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Brookings considers 3 percent pot tax

Brookings City Council might put a question on next May’s ballot asking voters to implement a 3 percent tax on the sale of recreational marijuana, it decided last week.

But first, it needs a reason for the revenue it would generate, said Mayor Ron Hedenskog.

“I don’t see anything wrong (with a tax),” he said. “But we need a plan. I can’t just take money, throw it in the general fund and have a party.”

He suggested any tax money fund the numerous parks and recreation projects the city would like to pursue.

“This is a slippery slope,” said Councilor Brent Hodges. “If we start over-taxing things, it’s just going to push it into the black market. It would be ironic if we could fund our Sheriff’s Office with tax revenue from recreational marijuana.”

Earlier this month, the state issued a 125-page report outlining how recreational pot sales will be managed in Oregon, after voters last November approved its use. Twenty-three states and the District of Columbia have some sort of legislation in place legalizing marijuana; four states — Colorado, Oregon, Alaska and Washington — have legalized the recreational use of the herb.

Recreational marijuana sales might begin in October following passage of a bill by the Legislature that awaits Gov. Kate Brown's signature.

Under the terms of the report, Oregon will tax recreational pot 17 percent starting in 2016; medical marijuana will remain untaxed. And governments — cities and counties — can add up to 3 percent tax on top of that. The Oregon Liquor Control Commission will be in charge of collecting the taxes.

It is uncertain whether the county could implement a 3 percent tax as well, bumping local pot tax rates to 6 percent — or 23 percent total.

A tax rate that high could deter people from obtaining pot legally, and instead nudge them toward the black market to avoid paying sales taxes.

Brookings City Council last October established a sales tax rate of 5 percent for recreational marijuana in anticipation that voters would approve Measure 91 on the state ballot last Nov. 4. The measure was approved, 56 to 44 percent. It took effect July 1, pending the state report.

The state’s 3 percent maximum overrides the city’s 5 percent proposed rate, City Manager Gary Milliman explained during a council meeting Monday night.

The council plans to monitor sales before possibly adjusting the rate later. Washington taxes pot at 37 percent; Colorado charges 2.9 percent for both retail and medical marijuana, and an additional 10 percent for retail marijuana sales; and Alaska charges $50 an ounce.

“There’s no way to read our voters,” said Councilor Bill Hamilton. “They turned down 68 cents (per assessed valuation) to help the jail. That still baffles me.”

Marijuana prices vary depending on the variety, but medical marijuana ranges from $8 to $12 a gram, or about enough to make one to two cigarettes, said Tina Nattell, office manager at Banana Belt Safe Access Center in Harbor.

The cost of recreational marijuana is currently unknown, but in Colorado, a gram of recreational pot ranges from $12 to $30.

City Attorney Martha Rice noted last year that many expect there to be legal challenges to any taxes, and having one established before the state measure is approved will likely reduce the chances of such lawsuits.