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Pot-ential for profit unclear

Tax revenue remains a promising but open question.
Kathleen Ellyn

Wallowa County Chieftain

Published on September 23, 2015 7:03AM


How much money might Wallowa County expect to receive in tax revenue from the sale of pot statewide and county-wide?

Well, that’s the $64,000 question.

As Wallowa County Commissioner Mike Hayward said last week, it may be thousands or it may be six bucks.

Nobody knows.

The reason the number cannot be nailed down is because Oregon’s marijuana tax plan and Oregon’s relationship to illegal marijuana is very different from the tax structures and marijuana relationships of Colorado or Washington.

Colorado raked in $11,608,684 in taxes for the month of July 2015 alone. Washington reported tax earnings of $11,484,814 the same month. Neither number includes licensing fees.

Back in July 2014, ECONorthwest released an independent study that projected Oregon would collect a (relatively) modest $78.7 million in marijuana tax in the first biennium — an average of $3,279,000 per month. The study was commissioned by New Approach Oregon, the organization that helped write Measure 91. The ECONorthwest study did not consider the impact on courts, police, and jail operating costs that might accrue.

By April of 2015 the Oregon Liquor Control Commission, which will oversee implementation of Measure 91, had scaled that estimate back considerably.

In a press released dated April 11, OLCC reported it had requested that the Legislature establish a 2015-2017 budget of $10.5 million to handle the recreational marijuana program. They also estimated revenue of $18.4 million for 2015-2017 — approximately $766,000 per month.

That’s a misleading number. The collected amount could be millions higher. The estimate is what OLCC thinks it might actually have in hand to spend in the biennium, not what the state will collect.

According to Rob Bovett, legal counsel for the Oregon Association of Counties and one of the writers for both Measure 91 and HB3400, nobody knows what we’ll earn.

“What will we collect? That’s really anyone’s guess,” said Bovett in a telephone interview last week. “It will depend on how effective HB3400 is at suppressing the black market. If it’s effective it will drive folks into the retail market where we’ll collect revenues.”

Oregon has a robust, smoothly operating black market, Bovett said. And, some of the biggest illicit marijuana fields in the west are growing in southern Oregon.

Will those growers and suppliers want to “go legit?” Although numerous news agencies have reported that formerly illegal growers in Washington have made the transition to legal growth and sale in that state, those growers have also been quoted as saying the cost of legal operation is so steep that they are struggling to see a significant profit.

Furthermore, Bovett said, “Washington’s state tax structure is entirely different than ours and I believe (legal marijuana) will sell for significantly less in Oregon than Washington.

“Our tax structures are dramatically lower than that of Washington. We’re going to have more supply, a higher grade of marijuana and a lower tax rate.”

All in all, Bovett said, “Comparing Washington to Oregon is apples and oranges. Colorado tax structure is overall closer to Oregon but we’re still lower.”

So what’s a county to do?

The Chieftain took a poll of 16 Eastern Oregon counties and found that five had actually pulled the trigger on the opt-out opportunity, voting to ban marijuana sales in the county.

Those counties are Umatilla (62.7 percent NO on Measure 91), Malheur (NO 68.7), Harney (NO 65.7), Baker (NO 59.5) and Crook (NO 58.6).

Cities in those counties are still free to make their own decisions. As an example, although medical marijuana sales are allowed in Union County, Island City and Elgin have reportedly voted to deny all licensing within city limits.

In Malheur County the City of Nyssa has followed the county’s suit and opted out.

In Wallowa County, the City of Enterprise has voted to approve medical marijuana dispensaries provided they meet with state requirements.

“Because of where our schools are located, they are basically limited to two locations in Enterprise,” said City Administrator Michele Young.

The City of Joseph has adopted a zoning ordinance prohibiting dispensaries.

The City of Wallowa “discussed it at their last meeting,” according to City Recorder Carol Long. “The consensus between the council member and citizens in attendance was to opt out.”

The matter will be put to a vote at the Wallowa council’s Oct. 20 meeting.

Wallowa County Commissioners are taking a longer look at the issue, as are the commissioners in numerous other Eastern Oregon counties. They have until the end of December to decide.

Newsroom assistant Elliott Seyler contributed to this story.



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