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May 31, 2015

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The legislature is considering altering Measure 91’s marijuana tax. Good.

The grower tax was poorly thought out. Indoor weed costs more to grow, but wholesales for twice the price of outdoor. One indoor plant might produce one pound; outdoor, five? Lower-carbon footprint outdoor growers get one crop/year; indoors, six-eight. Outdoor bud forced to early harvest by fall rains can’t be sold/taxed as leaf, for extracts, so the grower can recover some of his losses. There is no way to tax the higher value, or THC levels, of extracts etc. Do we tax a bottle of Budweiser the same as a fifth of Glenfiddich? Do we tax the barley? Or the beer? All 0f the burden is on the grower, which could sometimes be ruinous.

Good indoor black market weed wholesales for ~$2000/ lb. $35/oz is 28 percent; it’s 56 percent of an outdoor grower’s gross at $1,000/lb during the fall harvest “flush.” Add the 38 percent it costs to grow*, and 66 percent of the indoor grower’s gross is gone, bef0re she’s even paid the mortgage or property taxes; the lower-carbon-footprint outdoor grower has already been forced out. This is not going to be get-rich-quick, and unfair taxes could kill it.

Growers should be able to process their produce, if the process is as safe as cooking (no butane). Otherwise charging 15-16 percent at retail, after all value has been added, should net the state about the same money as charging the grower 28 percent. If grower, processor, wholesaler and retailer each pay four or five percent, the state will come out ahead, and will not lose revenue to a fixed tax when the price increases.

OLCC estimates that recreational Maryjane could be a $1.3 billion/year industry. That is either a lot of revenue for a few tobacco companies, or 13,000 new jobs each grossing $100,000/year, netting ~$62,500 before tax (*based on one indoor medical grower’s estimate that her costs are ~3/8 of her gross). There should be licenses for rural outdoor grows up to 99 plants; 100+ triggers special attention from the federal jackboots. 99 plants might gross $1/2 million/year, which could be the salvation of a lot of family farms—half a mil on half an acre leaves room to grow a lot of produce on the other 39 1/2, and if the romanesco you grow as a labor of love barely breaks even, so what, if the mortgage gets paid and the kids go to college? Urban outdoor commercial growers should be allowed to grow as few as six plants in a protected, private back yard; 12 plants might net a good outdoor grower $50k/yr. pre-tax, and for a cottage industry that leaves time for other pursuits, that’s a decent living. And Oregon needs a lot more decent livings, spread through communities where the economics multiply, instead of Monsanto/ADM sucking big money out of state.

When prohibition ends nationwide, Oregon’s new $1.3 billion industry might, given our reputation for growing superior weed, go to $13 billion. OLCC should be ready to let growers expand and add new growers to keep up with demand, or we’ll miss out on that. And when Oregon’s universities begin exploring the medicinal uses of cannabinoids, $13 Billion might go to --$130 billion? So, y’ know, maybe we shouldn’t tax the growers out of business right at the start?

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