Oregon expects up to $40 million in new revenue annually if voters legalize pot this fall


Bob Leeds, co-owner of Sea of Green Farms, shows some of the marijuana he produces during a tour of his company’s facility in Seattle. In Washington state, Oregon’s northern neighbor, legal pot sales began last month.(Jason Redmond/Reuters)

Oregon expects to earn anywhere from $17 million to $40 million if voters approve a measure this fall to legalize marijuana in the state, according to an official estimate published last week. The high-end number is $2 million more than a private-sector estimate commissioned by proponents of legalization and the wide range underscores the difficulty in producing such estimates.

Colorado, for example, has in the past year more than halved its estimates for early revenue from recreational marijuana. In a September estimate, the state’s Legislative Council staff predicted Colorado would net $33.5 million in revenue in the 2013 to 2014 fiscal year and $67 million the next. The council’s June estimate, however, cut those figures to $15.9 million and $30.6 million, respectively. As the Brookings Institution’s John Hudak noted in a late-July report, the lower taxes on medical marijuana provide users an incentive to take that route to buy the drug instead of purchasing it simply for recreational use.

Voters in Oregon, Alaska and the District of Columbia will take up the issue of marijuana use legalization this November. If passed, they would join Colorado and Washington, where voters legalized pot for recreational use in 2012.

As in Washington state, where legal sales of pot began last month, Oregon’s alcohol regulator, the Liquor Control Commission, would be tasked with regulating the marijuana industry. Revenue from legal marijuana would cover the OLCC’s estimated $3.8 million in start-up costs over the first three fiscal years and the estimated $3.2 million in annual operating costs.

What remains after those expenses are covered would be split five ways. The largest share, 40 percent, would go to education funding. Twenty percent would go toward grants for alcohol and drug abuse prevention, intervention and treatment; 15 percent would go to a state police account; 10 percent would be given to cities for law enforcement; and 5 percent would go to the Oregon Health Authority to be used on drug abuse prevention, intervention and treatment services.

  • The Oregon Health Authority also expects to spend $200,000 annually on two positions to license an estimated 20 facilities that test marijuana products, according to the estimate.
  • The state’s Agriculture Department expects to spend $100,000 annually on one position to make rules related to marijuana food products, communicate and work with the food industry to comply with the rules.
  • The Oregon State Police expect to need funds for three new detective positions on its Highway Interdiction Team and training all sworn members on roadside impairment enforcement. The cost for all that is estimated to be $400,000 in the start-up costs in the 2016 fiscal year and $400,000 annually starting from that year forward.
  • The Judicial Department expects an extra $21,000 to $56,000 in court costs between 2015 and 2017 and $13,000 to $47,000 every two years after that.

Legalization could reduce the number of individuals charged for marijuana-related violations, but that would also reduce the value of fines collected for such convictions. As a result, it’s difficult to estimate the impact legalization would have for local governments, district attorneys and the courts, according to the state’s estimate of the measure’s fiscal impact.

Niraj Chokshi reports for GovBeat, The Post's state and local policy blog.
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