Tax Experts Disagree on Tax Haul from Legal Weed in Oregon
Tax experts hired by the Oregon Legislature predict legal marijuana would generate a relatively small amount of money for the state.
The tax analysts, who worked with the Legislative Revenue Office, said in late July that legal weed would generate $16 million in tax revenue during the first year it’s available.
That result is much more conservative than estimates by proponents of legalization. They say legal pot should generate more than $38 million in taxes for the state in the first year.
There’s no way of knowing which point of view is correct, but Paul Warner, head of the revenue office, said they’re both uncertain. For one thing, it’s hard to calculate the true number of stoners in Oregon.
Nor is it clear how many of those tokers would leave the black market and start buying from legal pot shops.
The tax analysts predicted there would be relatively few out-of-staters coming to Oregon for the weed, unlike Colorado, where pot tourism is thriving. And the analysts said they don’t expect opening-day prices to drop for some time, a fact that could reduce the number of people who will switch to legal product.
The experts predicted that 67 percent of illicit buyers would stick with the black market. The other analysts, who work at a firm called ECONorthwest, predicted 60 percent of pot users would stay with the black market.
“We’re more cautious because we think it will take a while to happen,” Warner said.
The legislative tax experts conducted their analysis for a committee that will release financial estimates for each of the measures on the November ballot.
The report by ECONorthwest didn’t factor in the cost the state will bear in starting and overseeing a legal weed market. But the legislative report did produce an estimate, saying Oregon would spend about $7 million on regulatory costs in the initial year. That would leave just $9 million in net tax revenue.
It’s too early to gauge the market in neighboring Washington, where the first legal weed stores opened in early July. In Colorado, where stores opened Jan. 1, the industry generated $11 million in state taxes during the first four months of this year alone.
Activists recently succeeded in putting legalization on the November ballot in Oregon. The proposal has strong public support and is a good bet to pass. One other state, Alaska, is also set to make weed legal this fall.
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