City pot taxes too high, dispensary owner says

Sweet Relief hopes Gearhart's local retail cannabis tax will become more in line with other cities in the state.

Sweet Relief co-owner Oscar Nelson went before the City Council on Wednesday to seek some relief for a city sales tax that is more than three times higher than other cities in Oregon.

“I implore you as a city, as a council, to put the tax in line in what was stated in the statute and what the rest of the state is working towards,” he said.

In October 2014, shortly before voters approved Measure 91 — the legalization of recreational marijuana — Gearhart passed an ordinance requiring a 10 percent city tax on the sale of recreational marijuana and 5 percent for a medical marijuana cardholder.

After legalization, the state offered a mechanism for cities to charge a local tax of up to 3 percent. Municipalities may not impose a tax or fee on a medical marijuana cardholder or primary caregiver.

It wasn’t until this summer that Gearhart’s first cannabis shop, Sweet Relief, a family-owned chain of dispensaries, opened on U.S. Highway 101 near Gearhart Road.

To make a change in the city tax structure, voters would need to repeal and replace the 2014 tax, City Attorney Peter Watts said.

If voters adopt the changes, Gearhart would mirror other cities throughout the county and state, including Astoria, Seaside and Cannon Beach. Each adopted city taxes on recreational marijuana of 3 percent after the passage of Measure 91.

To put the measure on the November ballot, city councilors must schedule a special meeting and submit paperwork by Aug. 17.

If the measure doesn’t make it to the November ballot, it would have to wait until 2020. In that case, or if a November ballot measure fails, the city would need to decide whether to collect the 10 percent tax now in effect.

Right now, it’s not clear whether Gearhart’s tax will hold up to state scrutiny, Watts said. “I could not tell you if we could withstand a credible challenge to our tax law or not,” he said.

City Councilor Kerry Smith said the city’s tax should be in line with neighboring communities. “I would suggest staff put something together as soon as possible that we can adopt and send to voters in November,” he said.

Mayor Matt Brown and other councilors agreed.

Meanwhile, Nelson said he plans to pay the 10 percent required by the city.

“We would probably figure it out, but it makes it to where it’s untenable,” Nelson said after the meeting. “The margin’s dropped out of cannabis, and with all the competition so close around, we’d be able to do business — but it’s a situation we believe can be squared away.”

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