Week in Review: OR Rec Taxes in Question, DC Measure Might Stand + MD Sticks With Huge Fees

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By Marijuana Business Daily Staff

Marijuana legalization in Washington DC will probably remain intact, neighboring Maryland decides to stick with enormous fees for medical marijuana cultivators, and Oregon cities are pushing to get their own tax and fee revenue from recreational cannabis.

Here’s a closer look at several notable developments in the industry over the past week:

Washington DC Legalization Will Likely Stand

After Initiative 71 crushed marijuana opposition on Election Day in Washington DC, a black cloud of uncertainty still remained over cannabis legalization in the nation’s capital, mainly because Congress has the power to unilaterally overturn such voter-approved laws. But The Washington Post took a quick survey of several powerful Senate Republicans earlier this week, and found, perhaps surprisingly, that many high-profile conservatives simply don’t care that much whether the new law is allowed to remain in place.

“Focused on other things” was the response from Sen. John McCain, R-AZ, the former GOP presidential nominee, who was more concerned with military operations in the Middle East than with DC residents who want to toke up legally.

That can be interpreted as a positive sign not just for DC but for the nation at large when it comes to the broader marijuana legalization movement. If GOP party leaders are downgrading marijuana on their list of priorities, then they’re less likely to hound federal departments like the Drug Enforcement Agency to crack down on legal cannabis in states like Oregon and Alaska, which just legalized recreational marijuana sales.

The lack of enthusiasm on the part of Republicans for marijuana busts could signal a transition to a more populist small-government approach to cannabis, perhaps best personified by GOP Sen. Rand Paul of Kentucky. His position? He’s against the federal government telling local officials what they can’t do.

That in turn led one panelist at the 2014 Marijuana Business Conference and Expo in Las Vegas last week to suggest that Paul might be a better presidential candidate for the marijuana industry than Democrat Hillary Clinton, who was described as “squishy” on the issue of cannabis.

The bottom line: cannabis is becoming a much broader and nonpartisan political issue than almost any other hot topic, with both Republicans and Democrats aligning on both sides of the legalization question.

Maryland Sticks With $250,000 Cultivation License Fees

Despite rumors that business permit fees could be reduced, Maryland’s medical marijuana commission left the licensing fees unchanged from prior recommendations as they approved draft rules to govern cannabis businesses. As it stands, MMJ growers will have to pay $250,000 for a two-year license while dispensaries will have to pay $80,000, the commission said.

The group had delayed a vote to look into claims that the fees were too high, but ultimately decided to leave them as initially recommended, saying it wanted the industry to be adequately financed and self-sufficient as required by the Maryland General Assembly.

MMJ advocates say the exorbitant fees – the second-highest in the nation behind only Illinois – could drive off applicants and limit access for patients seeking relief from afflictions stemmed by cannabis use.  The six-figure cost could also prevent small businesses from opening and raise the price of medicine beyond what most patients can afford, said Delegate Cheryl D. Glenn, a Democrat from Baltimore. Glenn is the daughter of the commission’s namesake, Natalie M. LaPrade, who died of kidney cancer in 2011.

“We have the haves and have-nots all over again,” Glenn told the Baltimore Sun. “That’s ridiculous.”

The panel had twice delayed the vote, which was originally supposed to be in September. Patients seeking medicinal marijuana will still have to wait until 2016 to get their hands on the product as regulatory framework works its way through the General Assembly.

The commission set aside rules for the sale of edibles and liquid extracts, saying it didn’t have enough time to draft laws on the products, according to the Sun.

Oregon Cities’ Push for Higher Rec Taxes Could Give Life to Black Market

If it succeeds at the state Legislature next year, the League of Oregon Cities could wind up undermining a central campaign theme that led to recreational marijuana legalization in the state earlier this month. New Approach Oregon, in its push to persuade voters to legalize rec sales, argued that prohibition has failed, and a better approach to fighting the black market would be to tax and regulate the industry. That way, New Approach argued, illegal dealers could be simply priced out of business.

But the league doesn’t seem to agree. It wants more than 70 Oregon towns to have the right to tack on their own taxes and fees to cannabis companies, contrary to the letter of the law that voters approved with Measure 91 on Election Day (the law gives exclusive taxing rights to the state, and prohibits local governments from passing their own taxes and fees on legal cannabis dealers).

That in turn could result in much higher prices for consumers, and give further life to the black market, which is what has happened just north of Oregon, in Washington State.

In Washington, sky-high state taxes on marijuana cultivators, processors and retailers, along with a limited number of rec stores and a lengthy shortfall in supply, have kept the black market alive. Although it’s hard to tell if the black market is actually flourishing in Washington, it’s definitely not dead.

And if the League of Oregon Cities has its way, then towns could theoretically pass sales taxes that price out legal stores instead of the black market. The town of Fairview, for example, passed an astronomical 40% sales tax rate on marijuana in advance of Election Day, in the hopes that doing so would make selling cannabis simply too expensive for entrepreneurs. But what that means is the black market still has an opening in Fairview, and in any other town that would follow suit.