City Council repeals sales tax on recreational pot
GRANTS PASS — The City Council has repealed a 10 percent sales tax on recreational marijuana products that ran afoul of state law.
The tax, which was being collected throughout May at one of the two new marijuana retail stores in the city, was too high to be in line with state statutes. State law says cities can impose up to 3 percent on local sales if voters approve of the tax.
The City Council approved the 10 percent tax just before Oregon voters approved the legalization of recreational cannabis.
"I just wanted to clarify that these taxes were passed before Measure 91," Council President Dennis Roler said Wednesday.
City Attorney Mark Bartholomew previously said the council was presented with an update on the status of the state statutes and their conflict with the local tax last year. By then, the state Legislature had enacted a 17 percent state tax on recreational sales with a provision that cities and counties could also charge an additional 3 percent.
The city chose to take the stance that, since the local tax predated passage of Measure 91, the 10 percent rate could be grandfathered in if it was contested.
This wasn't much of a problem until Grants Pass saw its first marijuana retailers open this year.
The owner of Southern Oregon Cannabis Connection, Fred Tamayo, told the Daily Courier that he refused to charge the tax because it was illegal. He was also preparing to contest the tax in court if the city insisted on collecting it.
Officials backed down from the position that the tax had good legal footing to be grandfathered in.
"The state law clearly intends to pre-empt any local taxes," Bartholomew told the council Wednesday.
The city never did collect on the 10 percent sales tax, and has since told retailers to stop charging it. A 5 percent tax on medical marijuana apparently was never enforced. State law bars taxes on medical marijuana.
The City Council voted unanimously to repeal its local tax. It could place up to a 3 percent recreational tax on the ballot for voters to approve next year, however. For now, there is no local tax. Left unresolved is what to do with the money that customers at the other cannabis retailer in town, Diamond Cannabis, were overcharged because of the tax during the month of May.
Owner Carrie Boltz has said that her store collected the tax, not wanting to ruffle feathers with the city while enjoying its highly visible location on downtown Sixth Street.
She conceded that she was aware of the problems with the tax, and Boltz told the council on Wednesday that charging the tax wasn't easy.
"I wanted to express as a business owner that it has been very hard to explain why I charged this 10 percent tax to my customers," she said. "I'm looking forward to getting some clarity for my customers and also for myself."
Diamond Cannabis has previously stated that it will work with any customers who come in with questions about being overcharged and those who still have receipts and want to be reimbursed.