for an 8 percent tax on marijuana, but Jacobson said that cities will likely be forced to reduce their rate of taxation to a state-imposed maximum of 3 percent regardless.

“That’s a different battle, and a more difficult battle. There’s probably stronger state arguments for preemption on taxation issues than there are on other home rule issues,” Jacobson said.

Whether revenue from a 3 percent tax would even be significant was also a matter of discussion.

“This continues to be really — I guess ‘frustrating’ is the word — that we are apparently being prevented from taxing to cover what additional law enforcement activities we anticipate maybe arising,” City Councilor Julie Fitzgerald said.

Lehan was more optimistic. “You say it’s pretty nominal — the 3 percent — but I think that it could be a lot of money,” Lehan said. But she added that banking laws would be a problem regardless: “I think it would be very hard to reliably collect 3 percent ... without a better way to know how much money is traveling through,” she said.

Although there is no definite deadline for the city to determine a course of action, resolving the marijuana question soon would preempt businesses interested in setting up shop in the city. The council had planned to reach some conclusion on the matter at the Nov. 16 meeting, but resolved to push back the issue to the first meeting of December, in part due to the anticipated complexity of discussion about the Frog Pond Area Concept Plan Nov. 16.

Contact Jake Bartman at 503-636-1281 ext. 113 or This email address is being protected from spambots. You need JavaScript enabled to view it..

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