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Oregon’s 25% Recreational Marijuana Tax Begins in 2016

Oregon Marijuana Taxes

Recreational marijuana sales began in Oregon on October 1, 2015, and purchases had not been taxed up to this point. But beginning on January 4, 2016, those wishing to purchase recreational marijuana must pay a 25-percent tax.

For some, this will come as a surprise in cost at the checkout stand, but the implementation of the tax has never been hidden. The 25-percent tax will be in effect until at least the end of 2016.

This high tax rate is not permanent though. The Oregon Liquor Control Commission plans to open stores in late 2016. After that program is in place, a permanent 17-percent sales tax will be implemented.

According to Oregon Live, the Oregon Department of Revenue has setup cameras in preparation of receiving sums of cash from dispensaries for the purposes of paying taxes.

It was expected that recreational users would visit dispensaries to stock up before this tax goes into effect. That is something that Don Morse, owner of the Human Collective, has not seen. According to the transactions in his business, recreational users buy smaller quantities in comparison to those purchasing medical marijuana.  His concern is having such a large amount of cash in his shop, as he stated: “That is a lot of extra a month to keep on hand.”

These dispensaries are permitted by law to keep 2-percent of the sales tax collected. The Department of Revenue keeps a portion of it for administrative purposes as well.

The Oregon marijuana sales tax allocation is set up as follows:

  • 40-percent to the common school fund
  • 20-percent for mental health, alcoholism and drug services
  • 15-percent to Oregon State police
  • 10-percent to city law enforcement agencies
  • 10-percent for county law enforcement
  • 5-percent for drug and alcohol prevention treatment services to the Oregon Health Authority

The state has carefully laid out where these tax dollars will go. The funds go right back into state programs. In 2016, the state expects to take in somewhere between $2 million and $3 million in tax revenue solely from recreational marijuana sales.