Oregon nailed it with Measure 91. That initiative is business-friendly and has a tax structure that works for both marijuana businesses and consumers. Unfortunately, Measure 91 is being pulled apart by the Oregon legislature and may eventually suffer that same fate from the courts as well. The driving force behind some of the potentially biggest changes to the Measure have been Oregon’s cities and counties clamoring for local taxes and local control.
In Oregon Municipalities Seek to Tax Recreational Marijuana, But Can They? we contended that any municipal or county tax would conflict with Measure 91 and thus should be deemed unenforceable. Measure 91 also makes clear that cities and counties cannot ban recreational marijuana businesses outright. They must instead first put any proposed local ban to a vote of the people prior to implementation. These are some of the many reasons we like Measure 91: it was written so as to prevent cities and counties from putting a strangle-hold on the local development of the marijuana industry for political reasons or to pander to NIMBYs.
But now a number of Oregon cities and counties are seeking to contravene the will of the people and are demanding that the Oregon legislature change Measure 91 to allow for local marijuana taxes. Various Oregon cities and counties also are seeking the power to ban recreational marijuana businesses if they so decide.
These cities and counties are now threatening legal action, hinting to the legislature that existing state and federal laws could undo certain provisions of Measure 91, perhaps all. Rob Bovett, legal counsel for the Association of Oregon Counties, presented the legislature with an 8-page legal memo laying out the arguments that would allegedly undermine Measure 91 should the cities and counties not get their way. That legal memo argues that state law does not prevent cities and counties from opting out of Measure 91 nor does it prevent them from tacking on additional taxes for recreational marijuana. The memo asserts that federal law voids Measure 91 and that if the legislature does not submit to the city and county demands, we should expect to see Measure 91 subjected to court challenges. Trust us when we tell you this would not be the first time the question of whether or not a city or county can opt out of state marijuana legislation is headed for the courtroom.
Thus far, at least one Oregon county is seeking to use tight zoning regulations on marijuana businesses to limit how many marijuana businesses can operate in that jurisdiction. At least one Oregon city is considering strictly controlling how many marijuana facilities can operate within its city’s borders. Whether the legislature or the courts change Measure 91, the worry for marijuana businesses now has to be whether Oregon cities and counties will make operating a marijuana business so onerous and cost-prohibitive as to enact de facto bans. If the Oregon legislature or its courts allow for local taxation of recreational marijuana businesses, that will only make it that much harder for those businesses to compete against existing medical marijuana companies and, more importantly, against illegal marijuana operations.
These city and county power grabs are old hat for our Washington State marijuana lawyers and our advice to you is to hunker down and get ready for some long drawn out legal battles ahead. One thing is certain though: if Oregon cities and counties succeed in securing free reign over local taxation and the ability to ban marijuana businesses, Measure 91, the will of the Oregon voters, and what could have been the country’s best marijuana regulatory regime will all be badly hurt.