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As of yesterday tax-free marijuana sales in Oregon is no more and recreational marijuana will be taxed at 25 percent. The 25 percent tax will apply to all recreational sales through the end of 2016. Since October 1st of last year, medical marijuana dispensaries have been selling marijuana and marijuana products tax-free, and have been restricted to what cannabis produces, such as leaves, flowers, and seeds.

Later this year, the Oregon Liquor Control Commission will begin licensing retail stores. Stores that receive licenses will have a decrease in their sales taxes to 17 percent late in 2016 when Oregon’s recreational marijuana program is fully in operation. Local governments will then have the ability to determine their own taxes of up to 3 percent.

OLCC licensed retail stores will eventually be able to sell products like edibles, but that may not happen until later in the year. As reported by the OLCC, more than 80 cities and counties around Oregon have banned marijuana sales.

So there may be some disappointment when getting to the register. But frustrated shoppers should keep in mind that the extra charge will help advance a number of services statewide. Here’s a general breakdown of where the tax revenues will go:

  • 40 percent to Common School Fund
  • 20 percent to Mental Health Alcoholism and Drug Services
  • 15 percent to State Police
  • 10 percent to cities for enforcing cannabis laws and regulations
  • 10 percent to counties for enforcing cannabis laws and regulations
  • 5 percent to Oregon Health Authority to fund alcohol and drug abuse prevention programs

So the tax is an crucial step toward keeping the state (and its marijuana industry) safe, socially responsible and well-regulated. (And the current rate is a lot less than the 37 percent tax charged nearby in Washington state.)

The state’s Legislative Revenue Office expects to raise close to $4-million in tax revenues between now and 2017; that number is expected to jump to around $60-million from 2017-2019. The breakthrough will primarily come from clearing debts. The majority of the tax money will first go to paying off a loan taken out by the Oregon Liquor Control Commission to finance the creation of the Recreational Marijuana Program. Once that’s paid off, more money will be available.