The Economic Impact of Measure 91 on Oregon

On Nov. 4, Oregonians will vote on the landmark decision to legalize recreational cannabis. 

Washington was the first state to legalize recreational cannabis in 2012 with Colorado quickly following suite. If Measure 91 gets passed, Oregon will be part of a select group of states where recreational cannabis is permissible.  Measure 91 was not the first such bill to be endorsed in Oregon;  in 2012, Measure 80 was defeated with 53% of voters disapproving. 

If Measure 91 is approved, people ages 21 and over would be allowed to possess up to eight ounces of “dried” cannabis and up to four plants. It would also task the Oregon Liquor Control Commission with regulating sales of cannabis.  Some opponents of the bill argue that minor cannabis sellers would be edged out – many of whom come from lower income brackets – thus creating a larger fiscal disparity. Then there is the risk of consumers continuing to buy cannabis illegally if prices are too steep. Washington prices average from about $420 to $840 per ounce after taxes; while in Colorado, prices are slightly more than $260 per ounce after taxes. In Oregon, the average price per ounce is $177.

So then what exactly is the economic incentive to pass Measure 91? According to experts, it all depends on what kind of policies Oregon chooses to adopt. 

Washington and Colorado have somewhat different policies and outcomes. Colorado gained $7.3 million in tax revenue within the first three months of recreational cannabis legalization. Between 2012 through 2013, the number of criminal cannabis cases filed in state courts plummeted 77%, while the number of petty marijuana possession charges fell 81%, reducing the amount of law enforcement resources according to the Marijuana Policy Project. 

Although Washington recreational dispensaries have had no problem attracting customers, keeping enough product in stock has been a major concern.  New Vansterdam, one of Washington’s first recreational dispensaries, has been plagued with cannabis shortages and high prices since its inception.  Bureaucracy seems to be the main problem hindering Washington’s dispensaries. Recreational cannabis must be grown by a licensed farmer, licensed processor, and then be transferred to a separate retailer.  Retailers are not allowed to grow the marijuana they sell, nor can they have any prior association to the medical cannabis industry.

Compared to Colorado, where most dispensaries have growing and processing operations and can serve both medicinal and recreational costumers, Washington’s laws are much more constraining.  Another vital difference is that Colorado was allowed to sell first, and then test for strength and contamination; whereas Washington requires cannabis to be tested first. 

According to Oregon State University, the state could potentially net between $35 million to $105 million in tax revenue from Measure 91. Seth Crawford, faculty member at the School of Public Policy at Oregon State surmises that, “From a purely economic standpoint, it’s a net win for the state’s budget. There are still going to be enforcement issues, but the costs are likely to be lower than what is spent on enforcement now.”  

Besides tax revenue, Measure 91 has the potential to create new jobs. Oregon already suffers from higher than average unemployment, but if recreational cannabis is legalized, it could open the door for much needed job growth throughout the state. 

But at the end of the day, it all depends on how stringent Oregon recreational cannabis policies are. Allowing black-market suppliers to contribute legally in Oregon’s economy and keeping prices competitive is reliant on the amount of regulation. If Oregon takes the Washington route, it’s likely that the populace will continue purchasing cannabis on the black market; but if Oregon follows Colorado’s example, it could prove to be immensely lucrative.