Two bills introduced in the Oregon Legislature to allow cities to boost revenue from the tax on retail marijuana sales were heard in committee on Thursday, and testimony pitted city officials for the bills against marijuana industry representatives opposed to them.
Lead-off witnesses before the House Revenue Committee were from Ontario as the bills were introduced by Rep. Mark Owens, R-Crane, at the request of city officials.
House Bill 2014 would distribute marijuana funds revenue by population and location of the city, based on its share of retail sales of marijuana items in Oregon. Currently distribution is based on population and the number of licensed marijuana businesses.
House Bill 2015 would allow local governing bodies to raise local tax on the sale of marijuana related items from the current 3% up to 10%. A committee assistant said a tax increase would need to be approved by the governing body and then go the voters.
Ontario officials speak in favor
Speaking first was Mayor Riley Hill, noting that Ontario is the second-largest retailer of marijuana in Oregon behind Portland, realizing about $1 million a year in sales. He estimates about 90% of those sales come from Idaho, but did not provide evidence to support that claim.
The impacts on Ontario include traffic, infrastructure, public safety and homelessness, Hill said.
City Manager Adam Brown during testimony said that raising the tax to 10% would leave the tax lower than neighboring states, such as California and Washington. However, that is not entirely the case, as the 10% local tax would be added to Oregon’s 17% already charged, for a total of 27%. Taxes can vary in California from 23.25% up to 38%, depending on the local tax. In Washington state, those goods are taxed at 37%.
John Kirby, Ontario City Councilor, also commented on homelessness. Homeless issues have grown, he said, adding there are problems with vandalism and shoplifting. Ken Hart, also on the City Council, said, “[A tax increase will] benefit any city in Oregon.”
Cydney Cooke, other opponents testify against bills
Ontario citizen Cydney Cooke, who also serves on the Ontario planning commission, submitted testimony in opposition of both bills ahead of the public hearing. Her letter stated that while she supported lifting the recreational ban on marijuana several years ago, she does not support the city getting any more money. Reasons cited included that the money that has been received to date has not been used “to make any improvements to the lives of citizens,” including spending any of it on addressing issues, such as the homeless population.
“Our own Mayor who suggested the lobbying for the passage of this bill is currently suing the City, with his business, over $500 when he rightfully owes more for his failure to maintain his property,” reads her letter. “This is ridiculous and a misuse of power.”
She stated that a more reasonable bill should be sought adding concluding that “Right this moment, the City of Ontario is not ready, willing or deserving.”
Also speaking in opposition was Casey Houlihan, representing marijuana retailer in Oregon, talked about the struggle legal retailers have in Oregon in competing with the black market.
She said raising taxes would cause an increase in prices on marijuana making legal product less competitive.
“We feel that such a steep increase in the cost of retail cannabis is likely to displace a very large and significant percentage of consumers from the legal market,” Houlihan said in his subtitled statement.
During his testimony he expressed concern about the safety of product from the black market, which may not be tested for contaminants and sellers who may not be checking to see if their buyers are at least 21.
Portia Mittons, a retailer in Sumpter, said while the opening of dispensaries has been good for Ontario, it has not been good for her but that she is OK with that. She, too, said higher retail taxes would send people to buy from the black market. Higher taxes would be counterproductive, she said, and not keep money in Oregon.
League of Oregon Cities is split on bills
Representing the League of Oregon Cities, Mark Gharst is opposing HB 2014 because it would take money from some cities and give it to others.
But, the league fully supports HB 2015, allowing cities to raise their tax, which will be needed, he said.
In his submitted testimony, Gharst said Ballot Measure 110 which decriminalized drugs, passed by voters in November, will also cause a massive shift in the allocation of state marijuana tax distributions.
“Cities and counties will lose $45.7 million in state revenue for the 2021-23 biennium, a reduction of almost 72%,” Gharst said. “Before Measure 110, cities and counties would have each received 10% or about $63.7 million for the biennium total. Instead, locals will receive $18 million.”
Commenting that cities will already struggling with not having enough revenue, Gharst said, “cities need House Bill 2015.”