Oregon: Controversy Over Legal Cannabis Revenues

Oregon voted to legalize cannabis way back in November 2014, but promises of state coffers filled with canna-dollars are apparently being held up by an arcane bureaucratic logjam. 

Newsweek recently noted a May 5 report from Oregon’s KWG News, finding that the state has brought in close to $75 million in cannabis tax revenue since the start of 2016—yet not a penny has gone to actually closing Salem’s yawning $1.6 billion budget deficit.

The intended recipients are to be local schools and police agencies, but the legalization law dictates that before anyone else gets paid, the Oregon Liquor Control Commission (OLCC) must be reimbursed for administrative costs associated with setting up their new cannabis program.

The OLCC has taken out a $13 million loan to cover initial administrative costs, which should free up funds by year’s end. Of course, the cannabis revenue already collected should more than cover that.

So what’s going on here? A peek behind the headlines is needed to make sense of it…

Part of the confusion is due to the fact that the OLCC has only been involved in regulating the recreational cannabis market since January 2017, when sales were set to begin under the original legalization law. However, due to popular demand, sales began last year under an interim plan, overseen by the Oregon Health Authority. The state, by law, has until September 2017 to start distributing the revenue.

The Health Authority has already been overseeing the Oregon Medical Marijuana Program (OMMP) since its inception in 2007, and there are also questions around how the medical and recreational programs will co-exist.

The Oregon Cannabis Connection reprinted recent testimony before the state legislature’s Joint Committee on Marijuana Regulation by Oregon Cannabis Industry Association co-founder Pete “Pioneer” Gendron. He warned that small growers could be squeezed out by onerous restrictions of the OMMP-mandated Marijuana Enforcement Tracking Reporting Compliance (METRC) program and called for taking OMMP out of the hands of the Health Authority.

As Newsweek points out, Colorado has distributed millions of dollars in cannabis revenue to designated agencies since legalizing recreational sales for adults in 2012. (Actually, Newsweek incorrectly named the year of Colorado legalization as 2014—that was just the year legal retail sales began in January under terms of the 2012 initiative.) 

With legal cannabis now under potential attack from the new administration in Washington, whether Oregon successfully works out its growing pains could be critical to the future of the industry in the United States.