40 percent tax on marijuana sales? Fairview hopes to dissuade sellers after Oregon makes cannabis legal

40 percent tax on marijuana sales? Fairview hopes to dissuade sellers after Oregon makes cannabis legal


Now that Oregonians have voted to legalize the possession and sale of marijuana, the small suburb of Fairview east of Portland hopes to be the most expensive place in the state to buy the product.

The Fairview City Council in October anticipated Tuesday’s election outcome and approved a sales tax of 40 percent on sales of cannabis and related products. While dozens of towns have approved similar taxes, Fairview’s is the biggest on a list compiled by the League of Oregon Cities.

Mayor Mike Weatherby and some city council members toyed with setting the rate at 100 percent as a stronger deterrent to marijuana retailers opening in Fairview, which straddles Interstate 84 near Gresham.

“It’s just something we don’t need,” said Weatherby, who did not run for re-election this year.

Although use of marijuana will be permitted statewide beginning in July for people who are at least 21, retail sales likely will begin in 2016 after a rulemaking process.

“It is fair to say the whole purpose was to try to find ways to keep it out of Fairview,” said council member Tamie Arnold, a registered nurse who fought for the unusually high tax.

Arnold, who lost her re-election bid in Tuesday’s election, said she was worried about the message that legalization would send to children.

The council vote in October also established a 15 percent tax on the sales of medical marijuana. That’s the highest rate on a shorter list of cities that plan to tax sales to people with state-issued medical marijuana cards. Most cities with taxes on medical marijuana sales set rates of 10 percent or less.

Council member Steve Owen was the only vote against the ordinance, and two council members missed the vote, which came out 4-1.

“I think they were being too harsh on the folks who need medical marijuana,” Owen said.

Owen wasn’t taking a stand on the 40 percent rate levied on recreational marijuana. But he said Fairview’s marijuana tax rates might be worth reconsidering after January, when a new mayor and three new council members begin their terms.

“We can always reduce it,” he said.

A League of Oregon Cities database lists Fairview’s tax as the largest among at least 50 cities around the state that hurried to establish sales taxes on recreational marijuana before the Nov. 4 vote on Measure 91.

The ability of cities to collect the tax inevitably will be tested in court because the measure bars local taxation of the drug.The new law designates the state government as the only tax collector on marijuana sales but provides for some revenue sharing with local jurisdictions.

City leaders around Oregon believed they could avoid the measure’s restrictions on taxation by putting ordinances on the books before Nov. 4.

Scott Winkels, a lobbyist for the league of cities who has been working on the marijuana issue, said most cities that implemented the taxes wanted to preserve local control and cover costs associated with legalization. Those costs are similar to those that accompany alcohol, he said, such as nuisance issues and intoxicated drivers.

“If somebody has a complaint… it’s not going to be the state that takes those phone calls,” Winkels said.

The next largest tax on the league’s database was set in La Grande, where council members narrowly approved a 25 percent tax last week. Coos Bay’s council set a 10 percent tax but adopted an ordinance that allows an increase to 25 percent, according to the league’s data.

Fairview’s immediate neighbors might be more attractive to potential marijuana retailers looking for lower taxes. Like many cities around Oregon, Troutdale and Portland both set 10 percent taxes on recreational sales. Gresham passed an ordinance establishing a tax but won’t set a rate until next month.

Tiny Wood Village, meanwhile, won’t have any marijuana tax because its charter requires a citizen vote, and it wasn’t possible for city leaders to make that happen before Nov. 4.

— Eric Apalategui

The following list shows 49 municipalities that the League of Oregon Cities confirmed as having enacted taxes on marijuana sales. The group’s researchers found an additional 20 cities that were considering taxes as of October.

City Recreational tax Medical tax Notes Link to news article or ordinance
Ashland 10% 5%  
Aumsville 10% 5%  
Beaverton      
Brookings 10% 0%  
Brownsville 6% 6%  
Burns 10% 0%  
Central Point 10% 5%  
Columbia City      
Coos Bay 10% 10% The ordinance allows for a range of 0-25
Coquille 10% 5%  
Cornelius 10% 0%  
Dayton 10% 0% Via OCCMA email list
Fairview 40% 15%  
Forest Grove 10%   Medical is excluded from the tax
Gold Hill 10% 5%  
Gresham     The tax rate will be established by council resolution at a later meeting (Dec. 2)
Happy Valley 10% 10% City Council decided to tax medical at 10, instead of the 0 that is in the ordinance
Hillsboro 10% 0%  
Independence 10% 0%  
John Day 10% 5%  
Klamath Falls 10%   Chose not to tax medical marijuana.
Lake Oswego 10% 5%  
Lakeside 10% 5% Via The World
Lebanon 10% 10% Via Lebanon Express
Lincoln City 10%   Met 10-3 settled on a 10 recreational tax, medical marijuana wasn’t included in the approved ordinance.
Medford 8%   The ordinance has a separate tax of 8 on the production, processing and wholesaling of recreational marijuana. It would also tax retailers at 6. The city will not tax medical, because of their permanent moratorium.
Milwaukie 10% 0% Recreational sellers are entitled to retain 5 of all taxes due to defray the costs of bookkeeping and remittance.
Nehalem 10% 5% Recreational sellers are entitled to retain 5 of all taxes due to defray the costs of bookkeeping and remittance.
Newberg 10% 5%  
Newport 0% 0% Council will re-evaluate the rate if Measure 91 passes
North Bend 10% 5% Via The World
North Plains 10% 0% Second reading and final adoption on 11-3
Oregon City 10% 5%  
Oakridge 10% 5% Via OCCMA email list
Salem 10%   Medical is excluded from the tax
Sandy 10% 10%  
Seaside 0% 0% The rates will be established at a later date.
Sherwood 10% 0%  
Siletz 10% 5% Via News Times
Talent     The city council approved the taxation of recreational marijuana, but the rate has not been decided. They will not tax medical.
The Dalles 10% 5%  
Tigard 10% 5%  
Toledo 3% 3%  
Troutdale 10% 5%  
Tualatin 10% 5% The ordinance requires a gross receipts tax to be applied to all legal forms of marijuana, as well as an annual tax of $ 500 on establishments that allow consumption of marijuana and marijuana-infused products. Sellers can retain 5 of taxes due to costs of bookkeeping and remittance.
Vale 10% 5% Via the Argus Observer
West Linn 10% 5%  
Wilsonville 12% 8%  
Woodburn 10% 5%  


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