Marijuana Law, Policy & Reform

Editor: Douglas A. Berman
Moritz College of Law

Monday, October 9, 2017

Interesting accounting of allocation of marijuana reform revenues in Oregon

Effective use of marijuana reform revenues, in my view, is essential to both the arguments supporting reform and to the sustainability of those arguments over time. For that reason and others, I always find interesting and important any accounting of reform revenues, and this local article from Oregon provides just that.  The piece is headlined "Oregon pays out $85 million in pot taxes to school fund, cops, other services," and here are excerpts (with a few comments to follow):

The checks are in the mail. That's the message the Oregon Department of Revenue sent Friday when it announced it will pay out $85 million in marijuana taxes for schools, public health, police and local governments by next week.

The payouts represent the first distributions of state marijuana tax revenues since Oregon opened its legal recreational cannabis market. Oregon collected a total of $108.6 million in state and local taxes between Jan. 4, 2016, and Aug. 31, 2017.  The state put $9.56 million toward the Oregon Liquor Control Commission’s “start-up costs” for regulating the industry and toward the Department of Revenue's work to collect the taxes.

The rest was divvied up according to a formula spelled out by law: The state school fund gets 40 percent, or $34 million; mental health, alcoholism and drug services get 20 percent, or $17 million; Oregon State Police get 15 percent, or $12.75 million, and the Oregon Health Authority gets 5 percent, which comes to $4.25 million.

Anthony Johnson, the chief petitioner of Measure 91, which legalized recreational cannabis sales in Oregon, said the amount of tax revenue exceeded supporters’ early projections. He hopes the idea of marijuana taxes flowing into schools and public health and safety spur other states to legalize marijuana, he said. “I am glad to hear that the revenue is finally being distributed,” Johnson said. “This is what the voters intended. It shows that legalizing and regulating cannabis can help generate revenue for important governmental services.”

The largest share goes toward schools. The ballot measure said tax revenue would go to the Common School Fund, an endowment or trust fund of sorts for K-12 schools that makes distributions to districts twice a year. Lawmakers this year voted to move marijuana tax revenue to the State School Fund, which flows directly to school districts for costs such as teachers and textbooks. The fund has a budget of $8.2 billion for the biennium, the vast majority of which is made up of general fund and lottery dollars....

Otto Schell, legislative director for Oregon PTA, said while voters often assume marijuana tax revenue is providing major funding for schools, the reality is that it's among the "tiny fixes" the state has come up with to solve a major problem. To put the amount of pot taxes headed to schools in context, Schell said it's important to keep in mind how much it costs to operate the state's K12 system: roughly $30 million a day. "We keep using Band-Aids to fix something that is a systemic problem and challenge," he said.

A spokesman for the Oregon Health Authority said Friday that marijuana tax revenue will replace general fund dollars spent on existing programs, such as outpatient treatment, housing, transportation and detox. About $1 million will be spent on drug and alcohol abuse prevention, the state’s youth marijuana prevention campaign and drug and alcohol use data collection.....

Local governments may get marijuana tax revenue in two ways: Many levy their own sales tax or they are home to marijuana businesses, making them eligible for a slice of the revenue from the 17 percent state tax on pot sales. Ninety-five Oregon local governments impose a local sales tax of up to 3 percent; the Department of Revenue collects those taxes on behalf of 71 local communities, including Portland.

In the first quarter of this year, the state collected $1.2 million in local sales taxes. Scott Winkels, a lobbyist for the League of Oregon Cities, said pot tax dollars are welcome but dwarfed by revenue generated by local liquor sales. “It’s helpful, don’t get me wrong,” he said. “But we aren’t going to smoke our way to fiscal bliss.”

As this final quote highlights, even though many millions are being raised through marijuana reform, the amounts are still relatively small for a lot of "big ticket" items in the state budget like schools or municipal funding needs. That reality means, for good of for bad, the revenue from marijuana reform with have different impacts and different meaning to different recipients. I think advocates and opponents of reform will be well-advised to take a very close look at how these revenues are being utilized in order to have a refined understanding of some critical echo effects of modern reforms.

http://lawprofessors.typepad.com/marijuana_law/2017/10/interesting-accounting-of-allocation-of-marijuana-reform-revenues-in-oregon.html

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