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State's $3.48 million in revenue better than first tax collection in Colorado, Washington

TRIBUNE FILE PHOTO - The first month of taxes collected on recreational marijuana sales exceeded Oregon's expectations.SALEM — Oregon’s first month of tax revenue from recreational marijuana sales was greater than the first take of any other state so far where recreational sales have been legalized.

The Oregon Department of Revenue reported Thursday, March 17, that the agency collected about $3.48 million in recreational cannabis taxes in January.

Although each state’s tax structure differs, Oregon’s tax receipts exceeded even state economists’ expectations, boosted in part by an already robust medical marijuana industry and a three-month period of sales before the tax took effect.

State economists had projected $2 million to $3 million in tax revenue for the first year, after subtracting the cost of regulating the market, said Mazen Malik, senior economist with the Oregon Legislative Revenue Office. His office has yet to calculate the overall cost of regulation, he said.

“It is probably too early to make the conclusion on what is the overall picture out of this first month,” Malik said. “Visibility will improve as we go on. It might be that this is the trajectory of these things and we would end up with more money than we thought.”

Pamplin Media Group/EO Media Group

Sales without charging tax

Colorado and Washington were the only states to precede Oregon in collecting taxes on recreational marijuana. Alaska, the only other state where recreational sales are legal, is still writing regulations for the industry.

Washington collected less than $1.1 million in tax revenue in its first month of recreational sales in July 2014, according to figures from the Washington Liquor and Cannabis Board and the Washington Department of Revenue. The state levied an excise tax of 25 percent at every level of sale from producer to consumer when the recreational program started in 2014. The tax rate now stands at 37 percent only at the consumer level.

Colorado’s first month of tax receipts on recreational marijuana in January 2014 totaled more than $2 million. That state charges an excise tax of 15 percent at the wholesale level and a 12.9 percent sales tax on other recreational marijuana transactions.

While Oregon’s revenue on recreational marijuana exceeded expectations, Oregon allowed sales for three months before charging the tax, which might have given the industry more time to adjust, Malik said.

Oregon taxes recreational marijuana at the point of sale. Medical marijuana dispensaries were allowed to start selling recreational marijuana on a temporary basis in Oct. 1. In January, the tax took effect at a rate of 25 percent. The tax will be reduced to 17 percent when the licensed recreational retailers take over sales sometime in early 2017.

Carrying a lot of cash

Of Oregon’s 309 dispensaries, 253 made payments to the revenue department in January.

Joy Krawczyk, spokeswoman for Oregon Department of Revenue, said the agency is reaching out to dispensaries that didn’t submit a payment to make sure owners are aware of the regulations.

The federal ban on marijuana has prevented some Oregon dispensaries from being able to obtain financial services from banks and credit unions. As a result, those dispensaries deal only in cash. The revenue department carved out a special office with security and surveillance cameras to receive cash payments for tax bills, Krawczyk said. Dispensary owners who can’t submit a payment by check or money order have to travel to Salem to pay the tax bill in cash.

Mark and Cindy Cusick of Salem’s Herbal Grasslands are among those who paid their taxes in cash. The couple delivered $8,400 in cash to the revenue department in early February to pay their January tax bill, Mark Cusick said.

“I’ve carried that much cash before,” he said. “Obviously, it’s not the most comfortable feeling in the world.”

He said the taxes were about what he expected.

By Paris Achen
Portland Tribune Capital Bureau Reporter
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