State Sen. Tick Segerblom interacts with Pure Green Marijuana Dispensary owner Meghan Walstatter in Portland, Ore,, on Tuesday, Nov. 29, 2016 in the dispensary’s main lobby. Segerblom was one of five Nevada legislators and several more business leaders from Nevada’s marijuana industry to meet with Oregon’s Liquor Control Commission and Beaver State legislators on Tuesday morning before touring the dispensary in the afternoon.
Wednesday, Nov. 30, 2016 | 2 a.m.
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Nevada State Sen. Tick Segerblom raised his eyebrows as he walked into an Oregon marijuana dispensary Tuesday as part of a day-long fact-finding tour of the state’s recreational marijuana industry.
“I realize how good we’ve got it in Nevada,” Segerblom said while walking by a display case full of pot products at Pure Green Medical Marijuana Dispensary, just west of Portland’s downtown district. “I think this is going to be a smooth transition.”
Segerblom was one of five Nevada legislators who toured Portland dispensaries and met with Oregon’s Liquor Control Commission, which starting Jan. 1 will regulate the state’s recreational marijuana program. The Nevada contingent is gathering information to implement policy for recreational marijuana sales back home, which voters approved earlier this month through Ballot Question 2. Adults in Nevada on Jan. 1 will be allowed to possess and use up to one ounce of marijuana flower or up to one-eighth of an ounce of marijuana concentrates, like shatter, wax and carbon dioxide oil for recreational use.
Pure Green, like most of Oregon’s 446 marijuana shops, has sold products for recreational use since the state kicked off its “early start” program in October 2015. The program allowed medicinal marijuana dispensaries to stock and sell recreational weed on a limited basis before full recreational licenses are distributed on Jan. 1.
Oregon buyers are allowed a quarter-ounce of marijuana flower for recreational use compared with a full ounce for Nevada marijuana seekers. And while Oregon’s recreational law was passed in June 2015, it wasn’t until Oct. 1 of this year that the Oregon Health Authority – the industry’s current regulating body – allowed dispensaries to start selling concentrates and edibles, of which only one-sixteenth of an ounce is for sale per customer.
“We’re in a really challenging time here in Oregon for a number of reasons,” said Pure Green owner Matt Walstatter, who has been growing and selling marijuana under Oregon’s medical marijuana program since the early 2000s. “The rules as they exist are incredibly cumbersome.”
It’s this type of feedback that Segerblom and the others were seeking. He was joined by state Sens. David Parks, Patricia Farley, Pat Spearman and recently elected Nevada Assemblyman Steve Yeager, as well as former legislator-turned-marijuana lobbyist William Horne, Nevada Dispensary Association Executive Director Riana Durrett and several prominent Nevada dispensary owners and marijuana attorneys.
Among topics discussed at a nearly three-hour morning roundtable with the Oregon Liquor Control Commission included tax revenue, industry competition and a decrease in medical cards all resulting from just over 13 months of limited recreational marijuana sales in the state. The Oregon Health Authority allowed the early start program for limited marijuana flower sales to begin on Oct. 1, 2015.
Oregon brought in $54 million in sales tax from Jan. 1 of this year through Oct. 1, selling only marijuana flower for recreational use at a 25 percent sales tax rate, said OLCC economist Bill Schuette. The agency plans to lower the sales tax rate for recreational pot to 17 percent next year and estimates the program will bring about $40 million annually in sales tax revenue, Oregon state Sen. Ginny Burdick said at Tuesday’s meeting. Unlike Nevada, Oregon does not charge sales tax on medicinal marijuana.
Burdick advised Nevada’s legislators of the importance of what she called keeping a reasonable tax rate for its recreational program, arguing that inflated taxes on marijuana sales would allow black market sellers to re-enter the industry by selling at more affordable prices.
“You absolutely have to keep that tax rate fair,” Burdick said, “or it’s going to bring illegal sellers back into the picture.”
While Nevada’s medical and planned recreational programs currently restrict the number of licenses for weed facilities allowed per county, Oregon provided for unlimited licenses, one of which costs a fraction of the price required to obtain a license in Nevada. By issuing more licenses, the OLCC hopes to “allow the free market to regulate the industry,” commission spokesman Mark Pettinger said.
Nevada marijuana licensees will pay $5,000 for an application to the state, a one-time fee of between $10,000 and $20,000 for a local license, depending on the type of marijuana facility, and $3,300 to $10,000 to renew that local license each year. But Oregon licensees pay $250 for their state applications, between $1,000 and $4,750 for their local license and $250 to renew that license annually. Oregon has 1,227 functioning marijuana facilities, including dispensaries, laboratories, testing facilities and cultivation facilities, compared to 162 operating marijuana facilities in Nevada.
Pure Green’s Walstatter said stiff competition sparked by the state’s relatively low barriers to entry has caused dozens of dispensaries in Oregon to close or change hands since limited recreational marijuana sales began last October. The rising number of dispensaries has taken his business on a “roller coaster” of ups and downs over the past 13 months.
“Whenever the state makes a move to lighten up on restrictions, we see a brief boom in business,” he said. “But soon enough a bunch of new dispensaries pop up and everything drops off again.”
Walstatter cited permission from the Oregon Health Authority to start selling edibles on Oct. 1 as reason for his most recent spike in business. But the past two months has also seen an additional 32 dispensaries enter the state’s marijuana industry, nearly half of them in Portland.
Oregon state Rep. Ann Lininger said the state is pleased with their free-market-based system and plans to continue forward with it.
“It’s sometimes hard to watch because not all good people are going to make it,” Lininger said. “But it’s capitalism.”
The visit from Nevada representatives also featured a noticeable turnout from leaders in Oregon’s Native American tribes. Pi-Ta Pitt, the Confederated Tribes of Warm Springs project coordinator, told Segerblom and the lobbyist Horne that establishing incentive-based revenue sharing for counties that allow recreational marijuana sales would be key for developing Nevada’s recreational program statewide.
Pitt, whose tribe pays both state and municipality taxes on reservation-grown marijuana, said his clientele increased “drastically” when Oregon passed legislation permitting only counties that allowed the sale of marijuana to use the $54 million in tax dollars generated by its sale for local public works projects, law enforcement and firefighting efforts, among other local programs.
Before the measure passed, even counties that voted against having marijuana-related facilities were entitled to a share in state tax dollars, according to Oregon Health Authority spokesman Tony Andersen.
Twelve of Nevada’s 16 counties voted against and currently ban medical marijuana facilities. The counties will vote again on whether to allow recreational facilities in early 2017.
“I think the incentives are set up here so that counties are encouraged to participate,” Pitt said or Oregon. “Put something strong enough on the table and all of a sudden they have a vote and they’re back in.”
While medical marijuana cards in Nevada reached their all-time high of 24,471 through October and have shown a steady growth of about 820 per month this year, medical cards in Oregon have dropped from a peak of over 80,000 earlier this year to less than 66,000 as of Nov. 1, according to data from the Oregon Health Authority. Such a drop is a sign the recreational program is “doing its job,” Burdick said.
She told Nevada legislators to expect a drop in state medical cards if the state’s recreational program is operating smoothly. With a successful recreational marijuana program, former medicinal marijuana patients will defer to more accessible weed instead of reapplying annually for a state card, which in Nevada requires a doctor’s visit and $100 state application.
The Oregon state senator also lauded the current medicinal marijuana model in Nevada, saying Nevada is “much better prepared” for recreational marijuana than her home state was last year.
While the passing of Ballot Question 2 calls for legal possession and use of recreational marijuana in Nevada as of Jan. 1, 2017, Segerblom said he plans to introduce an early start bill when the Nevada Legislature begins on Feb. 6. If passed, the bill would allow the state’s current medical facilities to begin selling recreational marijuana on a temporary license starting as early as July 1 of next year, six months before licenses for recreational facilities were initially scheduled to be issued on Jan. 1, 2018.
It’s a proposed solution to a yearlong scenario in which adult Nevadans could legally possess and use recreational marijuana, but not have the legal means of purchasing it in-state. Segerblom and Parks argued such a time gap would draw greater demand for black market sales and prompt those with Nevada medical cards to illegally distribute their marijuana purchases to friends and family.
“You can already buy way more marijuana than you’ll need for an illness, unless you want to be stoned all the time,” Parks said. “There’s a lot of extra weed there.”
Despite Segerblom’s optimism, Parks questioned whether the recently passed ballot question allowed for an early start program in Nevada. He described himself as “cautiously optimistic.”
“We’re off to a good start,” Parks said. “But no doubt, we have a long road ahead.”
