Oregon Marijuana Business

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What is the Demand for Marijuana in Oregon?

Following the legalization of recreational marijuana in Oregon in 2014, the demand for recreational marijuana has been on the increase compared to when it was solely legalized for medical use. Since the beginning of the COVID-19 pandemic in 2019, there has been an upsurge in demand for marijuana in Oregon compared to the previous years. According to a 2021 Recreational Marijuana Supply and Demand Legislative Report, marijuana production has increased by 78%, while the amount of cannabis sold increased by 150%. This increase amplified the demand for marijuana from 50% of the total annual supply to 65%. The report also revealed that the COVID-19 pandemic and consequent recession did not negatively affect the overall demand for marijuana in the State of Oregon, unlike other industries.

Also, the National Survey on Drug and Health report conducted by the Substance Abuse and Mental Health Services Administration (SAMHSA) showed the demand for marijuana in Oregon between 2018 and 2019. According to the report, 26.99% of Oregon residents between the ages of 12 and 17 used marijuana in the state. 27.74% of Oregon residents between the ages of 18 and 25 used marijuana, while 24.93% of residents aged 26 and above used marijuana. The report showed that residents of the State of Oregon between ages 18 and 25 are the largest users of marijuana.

Oregon’s tax revenue from marijuana sales have grown annually since legal sales began there. According to an Oregon Department of Revenue Research Section report, the state generated $20.6 million in taxes on marijuana in 2016. Oregon’s marjuana tax revenue grew to $178 million in 2021. However, the state’s tax total from marijuana sales dipped to $144.7 million in 2022.

How is Marijuana Taxed in Oregon?

The Oregon Department of Revenue is the government agency responsible for the collection of marijuana tax. Accordingly, all licensed dealers are mandated to register with the Oregon Liquor Control Commission immediately after their license is granted for the purpose of taxation.

Marijuana purchases are subject to a 17% cannabis excise tax, payable by every retailer licensed by the Oregon Liquor Control Commission. Additionally, customers of marijuana are charged a 3% local municipal tax. The payment of local municipal tax is optional and depends on the location of the business. Consequently, most municipalities in Oregon have a Department of Revenue responsible for collecting the local municipal tax.

There is currently no cultivation tax in Oregon. Cultivators of recreational marijuana are only regulated, restricting the number of plants they can grow at a time to four per residence. The Control, Regulation, and Taxation of Marijuana and Industrial Hemp Act provides that only four cannabis plants can be cultivated on private property. Marijuana taxpayers are required to pay their monthly tax and file a quarterly return to the Oregon Department of Revenue. Quarterly filing is done electronically by filling the Oregon Quarterly Marijuana Tax Return online. If a marijuana taxpayer fails to file his return, the revenue department may issue an estimated return to such a person. Non-compliance with the Department of Revenue rules concerning the taxation of marijuana is a violation of the Oregon Liquor Control Commission license rules.

Marijuana tax payments could be made by money order, cheque, or wire transfer. Cash payments are not accepted unless an individual is paying in person at the Oregon Department of Revenue. Taxpayers are mandated to complete the Marijuana Tax Payment Voucher form and include it with their payment.

According to the Oregon Department of Revenue, funds collected after the quarterly $11.25 million obtained from marijuana tax has been exceeded are directed to measure 110, the Drug Treatment and Recovery Services Fund. According to the department, 40% of the marijuana tax obtained goes to the State School Fund, and 20% is dedicated to the Oregon Health Authority for mental health treatment, alcohol and drug abuse prevention, early intervention, and treatment. Another 20% is dedicated to cities and counties at the rate of 10% each. 15% of the tax is dedicated to the Oregon State Police, and the remaining 5% is for the Oregon Health Authority.

Marijuana tax revenues are also used to cover tax administration costs, payment of the Oregon Liquor Control Commission's enforcement costs, and the Oregon Criminal Justice Commission's Illegal Marijuana Drug Treatment and Recovery Services Fund. Additionally, every quarter of money obtained from marijuana tax is used for the Oregon Criminal Justice Commission's Illegal Marijuana Market Enforcement Grant Program. As of January 1, 2021, tax funds exceeding the quarterly $11.25 million obtained from the taxation of marijuana are dedicated to education programs, drug prevention, treatment programs, and transfers to local governments.

What is the Agency Taxing Marijuana Business in Oregon?

The Oregon Department of Revenue, formerly known as the Oregon Tax Commission, is responsible for collecting marijuana taxes in the state. It was established in 1909. The department ensures that the revenue system works to fund public services that preserve and enhance the quality of life for all citizens of the state. Accordingly, more than 95% of Oregon's General Fund is attributable to the work done by the Oregon Department of Revenue.

Generally, the overall responsibility of the Oregon Department of Revenue is to help in the administration and enforcement of Oregon tax laws. Currently, the department collects taxes from about 40 tax programs, including marijuana retail tax. The department may be contacted by dialing (503) 947-2597 or by sending an email to marijuanatax.dor@oregon.gov. The physical address of the department is as follows:

Department of Revenue

955 Center Street

North East Salem, Oregon 97301