Tax revenue has not been paid to the county since a moratorium on processing and producing pot facilities.
Deschutes County has filed a complaint against several Oregon state departments over marijuana tax revenue the county believes it should be paid, despite its moratorium on marijuana processing and growing facilities.
The county’s legal department recently filed a complaint in state tax court against the Oregon Department of Revenue, the Oregon Liquor Control Commission and Department of Administrative Services in an effort to change how the state interprets a statute that controls how marijuana tax revenue is distributed.
Marijuana tax revenue has not been paid to the county since the Deschutes County Commission decided to place a moratorium on approving new marijuana processing and producing facilities in August 2019.
In the November general election, residents voted to uphold this moratorium, meaning no new processing and growing facilities will be permitted in the rural part of the county.
But because of the moratorium, Deschutes County is ineligible to receive this money, or future tax revenue, because a county only receives this money if it allows all licensed recreational marijuana activity to take place within the county, said Mark Pettinger, a spokesman for the Oregon Liquor Control Commission, on Tuesday.
“When Deschutes County Commissioners voted to put a ban on allowing further licensed marijuana production that essentially became the point in time which the count(y) was no longer eligible to receive its portion of the 17% state tax collected at point of sale,” Pettinger said in an email. “Even though existing producers are allowed to continue production, and even though retail activity takes place in Deschutes County.”
In response to the legal complaint, Pettinger said in an email Friday the OLCC did not have a comment “because it’s a legal matter.”
Before the moratorium, the county was receiving about 4% of the revenue from the state’s marijuana revenue fund that gets shared with the counties. If the moratorium was not in place, the county would have received roughly $514,000 from December 2019 to this September, said Richard Hoover, a spokesman for the state Department of Revenue, in an email.
The county disagrees with the state’s interpretation of the statute that decides whether a county receives marijuana tax revenue, said Adam Smith, assistant legal counsel with the county. The county believes the state is interpreting the statute too narrowly, Smith said.
The county is asking the state to declare the statute does not preclude Deschutes County from receiving its disbursements from the state’s marijuana tax revenue fund, given that the moratorium and the opt -out election did not impact existing marijuana-related facilities, according to the court filing.
“This statute was not drafted from the perspective of what happened in Deschutes County,” Smith said.
Deschutes County is the only county in Oregon to opt in to marijuana — meaning allowing the production and sale of it within its borders — and then subsequently opt out of permitting a segment of the marijuana market. In this case, that means processing and growing.
Lawmakers didn’t anticipate the situation that has now occurred in Deschutes County when writing the original marijuana regulations, Smith argues.
But Deschutes County still has marijuana -related businesses operating within its borders, and those businesses are still paying taxes, Smith said.
“We have marijuana businesses and we have those impacts, but we aren’t getting the money,” Smith said.
There is also the question of where Deschutes County’s tax revenue is going if not to Deschutes County, Smith said.
“Taxes are still being paid in marijuana businesses in Deschutes County, and it’s not clear where it’s going,” he said.
The Department of Administrative Services and the Department of Revenue did not respond to requests for comment.