Petersburg could charge a tax on marijuana grown or pot products manufactured here under a local law approved in its first reading by the borough assembly Tuesday. The proposed ordinance is being revised by the borough’s attorney but it could be a source of revenue for the municipality if voters approve commercial pot sales here this fall.

As first drafted, the proposed ordinance would have created a 25 dollar per ounce tax when a grower or manufacturer sold pot to a retail store. It also would have levied a 50 cent per gram tax for sales at the retail level. Both those proposals are sales taxes and the borough’s charter requires voter approval before those can be implemented.

Assembly members instead are interested in creating an excise tax, which would be charged on how much pot a grower grows in the borough, or the amount of edible product manufactured, not be based on sales and not requiring a public vote.

The draft ordinance proposed depositing the money from a new tax into the borough’s property development fund. That pool of money has been used by the assembly to fund land purchases and major building renovations, like the municipal building project currently underway.

Local resident Marj Oines urged the assembly to use some of that money to fund drug and alcohol abuse programs. “Funding is being decreased for everything, for mental health here in Petersburg,” Oines said. “They’re struggling to get money just to get money to keep mental health going. So the money could either be 50 percent could go to Petersburg Mental Health, to be used for the treatment of those who suffer from or abuse marijuana.”

Up until this year, the borough has been paying 35,000 dollars to Petersburg Mental Health Services for drug and alcohol counseling in the community. That payment was cut during budget deliberations in the spring.

Photo from flickr/creative commons/seattle city council

Photo from flickr/creative commons/seattle city council

Nancy Strand did not support designating the money from a new pot tax for any specific use but favored depositing it into the property development fund. “I really don’t think we need to address alcohol abuse since the issue of opting out of alcohol sales hasn’t even come up,” said Strand. “So, can’t be one way for one substance and another way for another substance. But if the money goes to the property development fund and can be used for something else then I think it should just go to the property development fund and as it might be needed, doled out for other uses.”

Petersburg’s attorney is making changes to the draft ordinance, dropping the language that would create sales taxes on pot and adding wording for an excise tax. Those changes will be before the assembly at its next meeting September 19th. The second reading and public hearing on the proposed tax will be at that meeting and it will take three approvals by the assembly before taking effect.

Nevertheless, the assembly went ahead with voting on the first reading of tax proposal.

:19 “I think in the broader sense in this ordinance, with both state and federal monies being less for Petersburg I think this gives us a great opportunity to pull our own weight, start raising money to help the many projects, health care, we all know there’s many. So this could help us in a lot of ways moving forward and I think it’s a sound ordinance,” said Jeigh Stanton Gregor.

Of course the proposed new tax might not even happen, depending on the outcome of the October 4th borough election.

“We’re going through with the ordinance because we don’t know what will happen with the vote on the initiative,” said borough manager Steve Giesbrecht explained. “If the initiative fails in the sense that, if folks vote to ban commercial sales, this ordinance can still stay on the books but it will not be active from the standpoint of collections.”

The assembly voted 4-1 to change the ordinance to add language to designate up to 50 percent of the revenue from the tax to go toward health related costs. Strand voted against that change and voted against the first reading of the ordinance as well. With Stanton Gregor, Eric Castro, Mark Jensen and Cindi Lagoudakis in favor it passed 4-1.