Recreational marijuana went on sale in Oregon on October 1st last year (2015) and for the first three months consumers got the amazing opportunity to purchase their bud tax free. This was a move that Oregon made that stands out a lot when compared to other states which have legalized the herb.
Even though everyone knew it was coming, it’s got to be a bit of a downer to suddenly see that 25% tax being implemented as soon as the New Year arrived. The big question remains – will Oregon see nearly as many sales now that this tax is being collected?
In Oregon pot prices range from $9-15 per gram on average, so with the 25% tax it will come to $11.25-18.75 per gram on average. I’m not sure what the underground market prices look like in Oregon, but will it be a big enough difference that it will survive with a legal market rising?
If you ask the individuals who are running the shops, you will find that the consumers seem to have a relatively positive outlook on the tax. It was much the same in Colorado – people were happy to pay the tax, weed is finally legal after all!
In most cases, a couple extra bucks on every 8th isn’t so bad when purchasing your bud is no longer a potential criminal record. Unfortunately however, there will always be those people who are stubborn and don’t want to pay an even slightly higher price.
Those people are the ones who are likely to say things like, “I’ll just go back to ‘my guy’ instead”. No matter what the tax is, there is always going to be a few people who just don’t want to spend the extra money (or maybe their guy used to cut them a great deal that the dispensaries just can’t match).
In the end, the majority of consumers in a legal state are likely to choose a dispensary over the potential of being arrested to save a couple bucks per 8th.
The 25% tax will eventually drop down to 17%, after control of the recreational market is turned over to the Oregon Liquor Control Commission. The change in the tax is not likely to happen until much later this year or early next year.
It is up to dispensaries how they plan to make the tax money. Most dispensaries are simply adding the sales tax onto the bill as you would expect – but one owner is taking a different approach, absorbing the tax and hopes to make up for it with additional sales by not charging the high tax to the consumers.
The brave approach seems both risky and brilliant to me – and he might just win over some of those “I’ll go back to my guy” people. The cannabis industry is an extremely new and already highly competitive market – not even a 25% sales tax can change that.
Black market prices are always lower than retail and higher than wholesale.
If a oz would retail for $270/oz and wholesale for about $110/oz- you can expect to find it on the black market for about $140-$170/oz