Committee recommends Salem home-rule petition to double local cannabis excise, remove host community agreements

The Salem City Council Committee on Licenses and Legal Affairs voted Thursday to send a positive recommendation to the full council on a home‑rule petition that would raise the city’s local excise on cannabis from 3% to 6% and exempt Salem’s licensed cannabis establishments from the state host community agreement (HCA) process.

The petition, presented at the committee by Mayor Pingalo, would replace the current community impact fee/host‑community model with a straight excise collected by the city. Mayor Pingalo said the change would eliminate the “uncertainty” and potential litigation tied to HCAs and simplify local revenue collection. “Excise taxes…require no further burden on cities and towns to implement or collect. They have no uncertainty,” the mayor said.

The proposal drew support from several councilors, including Councilor Cohen, who moved the recommendation, and Councilor Watson, who criticized the current HCA system and the state Cannabis Control Commission’s management. Committee members discussed revenue estimates: city staff reported FY24 cannabis excise receipts at just under $700,000 at the current 3% rate and said a 6% cap would roughly double collections to about $1.4 million, assuming current sales levels. Mayor Pingalo and others noted Salem’s long history with the industry; the committee was told Salem has five licensed recreational cannabis retail establishments under the city’s cap.

Supporters framed the petition as both a local revenue measure and a response to litigation and administrative burdens created by HCAs. Mayor Pingalo said the 2023 regulatory changes imposing additional HCA review requirements had produced “irreparable divisions” and increased legal exposure for municipalities; the transcript records that in 2023 there were about 500 host agreements across roughly 150 cities and towns, a fact cited by the presenter as evidence of administrative burden.

Councilor Watson asked whether the proposed change would alter the state’s tax on cannabis; Mayor Pingalo replied that the petition would not affect state sales or excise tax and that the additional local 3% would operate alongside the state’s existing collections. Mayor Pingalo and other speakers said the added local excise would generally be passed to consumers unless businesses absorb the cost.

Councilor Varela was recused from the meeting, and that recusal was noted on the record. After discussion, Councilor Cohen moved to send a positive recommendation to the full council; the motion was seconded (recorded as seconded by Councilor Jerslow in the transcript) and the committee voted in favor. The motion carried.

What happens next: The committee referred the home‑rule petition to the full City Council with a positive recommendation. If the council approves, Salem would submit the petition to the state legislature for consideration; the transcript discussion included several councilors noting the petition may not be adopted by the Legislature but that sending it would signal local concerns about the HCA process.

Votes at a glance: The committee voted to send a positive recommendation to the full council (mover: Councilor Cohen; second: Councilor Jerslow; outcome: carries).