Oregon voters won't decide on legalizing marijuana until November, but Portland and Ashland — and perhaps, before long, more cities — are exploring whether they can tax it if becomes legal.
There is an urgency to the municipal inquiries because the legalization ballot initiative specifically reserves the right to tax marijuana to the State of Oregon. However, if cities impose a sales tax before legalization becomes effective, the tax might stick.
The perceived bonanza to government tax coffers from legalizing marijuana took a body blow when ECONorthwest estimated first-year sales would net $16 million in tax revenue, not the $38.5 million touted by the measure's supporters.
Key variables cited by ECONorthwest would be the number of licensed pot shops to open up — and the willingness of pot smokers to shift to legal, but more expensive marijuana sold in state-licensed stores. The economists predicted 60 percent of pot users would continue to shop in the black market.
The Oregon Liquor Control Commission, which would be given the job of regulating the newly legalized marijuana market, says it would need around $7 million to do its homework and write the necessary regulations.
The issue for cities is that they often see their hands tied on revenue sources by state legislative preemptions. City officials reason that marijuana-related issues bear a cost on local government and they should be able to collect some revenue to offset those costs from the sale of weed in their jurisdictions.
While government officials jockey on tax revenues, there also is a lot of discussion about quality control and labeling of marijuana and its byproducts, such as edibles. New York Times columnist Maureen Dowd created a sensation when she went to Colorado, tried out a legal marijuana candy bar and reported she felt as if she was dying. People familiar with marijuana said edibles pose a significant problem because the quantities of high-producing THC in them may vary widely and the potency may be enhanced because the marijuana is cooked.
Entrepreneurs in states such as Washington and Colorado, where voters have approved legalization, are rushing to fill consumer demand. Many are also working closely with regulators to ensure the newly legalized market provides user safeguards, which may wind up being a much bigger issue than who gets a cut from the sales.
The New York Times, in a series of major editorials, has called for a shift in federal policy on marijuana, allowing states to make up their own minds about legalization, but under a broad federal regulatory and safety umbrella. The Times editorialized that too much money is spent on prosecuting and incarcerating marijuana users who pose relatively small risk to public safety.