“It’ll create a huge pool of tax revenue.”
That was one of the primary arguments made by advocates for legalizing marijuana in Oregon in 2014. Now, nearly a year and a half after voters decided it was time to bring cannabis above board, that promise may be coming to fruition.
The sale of recreational cannabis generated $3.48 million in tax receipts in January, the first month the state began collecting taxes on marijuana. The number far exceeds projections made by the Oregon Liquor Control Commission last April. At the time, the agency charged with overseeing the cannabis market anticipated $18.4 million in tax revenue for the two-year period beginning in July 2015. If sales hold steady at January’s rate, taxes will be closer to $63 million for that period.
There are a few factors that explain the discrepancy:
- Sales are expected to fluctuate. As tax rates change and the market settles in, sales may drop. They may also rise.
- The OLCC’s $18.4 million projection included costs associated with administering Oregon’s legal marijuana program. It’s unclear what those costs will be.
- The OLCC also didn’t anticipate a move made by Oregon lawmakers to allow medical dispensaries to begin selling recreational cannabis last fall. The move fast-tracked sales, teeing up a robust retail environment for January’s foray into tax collection.
Retail outlets assess a 25 percent point-of-sale tax on marijuana in Oregon, suggesting that just under $14 million in recreational pot was sold in January. Participants in the state’s medical marijuana program can purchase cannabis without the tax.
The Portland Business Journal is a KGW News partner.