Stirring the pot: Marijuana legalization in Oregon and its surprising tax revenue

Tax revenue of marijuana exceeds expectations, but debatably translates to funding public schools

The legalization of recreational marijuana in Oregon has been a particularly interesting saga to follow.  Measure 91 passed in 2014, formally legalizing the usage of recreational marijuana and outlining standards for recreational cannabis cultivation for Oregonians over the age of 21.  Additionally, it placed a temporary tax of 25 percent on marijuana sales, the yearly revenue of which was to be split among a variety of public works within the state.

The bill was essentially framed as an avenue for providing additional funds to Oregon public works — specifically the struggling public school system — through the taxation of a borderline-illicit activity already widely practiced and considered relatively safe.  Those opposed to the bill’s passage found themselves somewhat reassured that — despite the devil’s lettuce being a prominent sector of their state’s economy — the heavily taxed luxury would positively affect the state’s failing public school system.  A 25 percent tax would surely discourage frugal millennials from their weed, and in the end, marijuana sales would decline.  Therefore, the backlash toward the legalization was not prominent.

Original estimations predicted that the 2015 tax revenue for marijuana would peak at around $2-3 million.  However, in the first three months of newly legalized sales, Oregon raked in over $10.5 million in tax revenue.  Expectations for yearly tax revenue now exceed $44 million, a nearly 2,000 percent increase.  As the tax revenue of marijuana sales skyrockets, however, one has to wonder where all the money is headed.

Anywhere from 12-25 percent of the revenue will be directly redeposited into Oregon’s marijuana regulation system.  Of the funds remaining, 40 percent is intended for Oregon’s Common School Fund and 20 percent will be deposited in the Mental Health, Alcoholism and Drug Services Account of Oregon. State police will receive 15 percent, 20 percent will benefit city and county law enforcement and the remaining five percent will be invested in Oregon Health Authority’s alcohol and drug abuse prevention programs, which focus primarily on early intervention and pre-exposure to harmful substances.

The funds distributed to the mental health programs, state police, various law enforcement branches and OHA all solicit minute worry, simply in that providing a sudden influx of millions of dollars to any institution can often result in corruption.  However, it is the Common School Fund that we ought to examine more closely, as the crumbling nature of the Oregon public school system requires immediate attention.

Oregon is as well-known for its towering evergreens as it is for its lackluster public school system.  The state received a cumulative D grade from the recent nationwide research published by the Network for Public Education.  The state received additional D grades in school financing and effective expenditures of taxpayer money.  Oregon received a 69.5/100 and was given a C- grade from Education Week, which tested student success and achievement within the public school system.  The state received a failing grade from Education Week in educational spending, ranking amongst the worst in the nation.

The Common School Fund is monitored and controlled by the Governor, Treasurer and Secretary of State of Oregon. On the Common School Fund state website, repetitive statistics citing the positives of the fund — and its current principal of nearly $1.5 billion — are displayed in colorful graphs and boldfaced typography.  As each school district is awarded a different amount from the fund based upon its size and perceived need, school districts receive anywhere from $210 to nearly $7 million annually.  On the website, a “sampling” of school districts is provided to exhibit average yearly donation amounts, yet the sampling includes a seemingly hand-picked collection of some of the largest recipients of funds provided, drastically inflating the purported size of the yearly donation from the fund, which donates only four to five percent of its principal each year.  Furthermore, while the money from the fund is purported to offset expenses incurred by school districts in recruiting and hiring new teachers, the ambiguity of donated funds is concerning, and opens the dialogue of where specifically the money is siphoned.

While the large influx of money from marijuana tax revenue presents a promising outlook for increased public school funding, Oregon has much to ameliorate.  When the state provides a positive outlook regarding its governmental spending, and the entirety of independent research suggests the literal antithesis, the citizenry should worry.  Marijuana sales will only continue to grow, and holding that the greatest support for the original passage of Measure 91 was rooted in the promotion of public school enhancement, our state’s leaders should strive to effectively improve the failing nature of the public school system.  We simply cannot and must not rely on unsupported, state-sponsored information and overtly misleading spending statistics to provide the necessary improvements.  Our public school system truly needs immediate and comprehensive overhauling and the marijuana tax revenue should merely aid in the process.