In November 2014, Oregon voters approved the use of recreational marijuana by a margin of 56% to 44%. The ballot measure stated that sales would begin when the Oregon Liquor Control Commission determined the rules and regulations governing the sale of legal marijuana, a process which has taken nearly two years.
Taken two years to set rules
Effective July 1, 2015, Oregon residents who were at least 21 years old could legally be in possession of one ounce of marijuana and keep up to eight ounces at their homes. Oregon residents could also grow up to four plants per household.
Eleven months after voters approved the measure, the sale of recreational marijuana began through existing medical marijuana dispensaries. Oregon had approved marijuana for medical use in 1998. Sales during the first week that recreational marijuana was sold in dispensaries exceeded $11 million.
Tax rate set at 17%
Following the development of rules and regulations governing the industry by the Oregon Liquor Control Commission (OLCC), 26 retail locations were licensed by the state and authorized to begin sales on October 1, 2016. Oregon had levied an initial tax of 25% on recreational marijuana while it was being sold in medical dispensaries, but the tax rate will lower to 17% at the retail outlets. Local cities and counties around the state have the option of banning retail outlets in their jurisdictions.
Complex rules and regulations
There has been widespread criticism of the almost two-year delay in implementing the rules governing sales, and of the complexity of regulations on the industry. Oregon has two state agencies overseeing the sale of marijuana. The OLCC has authority over the sale of recreational marijuana, while the Oregon Health Authority manages the medical use.
Significant tax revenues
Even though the sales outlets have been limited, Oregon has collected significantly more tax revenues than anticipated. The state now expects tax revenues of about $43 million for 2016, far exceeding earlier estimates of $2 to $3 million.
In neighboring Washington state, the first year tax revenues in 2015 were $67.5 million. In Colorado, marijuana sales for 2015 totaled nearly $1 billion with tax revenues of $135 million.
California sales will exceed all other states
California is expected to pass a measure to legalize recreational marijuana in November. Sales in the Golden State will probably exceed the combined total of all other states within a year or two. It is estimated that the state could see tax revenues of at least $1 billion and perhaps another $100 million in local taxes by 2018.
The state of California, which is set to vote on a ballot to fully legalize recreational use in November, is truly the cream of the cannabis crop. Last year, medical dispensaries in California sold a whopping $2.7 billion worth of marijuana-related products, which accounted for almost half of the country’s legal sales. — Merry Jane
Pressure on federal government
The sale of recreational marijuana has quickly become a big business in the states that have legalized its use. Other states are bound to look at the significant tax revenues being generated and jump on the bandwagon. All this will put increased pressure on the federal government to rethink its position on continuing to classify marijuana as a prohibited product.