In anticipation of the July 1 legalization of recreational marijuana, public and private entities have spent the past year preparing for what could be a financial windfall. Unfortunately, the City of Bend has not been one of those, even though a number of business owners in town already are positioning themselves to tap into the enormous financial opportunities this change brings (like the owner of Astro Lounge who smartly has registered BendBudTrail.com).
But so far, the City of Bend has not made any gestures towards positioning itself to financially benefit from the legal sale of recreational marijuana. It is not necessarily too late, but the train certainly is pulling out of the station.
Two weeks ago, the Oregon legislature (not a moment too soon) tentatively agreed to an amendment to Measure 91 that would allow cities and counties to collect some tax revenue from the sale of recreational marijuana. Although this deal does not fully answer what control cities and counties will have over the recreational use and sale of marijuana, it does present one potential answer to how cities may benefit.
Measure 91 plainly stated that the state—and not cities—would be able to collect a harvest tax on recreational marijuana; subsequently, the state legislature is discussing a 20 percentsales tax that could trickle down to cities and states.
In anticipation of the passage of Measure 91, dozens of cities throughout the state had the foresight last summer and fall to approve ordinances setting in place taxes on the sale of recreational marijuana (medical marijuana remains exempt from state and local taxes). By setting that tax in place before Measure 91 was passed in November, those cities—70 throughout the state, but not Bend—gambled that their ordinances would be grandfathered into existence. Many of those cities—like Medford—were adamantly opposed to legalization, yet had the acumen to set in place a sin tax.
Under a compromise approved by negotiators from the state legislature earlier in June, cities may be able to collect as much as a 3 percent sales tax (the remaining 17 percent will go to the state to fund education and law enforcement). Under the proposed deal, any local taxes would have to be approved by voters in a city or county.
To be left out of those potential tax opportunities would be a big loss. As we have recently seen, a mere one percent increase approved by voters on the Transient Room Tax (TRT) has generated tens of thousands of public dollars for a Cultural Tourism Fund, money earmarked for local art organizations to market their events outside the region.
The Oregon Liquor Control Commission, which will oversee the sale of recreational marijuana, has estimated that nearly $20 million will be reaped over the first two years of recreational sales, an estimate that will channel $3 million to various cities. Even those generous numbers seem low to us, as the State of Colorado is on pace to rake in $70 million from taxes on recreational marijuana (granted, their taxes are 28 percent).
The door has not fully closed on these opportunities. The state legislature is still debating what role and benefits cities can and will reap. It is high time for Bend's City Council to move away from its passive position, take a leadership position, and lobby state legislators like Knute Buehler to allow cities like Bend, who didn't have the foresight, to get a piece of the tax pie.