The Southern Oregon Marijuana Initiative

oregon marijuana cannabis
Local grower tax: good idea?

The regulation of state-legal cannabis differs from any other commodity. One of the more interesting and consequential differences is the degree of autonomy and control that states tend to give local jurisdictions (cities and counties) with respect to commercial cannabis activity. Local jurisdictions are often allowed to tax cannabis sales, for example; to license marijuana businesses; and to opt out of marijuana activity altogether. This is different than what is allowed or accepted with standard commodities (think: apples, flowers or chewing gum), or even with restricted commodities (alcohol, tobacco or lottery tickets). The reason that local jurisdictions have such wide latitude regarding marijuana is simple: federal prohibition.

Along these lines, the Association of Oregon Counties (AOC) recently offered an unusual proposal for the local regulation of cannabis. The proposal is called the “Southern Oregon Marijuana Initiative” (the “Initiative”) and it would amend Oregon statutes to allow the five most economically distressed Oregon counties to impose a marijuana production tax on licensed growers, in order to fund law enforcement efforts vis-à-vis the local black market. (For some background on the Oregon cannabis black market, and Oregon’s cannabis oversupply issue, see our coverage here).

The Initiative follows an attractive logic model. It observes that the counties at issue have suffered tremendous fiscal hardship since the local timber industry faltered. The counties also comprise a banana belt for cannabis, with perfect soil and climate, and an established and pervasive culture of illegal cannabis farming. The Initiative thus observes that:

“the marijuana industry has largely replaced the timber industry as the natural resources economic engine in Southern Oregon. However, unlike the timber industry, the marijuana industry does not substantially contribute to public services in Southern Oregon, including, but not limited to, the very law enforcement and code enforcement services needed to help the industry survive and thrive….”

It is indisputable that the counties cited by AOC suffer from a lack of public services, from law enforcement to libraries. This problematic reality, along with the following factors, conspire to make the AOC pitch all the more timely: 1) recent pressure on state-legal marijuana from the federal Department of Justice; 2) Oregon U.S. Attorney Billy Williams’ stated concern with overproduction and black market production; and 3) the lack of state budget allocation for increased enforcement against illegal cannabis operators. Against this challenging backdrop, local actors like AOC are proposing creative local regulation, in an attempt to fill the void.

Whether the Initiative has any chance of finding its way into law is an open question. In our view, however, it likely to fail. Southern Oregon pot growers have well known lobbies that will likely oppose the Initiative for a myriad of reasons, from taxation to a broad desire to combat further regulation. Also, with the short legislative session beginning February 5, there will be few opportunities for movement on cannabis legislation (right now, we are looking at a possible hemp bill and a gut and stuff marijuana bill, which may or may not amount to anything).

Still, it is fascinating to see the effect that federal prohibition has had on the law and policy efforts surrounding cannabis, all the way down to sparsely populated locales. The recent federal emphasis on overproduction and illegal export has only accelerated these conversations. Although it is well established that supply-side drug control has never worked, the federal government has nonetheless told its lawyers: “feel free to enforce the laws of prohibition.” It seems that local jurisdictions—including those awash in cannabis—may be thinking along those lines as well.