Posted on July 1, 2015 at 3:20 pm


At midnight Pacific Standard Time, marijuana fans toked up en masse in Portland to celebrate the technical end of cannabis prohibition in Oregon. But a vast gulf remains between the technical legalization triggered by last year’s referendum and the kind of robust, practical system of legal sales and well-regulated production facilities that will allow the state to draw tax revenue from legal weed.

Hours before the Portland smokeout, state lawmakers advanced three bills that flesh out the skeletal legalization initiative voters approved last November. Assuming Gov. Kate Brown (D) signs the trio, recreational pot commerce will go through a kind of staggered start in Oregon over the next year-and-a-half.

One of the bills sets a 17 percent sales tax on marijuana with an option for local governments to tack on another 3 percent for their own coffers. Even the maximum sales tax rate of 20 percent would be well below the nearly 30 percent sales tax on recreational bud in Colorado. The largest of the bills contains the full package of regulations for growers and sellers, criminal law changes, and business licensing guidelines that the Oregon Liquor Control Commission (OLCC) and the Oregon Health Authority (OHA) will use to establish the state’s retail marijuana system.

It will be over a year before that system comes fully online, as growers, distributors, edibles producers, and retail stores all seek licenses from the OLCC, which reportedly expects the full retail system to launch in late 2016. The lengthy regulatory bill and the sales tax bill are already on their way to Brown’s desk.

The comprehensive bill also contains an explicit recognition of marijuana shop employees’ right to unionize. Many workers in states that allow medical marijuana dispensaries have joined the United Food and Commercial Workers (UFCW), whose members have helped shape local marijuana policy in California.

Legalization at the state level conflicts with ongoing federal prohibition in a variety of important ways – especially banking, where federal law is forcing legal pot shops to store huge sums in cash because the firms cannot get normal financial services – but labor issues seem to be an exception. Federal labor law adjudicators were ready to jump in on behalf of workers at a Maine dispensary last year before the company’s leadership dropped their anti-union efforts to pre-empt the federal intervention. The Oregon provisions on labor issues seem designed to ensure that business owners can’t retaliate against employees who report violations of the OLCC or OHA rules for legal pot.

Oregon’s third bill is where things get complicated. The state ballot measure that legalized marijuana makes possession and private consumption of the drug legal starting July 1, 2015 – more than a year before state officials expect a full system of legal stores and licensed, regulated grow operations to be operational. If the third measure fails to pass the House or gets vetoed by Brown, at least a year would pass where it’s legal to have and smoke marijuana for fun, but illegal to pay someone for it unless it’s for medicinal purposes.

The bill’s author, State Senate minority leader Ted Ferrioli (R), told The Oregonian that he pushed SB 460 because Oregonians shouldn’t have to “wait for a year or so until your bureaucracy can catch up with your democracy.” His bill allows existing medical marijuana dispensaries to start selling small amounts to recreational customers on October 1.

That’s roughly a year before the state’s full system will open – and three months before the sales tax bill will kick in. Oregon would collect no sales taxes on recreational pot sales by existing medical dispensaries for that first quarter-year. Early sales would be capped at a quarter-ounce per customer per day. State fiscal analysts predict that the bill would generate $2 to $3 million in revenue in the window after the sales tax kicks in but before the broader retail market comes alive. But they also warn the idea is “a major risk” that might “disrupt the unfolding of the legal commercial system.”

Such market disruption is essentially unavoidable, though, for states that aim for thoughtful, comprehensive, and tightly-regulated pot markets. Colorado’s system featured a similar staggered-start approach to who could sell what when, and also gave highly favorable sales tax treatment to medicinal-use purchases.

Those dynamics constrained the market artificially in the early going, reduced initial tax revenues for the state as compared to projections, and delayed a significant drop in retail prices for about a year. But most were happy to trade some mild market interference for the stability and public confidence that the gradual approach provided, as advocates and observers told ThinkProgress in June.

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