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State Taxes Start On Recreational Marijuana

Retail facilities to get licensing from OLCC in late 2016

Recreational marijuana sold by medical marijuana dispensaries will be taxed 25 percent at the register.

Recreational marijuana sold by medical marijuana dispensaries will be taxed 25 percent at the register. Emily Mentzer/Itemizer-Observer file

SALEM — Medical marijuana dispensaries started collecting a 25 percent tax on the retail price of recreational marijuana products on Monday.

Dispensaries began selling nontaxable limited recreational marijuana products — seeds, leaves, flowers and nonflowering plants — to those 21 years or older on Oct. 1, 2015, under Senate Bill 460.

House Bill 2041 authorized the tax that began Monday. The rate is in effect for dispensary sales until Dec. 31.

Toward the end of the 2015 Legislative Session, marijuana taxation shifted from the grower level to the point of sale. Administration of that tax moved from the Oregon Liquor Control Commission to the Department of Revenue.

OLCC plans to start issuing licenses to retail facilities in late 2016.

At licensed retailers, consumers will be able to buy more types of recreational marijuana products, including immature plants, edibles, concentrates, extracts and topical products. Retail sales at licensed facilities will be taxed at 17 percent.

Cities and counties can adopt an additional local tax of up to 3 percent on retail sales.

The state Department of Revenue is not involved in the collection of local marijuana taxes.

After the Department of Revenue pays for its administrative expenses, and the OLCC’s liquor fund loan is repaid, the revenue from recreational marijuana tax will be distributed as follows:

• 40 percent to the Common School Fund;

• 20 percent to mental health, alcoholism, and drug services;

• 15 percent to the Oregon State Police;

• 10 percent to cities for local law enforcement;

• 10 percent to counties for local law enforcement;

• 5 percent to the Oregon Health Authority for alcohol and drug abuse prevention and early intervention and treatment services.

In 2015, the city of Independence passed an ordinance approving a 10 percent tax on recreational marijuana, originally planned to go into effect Oct. 1, 2015, the day recreational sales became legal.

Finance Manager Gloria Butsch said the city decided to hold off on implementing the tax because of the legislation that was in progress.

Dallas and Falls City also approved taxes on the drug, but left it at 0 percent until after the law was more defined. Monmouth has no tax on marijuana.

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