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Gold Hill City Council could tax recreational pot up to 25 percent

Sales of recreational marijuana could be taxed up to 25 percent in Gold Hill, the City Council decided Monday.

The council approved on first reading an ordinance that would tax recreational marijuana sales — if voters legalize marijuana in Oregon on Nov. 4 — at 10 percent. The tax could go as high as 25 percent with council approval, according to the ordinance. The council is set to take a final vote Oct. 6.

Gold Hill will keep the tax on medical marijuana at 5 percent in deference to patients who need medicine, said City Manager Rick Hohnbaum. But the two levels of taxation could cause problems in Oregon as it has in Colorado, which legalized marijuana earlier this year. 

"Right now, the biggest issue Colorado is having is, when they have a different level of taxation, there are people misusing medical cards as a way of going for the cheaper tax rate," Hohnbaum said. "The council has talked about keeping medicinal rates lower, but this is all new frontier, so we're figuring it out as we go along."

Brie Malarkey, owner of a Gold Hill medical marijuana dispensary called Breeze Botanicals, said the steep tax would do more to hurt small business than help city coffers.

The 5 percent tax on medical marijuana, earmarked to fund public safety, already has been a deterrent for her customers, who can obtain their marijuana at dispensaries in cities that don't charge a local tax.

To stay competitive, Malarkey refunds her customers the city tax amount they pay – $50 for every $1,000 in sales – in store credit.

"Basically, all we're doing is setting up a framework so we're not over obligating future council and establishing something before the November ballot so we have more options after the ballot."

Malarkey said state taxation is already included in Measure 91, titled the Control, Regulation and Taxation of Marijuana and Industrial Hemp Act. 

"I'm under the impression the new legislation does a flat fee, per ounce, at the manufacturer level of $35 an ounce. That's $560 per pound. So if a grower is willing to sell it to me for $1,000 a pound, they have to add that $560 tax which is earmarked to be given back to cities and counties to offset any costs. But then I'm supposed to charge another 25 percent on top of that?" Malarkey said.

"Now something that I could have gotten for $1,000 is how much?"

Taxes on dispensaries that supply cannabis would only encourage the black market that legalization seeks to end, she said.

"I'm already charging $100 more than people can go get it on the streets for. So the whole point of getting rid of the black market is missed," she said.

"With more of this type of thinking, the black market will probably continue to thrive. People will get marijuana everywhere except at the facilities that are legal to provide it."

Buffy Pollock is a freelance writer living in Medford. E-mail her at buffyp76@yahoo.com.