Salem City Council (sort of) endorses marijuana legalization

Last night Statesman Journal reporter Michael Rose tweeted:

Breaking: Salem City Council approves 10% sales tax on recreational marijuana if voters legalize it.

Today a story appeared on the SJ web site.

If Oregon voters in November legalize marijuana for recreational use, Salem will be ready with a new city tax on pot sales.

Salem City Council on Monday approved a city tax on sales of recreational marijuana products, including marijuana infused snack foods. The new ordinance would allow a 10 percent sales tax on recreational marijuana. Sales of medical marijuana were excluded from the tax.
Download Pot tax approved by Salem City Council

Hey, that sure sounds like a endorsement of Measure 91 to me, the Oregon initiative that will legalize, tax, and regulate recreational marijuana for adults if it passes on November 4.

After all, Salem's Mayor and city councilors wouldn't want to get tax revenues from marijuana sales if they didn't think legal pot was a fine, upstanding substance for Salemians to consume, right? No ethical elected official would welcome money from the Demon Weed, if they believed in this myth.

So thanks, city leaders, for giving an unspoken thumbs-up to marijuana legalization. Since you mostly are conservatives, hopefully this will spur your Republican/Libertarian compatriots to vote for Measure 91.

There's only a couple of downsides to the near-unanimous Salem City Council action (Laura Tesler was the only "no" vote).

First, it almost certainly is illegal.

Measure 91 prohibits cities or counties from imposing their own local marijuana taxes. Most attorneys I've seen quoted on this issue say it is very unlikely that passing a tax before the election would trump the legal language of Measure 91.

Second, it almost certainly is a bad idea.

Marijuana policy experts are calling Measure 91 the nation's "gold standard" of cannabis legalization should it pass. 

One reason is that the $35 per ounce taxation level is seen as being high enough to generate revenue for schools, law enforcement, and drug abuse prevention, while being low enough to draw marijuana users away from the black market.

Currently an Oregon medical marijuana dispensary is showing pricing of about $200 an ounce. So if the City of Salem were able to tax recreational marijuana sales at 10%, and the price per ounce also was $200, this would add $20 to the purchase cost.

Which would be on top of the $35 per ounce allowed by Measure 91. Now we're up to taxes totaling $55 an ounce, or a 28% "sales tax." 

Sure, many people would be willing to pay that much for certified, tested marijuana being sold in a store. However, others wouldn't. They'd continue buying on the black market.

Thus the tax imposed by the Salem City Council last night not only is an implied endorsement of marijuana legalization, it also is an implied endorsement of a stronger remaining black market (including the portion controlled by drug cartels) following the passage of Measure 91.

Comments

[Diana Dickey]

I really wrestled with last night's decision because I share the concern that if the cost of legalized recreational marijuana is too high, we risk a black market situation. Also, if we set a tax rate that is considerably higher than neighborhing jurisdictions, we potentially could miss out on revenue because the consumers will go to the more favorable market. We will have more answers after Nov. 4, and I would have no problem bringing this issue back to the Council, when we have a clearer understanding of the new law and how it will be implemented in OR and in our community. I would not agree that our decision last night was any sort of collective endorsement or impllied endorsement for Measure 91. We are all learning about this issue, and thankfully, were able to resolve the dispensary issue last night and give those businesses some certainty and ability to operate legally in Salem.

[Brian Hines]

Diana, I can appreciate that this was a tough decision. It's understandable that the city council would want to look for ways to bring in more revenue. And quite a few other cities in Oregon have jumped on the marijuana taxation gravy train already.

But like you said, increasing the cost of legal pot makes buying on the black market more appealing. Fortunately, this issue probably will be moot if Measure 91 passes, since taxation by cities and counties almost certainly will be found illegal by courts.

My "implied endorsement" language was decidedly tongue-in-cheek, of course. Well, not totally, but mostly.

I do think, though, that if a local elected official really finds the notion of legalized marijuana to be repulsive, he or she shouldn't vote to tax it -- since this means the more pot is consumed, the more money flows into the local government coffers.