The Oregon Department of Revenue (ODR) reports the state has collected more than $25 million in taxes on marijuana from Jan. 1 – July 31, significantly higher than the $18.4 million initially projected.
By Ann Powers
But, the buzz kill for public entities earmarked to benefit from the sin tax is they haven’t seen any of that revenue to date. Those slated to receive marijuana tax funds are:
- Common School Fund – 40 percent
- Mental health, alcoholism, and drug services – 20 percent
- Oregon State Police – 15 percent
- Cities for local law enforcement – 10 percent
- Counties for local law enforcement – 10 percent
- Oregon Health Authority – 5 percent
“Last year we received $68,000 from the Common School Fund,” said Paul Erelbach, Nieh-Kah-Nie School District superintendent “This year we got $70,000, but I don’t know how much of that is from marijuana tax revenue.”
“None of it yet,” according to ODR spokeswoman Joy Krawczyk.
And they won’t see the money until next year after reimbursements have been made for state licensing and taxation start up costs, and the Oregon Liquor Control Commission (OLCC) licenses dispensaries, she added.
State officials said distributing marijuana tax-generated funds to counties and cities may kick in after July 2017.
Medical marijuana dispensaries began collecting a temporary 25 percent tax on recreational cannabis sales in January. Krawczyk said it drove the generous influx of the added tariff money.
“So far it’s been more than initially projected,” she said. “Even with all the information we got from Washington and Colorado, it was really hard to have any concrete expectations for what this revenue would look like.”
In 2014, Colorado garnered $76 million in tax revenue from legal hemp sales when that state joined with Washington in legalizing recreational marijuana for adults 21 or older.
By July 2016, Washington state’s treasury reported it had taken in more than $250 million in excise tax since cannabis legalization began in July 2014.
Oregon voters approved marijuana tax revenue distributions through Measure 91. State officials said it will cost $28.7 million to regulate pot. Taxes will pay for $12 million of that, with the remaining covered through fees and licensing of marijuana businesses.
Some retailers, along with their customers, don’t have major issues with the hefty tax.
“I’m totally happy with it,” said Steven Reynolds, Sweet Relief dispensary manager in Tillamook. “It’s mostly people who aren’t from here who are surprised by the tax. We try to tell them you are paying a little bit extra, but when you look on the bright side and into the future it’s going to help schools… (and other) projects we’d like to see get done.”
Besides the public organizations waiting for the tax bonus to come their way, the downer for dispensaries is the arduous, and often risky, process of paying those taxes.
Retailers must register with ODR’s Revenue Marijuana Tax Program and submit quarterly tax returns in addition to monthly payments. And since the federal government has not legalized marijuana use, pot businesses can’t get bank accounts or loans due to federal banking laws.
“Despite Oregon’s recreational legalization, marijuana is still illegal under federal law,” explained William Porter, Tillamook County district attorney.
That means dispensaries have to pay in cash, which they hand-deliver to Salem. Moreover, no bank account means more money stored on the retailer’s premises.
“There is concern about dispensary robberies and burglaries at commercial grow sites,” Porter added. “Lots of loose money laying around.”
“It’s nerve-racking and it’s hard on us,” he said. “It definitely puts a target on us.”