By Noelle Crombie
The Oregonian | OregonLive
The checks are in the mail.
That’s the message the Oregon Department of Revenue sent Friday when it announced it will pay out $85 million in marijuana taxes for schools, public health, police and local governments by next week.
The payouts represent the first distributions of state marijuana tax revenues since Oregon opened its legal recreational cannabis market.
Oregon collected a total of $108.6 million in state and local taxes between Jan. 4, 2016, and Aug. 31, 2017. The state put $9.56 million toward the Oregon Liquor Control Commission’s “start-up costs” for regulating the industry and toward the Department of Revenue’s work to collect the taxes.
The rest was divvied up according to a formula spelled out by law: The state school fund gets 40 percent, or $34 million; mental health, alcoholism and drug services get 20 percent, or $17 million; Oregon State Police get 15 percent, or $12.75 million, and the Oregon Health Authority gets 5 percent, which comes to $4.25 million.
Anthony Johnson, the chief petitioner of Measure 91, which legalized recreational cannabis sales in Oregon, said the amount of tax revenue exceeded supporters’ early projections. He hopes the idea of marijuana taxes flowing into schools and public health and safety spur other states to legalize marijuana, he said.
“I am glad to hear that the revenue is finally being distributed,” Johnson said. “This is what the voters intended. It shows that legalizing and regulating cannabis can help generate revenue for important governmental services.”
The largest share goes toward schools. The ballot measure said tax revenue would go to the Common School Fund, an endowment or trust fund of sorts for K-12 schools that makes distributions to districts twice a year.
Lawmakers this year voted to move marijuana tax revenue to the State School Fund, which flows directly to school districts for costs such as teachers and textbooks.
The fund has a budget of $8.2 billion for the biennium, the vast majority of which is made up of general fund and lottery dollars.
Morgan Allen, deputy director of the Confederation of Oregon School Administrators, said school officials are pleased with the change.
“That money is much more effectively impacting schools and students in a positive way by going into the state school fund,” he said.
Otto Schell, legislative director for Oregon PTA, said while voters often assume marijuana tax revenue is providing major funding for schools, the reality is that it’s among the “tiny fixes” the state has come up with to solve a major problem.
To put the amount of pot taxes headed to schools in context, Schell said it’s important to keep in mind how much it costs to operate the state’s K12 system: roughly $30 million a day.
“We keep using Band-Aids to fix something that is a systemic problem and challenge,” he said.
A spokesman for the Oregon Health Authority said Friday that marijuana tax revenue will replace general fund dollars spent on existing programs, such as outpatient treatment, housing, transportation and detox.
About $1 million will be spent on drug and alcohol abuse prevention, the state’s youth marijuana prevention campaign and drug and alcohol use data collection.
Local governments may get marijuana tax revenue in two ways: Many levy their own sales tax or they are home to marijuana businesses, making them eligible for a slice of the revenue from the 17 percent state tax on pot sales.
Ninety-five Oregon local governments impose a local sales tax of up to 3 percent; the Department of Revenue collects those taxes on behalf of 71 local communities, including Portland.
In the first quarter of this year, the state collected $1.2 million in local sales taxes.
Scott Winkels, a lobbyist for the League of Oregon Cities, said pot tax dollars are welcome but dwarfed by revenue generated by local liquor sales.
“It’s helpful, don’t get me wrong,” he said. “But we aren’t going to smoke our way to fiscal bliss.”
Things get a little tricky when it comes to how the state divvies up the state tax.
The Department of Revenue operates under two formulas, one for taxes collected before July 1 and another for after that date. All cities and counties get a portion of taxes collected under the pre-July 1 formula, even if they don’t allow legal cannabis businesses.
How much a community gets under this formula is based on how many people live there. After that date, however, if a city or county doesn’t allow all types of marijuana licenses, such as producer, processor, wholesaler and retailer, they aren’t eligible for any of the tax dollars generated from sales.
Those that do allow all types of legal cannabis businesses get a slice of the revenue based on their population and the number of licenses they have in their communities.
The amount that the eligible counties receive also is based in part on the size of their cannabis production area, known as canopy size, in addition to the number of marijuana processor, retailer and wholesale licenses within their borders.
If a county doesn’t allow wholesalers or retailers, they’re not eligible for the portion of tax revenue based on licenses. Likewise, if they don’t allow production, they aren’t eligible for the portion based on canopy size.
State revenue officials said they’re still calculating how much cities and counties will get under the two formulas.
Joy Krawczyk, a spokeswoman for the agency, said tax revenue information will be released by region instead of by city and county to protect the identity of marijuana businesses, though local governments will have to report how much they got in marijuana sales taxes come budget time.
Ryan Crow, 35, of Portland, was pleased to hear pot taxes are trickling down to schools and other government services.
“I think it’s good,” said Crow, stepping into Kaleafa Cannabis Co. on Southeast Woodstock Boulevard in Portland. “That’s where it should be going.”
— Noelle Crombie