The 2022 Marijuana Tax Battle – Emergency Call to Action to Stop Marijuana Retail Tax Increases
Senate Bill 1506 is poised to pass the senate and seeks to increase the local option retail tax from 3% to 10%. If you are an OLCC licensee, you know this is a disaster (if you are not and do not, see below). What can you do? Today – right now – get on social media and tell the legislature that this kind of regressive tax hike will put small businesses out of business and push consumers to the illicit market.
Specifically, tweet your concerns and tag:
Or post on Facebook and tag:
Or post on Instagram and tag:
Don’t have Twitter, Instagram, or Facebook, or want to go above and beyond by contacting everyone on the committee about to pass this bill? See the end of this post email addresses. Please remember that the legislators are our partners in this, not our adversaries. Be respectful and kind. You are educating legislators about the negative effects of a retail tax hike and letting them know this issue is important to you.
Oregon’s recreational marijuana program has been a boon for the state tax revenue since the inception of the program.
Measure 110, which passed in 2020, reallocated all marijuana tax revenue over $11,250,000 per quarter to drug treatment programs and away from other uses, including to cities and counties. Since then, cities and counties have fought hard to make up the shortfall.
Last year, Senate Bill 864, which would have raised retail taxes on recreational marijuana, faltered and died, but we knew the tax hike fight was not over.
This year, Senate Bill 1506, which, until recently, seemed to be following in the footsteps of Senate Bill 864 for a swift death, is gaining steam, largely because of lawmakers from Eastern Oregon jurisdictions, which, because of their proximity to the Idaho border, stand to benefit from eight figures in additional annual tax revenue if the local recreational marijuana retail taxes increase to 10%.
The arguments for raising the tax rate typically circle around the need for more money for law enforcement trying to battle the still thriving illicit market and the high revenue the recreational marijuana industry brings in. What these arguments fail to consider, however, is the shaky financial situation of many of our pot companies (the majority of OLCC licensed businesses are not profitable, with female and minority owned businesses faring the worst) and the ongoing battle for customers between the legal market and the illegal market. This tax increase would put smaller cannabis businesses out of business and raise prices, both of which will push consumers to the illicit market. Further, it would be a regressive tax because Oregonians making $25,000 or less are more likely than those in any other income bracket to spend $500 or more annually on recreational marijuana.
The legal market in Oregon suffers from crushing compliance costs that the illegal market avoids. Whereas illicit market growers can increase yield and decrease the time and effort it takes to keep bugs and other problems under control by using unapproved chemicals, legal growers comply with laws prohibiting the use of pesticides and fertilizers that are or may be harmful to consumers or the environment. Similarly, while legal growers often have staggering budget line items for water, illegal growers often steal water, keeping their cost of production lower. The operational differences between legal and illegal growers have gotten the most attention in recent years, but the differences in the cost of operation between the legal and illegal market can be seen up and down the vertical, with processors using safe, but more expensive, equipment and methods, and retailers not being able to write off most of their expenses because of IRC 280E. All licensees comply with immense security and seed-to-sale tracking costs and, like non cannabis businesses, pay taxes and other costs of doing business that the illicit market typically avoids.
The illicit market’s competitive advantage allows it to undercut the legal market, keeping Oregon’s illicit marijuana industry alive and well. The legal market works tirelessly to siphon market share from the illicit market, but, if Senate Bill 1506 passes and retail sales of recreational marijuana see an additional 7% tax, customers will leave the legal market for the cheaper product on the illegal market.
Oregon’s state-legal cannabis industry cannot absorb this tax increase. If implemented, the tax would most likely be partially absorbed by the industry, further squeezing struggling small businesses, and partially passed on to consumers, increasing the prices they see in retail stores and pushing them to the illicit market. A retail tax hike is bad for Oregon businesses, consumers, and the state. Help us stop it!
- Representative Pam Marsh — Party: Democrat – District: 5 Capitol Phone: 503-986-1405 Capitol Address: 900 Court St NE, H-474, Salem, OR 97301 Email: Rep.PamMarsh@oregonlegislature.gov Website: http://www.oregonlegislature.gov/marsh
- Representative Nancy Nathanson — Party: Democrat – District: 13 Capitol Phone: 503-986-1413 Capitol Address: 900 Court St NE, H-279, Salem, OR 97301 Email: Rep.NancyNathanson@oregonlegislature.gov Website: http://www.oregonlegislature.gov/nathanson — https://twitter.com/Rep_NN — https://www.instagram.com/rep_nn/ — https://www.facebook.com/nancynathansonoregon
- Representative Mark Owens — Party: Republican – District: 60 Capitol Phone: 503-986-1460 Capitol Address: 900 Court St NE, H-475, Salem, OR 97301 Email:Rep.MarkOwens@oregonlegislature.gov Website: http://www.oregonlegislature.gov/owens
- Senator Janeen Sollman — Party: Democrat – District: 15 Capitol Phone: 503-986-1715 Capitol Address: 900 Court St NE, S-207, Salem, OR, 97301 Email: Sen.JaneenSollman@oregonlegislature.gov Website: http://www.oregonlegislature.gov/sollman — https://twitter.com/SollmanJaneen — https://www.facebook.com/JaneenSollman2016 — https://www.instagram.com/sen.janeensollman/
- Senator Rachel Armitage — Party: Democrat – District: 16 Capitol Phone: 503-986-1716 Capitol Address: 900 Court St NE, S-209, Salem, OR, 97301 Email: Sen.RachelArmitage@oregonlegislature.gov Website: http://www.oregonlegislature.gov/armitage — https://www.facebook.com/rachelgowland.4 — https://www.instagram.com/senrachelarmitage/
- Senator Lee Beyer — Party: Democrat – District: 6 Capitol Phone: 503-986-1706 Capitol Address: 900 Court St NE, S-411, Salem, OR, 97301 Email: Sen.LeeBeyer@oregonlegislature.gov Website: http://www.oregonlegislature.gov/beyer/
- Senator Rob Wagner — Party: Democrat – District: 19 Capitol Phone: 503-986-1700 Capitol Address: 900 Court St NE, S-223, Salem, OR, 97301 Email: Sen.RobWagner@oregonlegislature.gov Website: http://www.oregonlegislature.gov/wagner — https://twitter.com/RobForOregon — https://www.facebook.com/RobWagnerForOregon — https://www.instagram.com/robfororegon/