Recreational marijuana tax set to start in Oregon in 2016 - KPTV - FOX 12

Recreational marijuana tax set to start in Oregon in 2016

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Medical marijuana dispensaries will start collecting a 25 percent tax on the retail price of recreational marijuana products starting Jan. 4, 2016, according to the Oregon Department of Revenue.

Dispensaries started selling nontaxable limited recreational marijuana products - seeds, leaves, flowers, and non-flowering plants – on Oct. 1 to people 21 years old and older under Senate Bill 460.

House Bill 2041 authorized the tax that begins in January, and the rate is in effect for dispensary sales until December 31, 2016.

The Oregon Liquor Control Commission plans to start issuing licenses to retail facilities in late 2016. At licensed retailers, people 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.

Toward the end of the 2015 legislative session, marijuana taxation shifted from the grower level to the point of sale, while the administration of the tax moved from the OLCC to the Department of Revenue.

"We're applying decades of tax-administration lessons learned and best practices to the development and implementation of Oregon's marijuana tax program. We're confident that the end result will be an effective and efficient tax collection program," said Jim Bucholz, director of the Department of Revenue.

Oregon voters approved marijuana tax revenue distributions through Measure 91 in 2014.

The total revenue, after administrative expenses and OLCC's liquor fund loan are repaid, will go toward:

  • 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.

These disbursements may begin after July 1, 2017.

City and county disbursements will depend on the number of OLCC licenses issued to facilities in that area. Cities and counties that choose to prohibit licensed facilities will not receive any marijuana tax revenue disbursements.

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