Cities, counties awaiting pot revenues

Local jurisdictions will soon reap the tax benefits of legal marijuana market. 


Oregon's legal marijuana industry has generated millions of dollars, but public agencies have yet to receive their cut since the state started collecting tax money from sales.

That's because Oregon Liquor Control Commission (OLCC) has been withholding all revenue until the administrative costs for starting the program have been reimbursed.

According to Joy Krawczyk, communications manager with the Oregon Department of Revenue, the holdout is nearly at an end, with cannabis dollars expected to be doled out some time this month or in October.  

Oregon law says tax revenue from cannabis sales must be distributed to state agencies and city and county law enforcement.

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Krawczyk said the formula for determining how many cannabis dollars county governments will receive has been changed.

The change aims to reward counties with a preponderance of grow operations because they currently shoulder a disproportionate burden for relatively little  reward since only dispensary sales can be taxed.

Until that money is disbursed, jurisdictions have been forced to rely solely on income from locally-enacted cannabis tax measures, which can be up to 3% of sales.

That's not enough for many cannabis growing counties.

Jackson and Josephine County currently have 300 and 230 OLCC regulated operations respectively. Julie Schmelzer, Josephine County’s community development director, said in addition to OLCC farms, her jurisdiction has nearly 3,000 registered medical marijuana facilities.

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The new industry is pumping up real-estate offices and boosting sales for local businesses selling industry products such as fertilizer, compost soil, lighting, greenhouse equipment and lumber..

Cannabis production has also created lucrative job opportunities. So many in fact that general laborers have become incresaing difficult for other busineses to find. 

But the management costs have so far outweighed the benefits at the county level, said Jackson County Commissioner Colleen Roberts.

“Nearly all departments have had an increased workload,” Roberts said. “Regular normal course of business operations are mired down by the attention required to address the marijuana industry."

She said the growth in production has led to numerous code complaints mostly focused on the conflicts between the production methods — lighting, people camping on property, armed guards — of growing marijuana and the generally residential uses of neighboring properties.

"We have complaints made to our Sheriff’s Office continually. We have damaged survey corners and land disputes. We have calls daily to County Commissioners and staff seeking information and making various complaints. We have complaints about misuse of water and water rights."

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Now the money is coming.

Cities and counties have not yet been given estimates as to exactly how much their particular municipality will receive over the 2017-2019 biennium.

But, during the 2017 session, lawmakers changed the calculation method to be based on the amount of grow canopies available and how many OLCC licenses have been issued.

Krawczky cited a hypothetical example: If the Oregon Marijuana Account has $10 million on the last day of the first quarter in 2018, 10% would be allocated to counties.

Half of the that 10% would be distributed based on the percentage of licenses held in each county compared to the total number in the state. The second half is based on commercially available grow canopies associated with producer licenses.

The money will be deposited into the recipient county’s general fund. However, the change in formula will not apply to tax dollars collected prior to July 1, 2017.

According to Josephine County Commissioner Simon Hare, the state’s cannabis dollars will likely be used for code enforcement and to fund his county’s “decimated” sheriff’s department.

Josephine County public coffers have been depleted as federal timber sales declined. The county did pass its first public safety last spring, after shooting down similar measures in the past. 

As of Sept. 20, Josephine County has only one code enforcement officer to oversee a county with thousands of cannabis production sites.

 

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