In many states, cannabis just isn’t bringing the income that marijuana enthusiasts and politicians expected. Legal weed was supposed to be a significant tax boost, funding major public programs and eliminating dangerous criminal activity. Yet, after an initial boom of interest in legal recreational pot, states like California, Washington and Nevada have seen their industries tank and tax income fail to live up to expectations.
But not Oregon. Even five years after Oregonians first gained access to the drug, sales at recreational dispensaries continue to climb. Why has Oregon seen such unprecedented success, and what lessons can other states apply to see similar success within their borders?
Oregon Has (Almost) Always Been Weed-friendly
An undeniable component of Oregon’s cannabis industry success is its history with the drug and the drug’s cultural significance within the state. When states first began banning marijuana in the early 20th century, Oregon jumped on the bandwagon — but it soon recognized its mistake. As research confirmed users’ beliefs that cannabis was not the crime-inducing, devastating drug feared by White, upper- and middle-class Americans, Oregon was quick to respond.
The Beaver State became the first state to fully decriminalize marijuana in 1973, merely fining users found in possession of up to an ounce of the drug. Later, in 1998, Oregon was among the first four states to legalize medical cannabis, so those suffering from qualifying conditions suddenly gained access to legal weed.
In the years following the legalization of medical marijuana, Oregonians began using cannabis at rates 30 to 40 percent higher than the rest of the U.S. population. In a 2006 report by the Drug Enforcement Administration, Oregon was ranked amongst the top fifth of states for cannabis usage (https://en.wikipedia.org/wiki/Cannabis_in_Oregon). What’s more, Oregon established itself as a national leader in indoor cannabis cultivation in the 1990s, and today, it isn’t uncommon to pass by outdoor growing operations — both legitimate ones managed by licensed farmers and forbidden fields nestled in Oregon’s wilderness.
Perhaps due to the prevailing counterculture attitudes on the West Coast or maybe just the dense naturalness of the state, Oregon has always enjoyed a strong class of marijuana users, who continue to support the legal cannabis industry today.
Oregon Makes It Easier for Users to Find and Buy Weed
Legal adult-use marijuana is most often pitched as a major boost to local and state tax revenues. Instead of wasting taxpayer dollars trying to identify and stop drug use, the state can collect money from those interested in buying and using marijuana. Then, that money can help fund valuable public programs, like education and infrastructure.
Unfortunately, to live up to expectations set for tax incomes, politicians tend to set marijuana tax rates dizzyingly high. In California, for example, the state taxes cultivators at a flat rate per ounce, levies an excise tax on product sold in dispensaries and permits counties and cities to set their own local taxes on top. This can inflate the cost of marijuana products as much as 80 percent, keeping them out of reach of most Californians and visitors on a budget. Worse, California’s plans for utilizing their marijuana tax income are frustratingly vague, which only emboldens users to fund the active cannabis black market in the state (read more about that here: https://www.fool.com/investing/2019/09/14/californias-cannabis-black-market-is-insanely-larg.aspx).
In contrast, Oregon’s taxes are mercifully reasonable. The state legislature set the base tax rate for recreational products at 17 percent, with certain provisions for cities to add local taxes of up to 3 percent. Retailers are permitted to retain 2 percent of these taxes to cover their expenses, which helps keep dispensaries in operation. Though dispensary zoning is at the discretion of cities and towns, it isn’t terribly difficult for most Oregonians to find a convenient dispensary near their home (especially thanks to online tools like these: https://weedmaps.com/dispensaries/in/united-states/oregon) and acquire desired products without breaking the bank. Plus, the government makes it clear which programs benefit from these taxes:
- 40 percent to Common School Fund
- 20 percent to Mental Health Alcoholism and Drug Services
- 15 percent to State Police
- 10 percent to Cities for enforcement of the measure
- 10 percent to Counties for enforcement of the measure
- 5 percent to Oregon Health Authority for alcohol and drug abuse prevention
Thus, users are incentivized to buy legal weed instead of backing criminal cartels that harm their communities.
Oregon’s Weed Laws Could Inspire the Nation
In 2020, the U.S. economy is in a somewhat dangerous position. After shutting down for months on end — and with the threat of additional lockdowns imminent — many states are struggling under the demand for public services like unemployment and healthcare. States and the Federal Government are looking for a solution that could increase tax revenues without putting additional strain on citizens or corporations — and legal adult-use marijuana could be just that.
Oregon’s unmitigated success at building a thriving cannabis industry is exactly what other states need to observe when considering their own recreational marijuana initiatives. Even today, Oregon continues to lead the charge into a weed-friendly future.