Cities and States Debate How to Divide Marijuana Tax Revenue

In the four states where recreational marijuana is legal, local and state governments are figuring out how to divide the tax revenue, NPR reports.

Colorado, Washington, Alaska and Oregon have approved recreational marijuana sales. Under Oregon’s law, passed in November, cities will receive 10 percent of tax revenues when sales begin next year. City leaders are already arguing they should get a larger share.

Scott Winkels, a lobbyist with the League of Oregon Cities, says that when marijuana becomes more available, cities will have to deal with negative consequences, such as drugged driving or responding to neighbor complaints of marijuana odors. “When that smoke comes wafting over the fence and somebody’s upset that their kids are smelling it, who’s going to take that call? It’s going to be your local government,” he said.

About 70 cities in Oregon have passed a sales tax on retail marijuana, hoping to bring in additional revenue, Winkels said. He notes that the state law prohibits local governments from adding their own taxes, so it is unclear if cities will be able to keep the revenue.

In Washington, where retail marijuana has been legal since July, police officers have made many fewer drug arrests, says Alison Holcomb of the American Civil Liberties Union, which wrote the ballot proposal. In 2014, the Washington State Patrol made 820 misdemeanor drug arrests, down from almost 7,000 in 2011. She says this suggests local governments should have fewer marijuana-related law enforcement costs, not more.

In Colorado, local governments receive a share of tax revenues from retail marijuana. The state has received so much tax revenue that residents will receive a refund, the article notes. Alaska has not yet determined how marijuana tax revenue will be divided between the state and cities.