SALEM — Oregonians are buying more legal pot than expected.
That means they are also poised to pay more taxes on it — about $12.5 million more in the current budget than state economists projected several months ago.
The average price of a gram of cannabis on the retail market has dropped from about $10 in late 2016 to just above $4 in mid-2018, according to state figures.
But tax collections continue to grow.
Altogether, Oregon consumers are projected to pay $176 million in state marijuana taxes during the current budget cycle, which ends in mid-2019.
“Since Oregon levies its recreational marijuana tax based on the price of the product, the fact that actual tax collections have exceeded expectations is all the more impressive given the ongoing drop in prices,” state economists said in a revenue forecast report last week. “For every ounce sold, or every edible purchased, Oregon is receiving less tax revenue per item due to the price decline.”
Wholesale prices have also decreased in that period, but less dramatically.
Consumers are turning away from other sources, like the black market and medical marijuana, and toward recreational retail, state economists say.
And more Oregonians are using cannabis, according to the forecast.
Nationally, the Substance Abuse and Mental Health Services Administration says the percentage of adults who report using marijuana in the past month has grown to 7.9 percent in 2017, compared to 6.5 percent in 2015.
In August, recreational marijuana consumers bought more than $52.5 million worth of cannabis, according to the Oregon Liquor Control Commission, which tracks sales data.
The OLCC says in that month alone, recreational and medical consumers in Oregon bought at least 16,000 pounds of usable marijuana, about 400,000 units of edibles and tinctures and more than 600,000 units of marijuana extracts and concentrates.
State economists say that the spate of local measures passed in November to allow cannabis in certain cities and counties aren’t likely to nudge tax collections up further, though.
Six cities voted to allow recreational marijuana, four of them repealing existing bans. Nearly thirty measures related to marijuana were on local ballots this November.
“In terms of recent elections, the places today voting on (marijuana) are all small and won’t have that much of an impact on statewide sales,” said state economist Josh Lehner in an email to the Oregon Capital Bureau. “It’s not like there is another big population jurisdiction out there that has yet to legalize, I don’t think.”
Lehner said certain cities and counties could actually see declines in marijuana tax revenues now that more of them have voted to allow recreational marijuana within their boundaries.
“The border effect of where sales are legal and how consumers access them is important,” Lehner said. “So a neighboring town may see some losses as more towns legalize.”
Recreational marijuana retailers must charge a 17 percent state tax on sales.
Cities and counties can charge local taxes of up to 3 percent on sales, too, but state economists focus their projections on state marijuana taxes.
Sales to consumers with medical marijuana patient cards aren’t taxed.
The tax money, minus administrative costs, goes to a dedicated state marijuana account that in turn goes to K-12 education, mental health services, police and cities and counties.
The state Revenue Department couldn’t provide detailed regional data on marijuana sales taxes.
“Many areas only have a few businesses operating within their limits,” Joy Krawczyk, a spokeswoman for the tax agency, said in an email. “Providing information about how much was collected in that area — along with the use of other publicly-available information or knowledge held by one of the other taxpayers in that area — could allow for the determination of specifics of individual tax returns.”
Disclosing the particulars of a return is illegal, Krawczyk said.
In the years to come, collections from recreational marijuana are likely to grow, although there are significant risks attendant with the marijuana industry, state economists said.
A significant possible downside: cannabis remains illegal under federal law, leaving the industry open to risk in the event of a federal crackdown. Oregon U.S. Attorney Billy Williams has expressed concerns about the illegal shipment of Oregon marijuana across state lines. Williams also believes the state is producing far more cannabis than its residents can consume.
In the long run, state economists say that cannabis could continue to have an economic impact through high “value-added products like oils, creams and edibles, in addition to niche, specialty strains” — a bit like the state’s craft beer industry.
Reporter Claire Withycombe: [email protected] or 503-385-4903. Withycombe is a reporter for the East Oregonian working for the Oregon Capital Bureau, a collaboration of EO Media Group, Pamplin Media Group, and Salem Reporter. Malheur Enterprise editor Les Zaitz manages the bureau.