marijuana washington seattle

Deb Greene, Cannabis City's first customer, displays her purchase of legal recreational marijuana as the store's owner, James Lathrop, walks past on July 8, 2014, in Seattle.

(Associated Press)

Legalizing marijuana could produce an additional $38.5 million in taxes for Oregon in the first year, according to an economic study financed by the legalization campaign.

That's equivalent to less than one-half of 1 percent of the state's general fund budget of $8 billion a year. But the projected revenues are also nearly a quarter of the entire budget of the Oregon State Police.

"It's not an insignificant amount, but it's not huge" relative to the entire budget, said Robert Whelan, who authored the study for Portland-based ECONorthwest.

The study concedes that it is particularly hard to estimate the economic impact of legal marijuana sales once the market matures, but it does point to a couple of interesting possibilities.

One is that the legalization measure on the November ballot calls for a much lower tax than levied on legal marijuana sales in Washington – and that could prod Washingtonians to come across the border to buy pot, much as they already do for other products to avoid sales taxes.

Second, the study says Oregon could be a "formidable exporter" of marijuana if legalization becomes widespread because of the favorable growing conditions in some parts of the state.

The study estimated that about 1.3 million ounces – the equivalent of about 86,000 pounds – of marijuana would be sold through the legal market in the first full year.

At an average tax rate of $28 an ounce, that would produce $38.5 million for the state in fiscal year 2017, says the study. The measure would tax producers $35 an ounce for the most potent parts of the marijuana plants, $10 an ounce for leaves and $5 for immature plants sold to home growers.

In contrast, Washington levies taxes at all levels of sales and production, producing legal prices reaching over $700 an ounce, according to the ECONorthwest study.

Oregon's tax rate is much lower, to the point that prices on this side of the border could be as low as $140 an ounce, the study says.

"If such pricing is in place when Oregon stores open, Oregon sales and tax receipts from marijuana bought from Washingtonians may be substantially higher than shown in this analysis," the study says.

The study didn't attempt to calculate the cost of regulating legal marijuana sales or of how it would impact law enforcement and corrections costs. Currently, possession of less than an ounce of marijuana is subject to a non-criminal citation.

Peter Zuckerman, a spokesman for New Approach, which is sponsoring the marijuana measure, said the bottom line of the study is that legalization would "generate tens of millions of dollars for public services...and right now a lot of that money is going into the black market."

Clatsop County District Attorney Josh Marquis, one of the leading opponents of the measure, said gains from legal sales wouldn't offset what he sees as the harm caused by legalizing the drug. He has argued that it would increase intoxicated driving and further encourage minors to use marijuana.

"It would just be a few million dollars split up a bunch of different ways," he said of the tax revenue.

Paul Warner, the Oregon Legislature's top tax expert, said his office is working on its own revenue estimates.

"The amount of uncertainty is enormous," said Warner, noting that it is hard to know how many marijuana users are in the state and how many will abandon the black market.

Warner noted that the estimated first-year tax revenues of $38.5 million is about two-thirds of what the state collects in taxes for non-cigarette tobacco products, such as cigars and snuff.

But, Warner added, tobacco sales are trending down while the marijuana market "is a revenue source that could grow over time."

-- Jeff Mapes