International Cannabis Business Conference

Recreational Marijuana Sales to Begin on Oct. 1 in Oregon

Bloom Well at 1814 NE Division St. in Bend will be able to start selling recreational marijuana on Oct. 1.

The legislature decided it would be fairer, and less of a burden on the consumer, to have a sales tax instead. That was a huge move, not just because it changed the measure – something that advocates resisted strongly during the legislative session – but because Oregon has never had a sales tax on anything. The legislature can't impose one and voters have turned down every sales tax initiative they've been presented with; it's something Oregonians are proud of. It's also something that Oregon uses to attract shoppers from California and Washington State looking to purchase big-ticket items.

The sales tax on all marijuana products has been set at 17%. That tax doesn't go into effect, however, until retail sales really start sometime in 2016. 

An interim sales tax of 25% was set by the legislature, but that doesn't go into effect until January 1. This means that for the last three months of 2015, there will be no sales taxes collected on retail marijuana sales. 

One of the biggest concerns was that by opening up dispensaries to retail sales, medical users would get the shaft because the newly-legal adult-use consumers would come in and buy up all the products. Consumers will only be allowed to purchase dried flowers, clones and seeds (no concentrates or edibles). Retail consumers are also limited to purchases of a quarter ounce and four plants per day. The bill makes no mention of seeds, so presumably those are also not allowed to be sold.

Still, this new law means there will be a lot more customers for Oregon's 130-plus dispensaries. That's important, because according to industry consultants and advocates like Sam Chapman of New Economy and Don Morse of the Oregon Cannabis Business Council, who testified before the legislature's Measure 91 committee on June 18, many of Oregon's dispensaries are struggling. 

Some believe dispensaries are cash cows, that owning a marijuana store is like having a magic money machine. The reality is much different. The top few stores may be doing well, but the rest are not. The market is over-saturated, particularly in the Portland area, but all around the state. Recreational sales are seen as something that could save these dispensaries.

That's also why the timing could present more problems. The outdoor harvest in Oregon has always been significant. The state has a number of prolific outdoor growers, especially in economically depressed southern and central Oregon. Delaying retail sales until October means outdoor crops will be hitting the market at the same time. This will create a glut, which means depressed prices.

Oregon has a part-time legislature. The state has a long session in odd-numbered years, from February through early July. In even numbered years, they meet for only about four weeks, through the month of February. In that short session, the legislature can only consider revenue-related bills. If they don't make any changes in February 2016, they won't be able to change the program at all until 2017. 

When we relax, we lose momentum. That's a luxury we really can't afford.

 

Doug McVay

Doug McVay

Doug McVay is on the board of directors of Common Sense for Drug Policy. He lives in Portland, Oregon.