Medical marijuana dispensaries will start collecting a 25 percent tax on the retail price of recreational marijuana products on January 4.
Dispensaries started selling nontaxable limited recreational marijuana products–seeds, leaves, flowers, and non-flowering plants-to those 21 or older on October 1, 2015 under Senate Bill 460. House Bill 2041 authorized the tax that begins in January, and the rate is in effect for dispensary sales until December 31, 2016.
Toward the end of the 2015 Legislative Session, marijuana taxation shifted from the grower level to the point of sale. The administration of the tax also moved from the Oregon Liquor Control Commission (OLCC) to the Department of Revenue. Since then, Revenue has been working closely with its partner agencies to make sure the plans for administering the tax match with the expectations of voters, the Legislature, and the general public, said John Galvin, the Marijuana Tax Program manager at Revenue.
“Even though the marijuana tax program is new to Oregon, administering tax programs is what we do every day,” said Jim Bucholz, director of the Department of Revenue. “We’re applying decades of tax-administration lessons learned and best practices to the development and implementation of Oregon’s marijuana tax program. We’re confident that the end result will be an effective and efficient tax collection program.”
OLCC plans to start issuing licenses to retail facilities in late 2016. At licensed retailers, consumers will be able to buy more types of recreational marijuana products, including immature plants, edibles, concentrates, extracts, and topical products. Retail sales at licensed facilities will be taxed at 17 percent.
Cities and counties can adopt an additional local tax of up to 3 percent on retail sales. The state Department of Revenue is not involved in the collection of local marijuana taxes.
Oregon voters approved marijuana tax revenue distributions through Measure 91. The total revenue, after Revenue’s administrative expenses and OLCC’s liquor fund loan are repaid, will be distributed as follows:
* 40 percent to the Common School Fund.
* 20 percent to mental health, alcoholism, and drug services.
* 15 percent to the Oregon State Police.
* 10 percent to cities for local law enforcement.
* 10 percent to counties for local law enforcement.
* 5 percent to the Oregon Health Authority for alcohol and drug abuse prevention and early intervention and treatment services.
These disbursements may begin after July 1, 2017. City and county disbursements will depend on the number of OLCC licenses issued to facilities in that area. Cities and counties that choose to prohibit licensed facilities will not receive any marijuana tax revenue disbursements.
For current revenue estimates on recreational marijuana sales and taxes, call the Legislative Revenue Office at 503-986-1266.