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Financial Impact Statement For Oregon Marijuana Legalization Initiative Released

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oregon marijuanaOregon Measure 80 Would Generate Revenue And Create Jobs

Oregon Secretary of State Kate Brown has released the Financial Impact Statement for Measure 80 that will appear in voter pamphlets.

Below is the Explanatory Statement:

Currently Oregon law prohibits the cultivation, distribution and use of marijuana (cannabis), except as permitted pursuant to the Oregon Medical Marijuana Act. The passage of Ballot Measure 80 would replace and supersede all existing state and local laws relating to marijuana, except those that pertain to medical marijuana and driving under the influence of intoxicants.

The measure creates new criminal penalties for illegal sale of marijuana, removal of marijuana out of the state and unlawful distribution of marijuana to minors. It bans public consumption of marijuana, except where permitted by signs and where minors are excluded. Personal use of marijuana and cultivation of marijuana for personal use are authorized by the measure. The measure distinguishes “hemp” from “marijuana” and prohibits regulation of hemp.

The measure creates the Oregon Cannabis Commission (Commission). The duties of the Commission include:

1. Licensing qualified marijuana growers;
2. Licensing qualified persons to process and package marijuana;
3. Licensing stores to sell marijuana to persons having a physician’s order stating that marijuana is an effective treatment for that person’s medical condition;
4. Purchasing marijuana from licensed growers for sale at state-licensed stores;
5. Selling processed marijuana at cost to state-licensed stores, pharmacies in Oregon and other states, and to Oregon medical research facilities;
6. Setting the retail price of marijuana sold for profit at state-licensed stores;
7. Collecting fees for licenses issued;
8. Setting standards for quality and potency of marijuana sold at state-licensed stores;
9. Establishing psychoactive concentrations of marijuana and hemp;
10. May limit the quantity of marijuana sold at state-licensed stores and may prohibit the sale of marijuana to persons who violate the provision of the measure or who abuse marijuana; and
11. Promoting Oregon cannabis products in all legal national and international markets.The measure sets qualifications for persons who purchase marijuana at state-licensed stores, and for persons licensed to cultivate or process marijuana for purchase by these stores.

Money from licenses and the sale of marijuana at state-licensed stores shall be used to:

1. Reimburse the Commission for expenses;
2. Reimburse the Attorney General’s office for the costs of enforcing the criminal provisions created by the measure and defending the validity of the measure; and
3. Reimburse Commission-licensed retailers by paying them 15% of gross sales at Commission-licensed stores.

Money remaining from the sales of marijuana after reimbursements have been paid shall be distributed as follows:

1. 90% to the state general fund to finance state programs;
2. 7% to the Department of Human Resources to fund drug treatment programs;
3. 1% to create and fund a new state committee for the promotion of Oregon hemp fiber and associated industries;
4. 1% to create and fund a new state committee to develop and promote biodiesel fuel production from hemp seeds; and
5. 1% to state school districts to fund drug education programs.

Ballot Measure 80 would take effect on January 1, 2013.

Below is the Estimate of Financial Impact:

This measure legalizes the private manufacture, possession and use of cannabis in Oregon. Investigations and prosecutions for related offenses would no longer take place after the effective date of this measure. State and local expenditures and revenues will be impacted by passage of this measure.

The measure creates the Oregon Cannabis Commission, appointed by the Governor, to carry out the provisions of the measure. The state’s Chief Financial Office believes the appointment of the commission will not add noteworthy cost to state expenditures.

The cost of operating the Commission may be similar to the cost of operating the existing Oregon Liquor Control Commission, which is about $22 million per year, excluding the variable expenses related to compensating liquor store owners and paying bank card fees.

Total additional revenues to state government are indeterminate, but revenues are likely to be sufficient to offset the expenditures of the Commission.

The measure requires the Oregon Cannabis Commission to consult with the Board of Pharmacy on various issues and, if practicable, to establish certain rules. As the Commission is not granted rule-making authority, the Board of Pharmacy may be called upon to establish those rules. The Board of Pharmacy estimates the need for one halftime pharmacist, at a cost of approximately $75,000 per year, to carry out these additional duties.

State expenditures would be reduced by the amount that the state pays for felony offenders with related convictions in prison and on probation. The savings to the state as a result of the passage of this measure is estimated to be between $1.4 million and $2.4 million a year.

The measure prohibits the disclosure of names and addresses of applicants, licensees, and purchasers of cannabis except upon the person’s request. The Oregon Judicial Department estimates additional expenditures of between $1.6 million and $3.3 million per year to ensure court case files do not contain such names or addresses prior to
allowing them to be viewed by parties to a case, the public, or the media.

The amount of the impact for local law enforcement, district attorneys, and the courts is indeterminate.

fiscal impact statement

Below is the Explanation of Financial Estimate Statment:

The measure replaces the state’s existing laws relating to cannabis, except those relating to operating a motor vehicle while intoxicated and the Oregon Medical Marijuana Act (OMMA). The OMMA is administered by the Oregon Health Authority, which expects the measure’s legalization of cannabis to reduce OMMA revenues from application and renewal fees, slightly more than half of which support other public health programs. The magnitude of this reduction in OMMA fee revenues is indeterminate.

Under the measure, additional revenues to the state would result from the value of sales of cannabis in excess of expenditures to operate the Oregon Cannabis Commission (OCC). It would also compensate OCC contractors and provide legal defense of the provisions enacted by the measure and of persons prosecuted for acts licensed under the measure. The value of gross sales of marijuana by the OCC depends on several variables, each of which has a large degree of uncertainty: (1) the amount of cannabis sold per year through OCC stores; and (2) the proportion of those sales that would be “at cost” for medicinal use and research (provided for in the measure’s language for ORS 474.045) or at a profit (provided for in the measure’s language for 474.055). The uncertainty of these variables results in an indeterminate value of additional revenues to the state.

The measure outlines the distribution of revenues to a variety of programs, including two new hemp-related state committees. Because the amount of revenue generated is unknown, any related increase of expenditures is also indeterminate.

The Judicial Department has identified potential indeterminate financial impacts of the
measure on the state’s court system including:

• Motions to determine which laws the measure repeals
• Additional cases in the Court of Appeals to address OCC rulemaking and licensing authority
• Additional state court time required to resolve unclear or conflicting provisions of the measure
• Additional cases filed under new misdemeanors and felonies created in the measure
• Additional cases of DUII offenses, child endangerment, and juvenile dependency
• Additional court time taken to impose a fine to deprive a defendant of profits.

The measure requires the state’s Attorney General to vigorously defend the provisions of the measure and any person prosecuted for acts licensed under the measure. The Oregon

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2 Comments

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