Measure 91
Supporters celebrate the passage of Measure 91, legalizing marijuana in Oregon.
(Michael Lloyd/The Oregonian)
Supporters of Measure 91, which made pot legal, emphasized the fact that legalization will divert money from the shadowy world of drug dealing to public services.
"We're sending millions of dollars to dealers and to violent drug cartels," Dan Mahr, campaign manager for Yes on 91, said in a press release before the measure was passed. "But if Oregon legalizes... the sales would instead generate tens of millions of new funding for essential public services."
Indeed, the state's annual earnings from marijuana will hit $16.5 million in 2017 and $24.3 million by 2019, according to Legislative Revenue Office estimates. But what do those numbers mean, practically speaking, for Oregonians?
It turns out that for the main beneficiary, Oregon public schools, the money won't mean that much at all -- at least in the near future.
An analysis performed by The Oregonian and reviewed by the legislative revenue office found this: The money in 2017 will amount to about $55,000, or less than the average cost of one teacher in a state that employed about 26,400 in the 2012-13 school year.
We're taking a closer look at the numbers in a series of explainers focusing on the three "essential public services" to which Measure 91 dedicates tax money: education, law enforcement and health. Here's how we came to our conclusion about schools.
In 2017, the state will collect an estimated $16,036,000 in taxes on pot sales and $425,000 in licensing fees from retailers. (This is just the revenue analysts' educated guess based on a variety of assumptions and data about marijuana use -- but it's the best we've got.)
The first thing that depletes the initial $16.5 million is startup costs: $3.9 million for the Oregon Liquor Control Commission to set rules and create a system for licensing and tracking producers and retailers. An additional $3.2 million will go toward administering the system.
That overhead leaves $9.4 million to spend on public services in the first year of marijuana sales.
The authors of Measure 91 dedicated the largest chunk of net revenues – 40 percent – to the Common School Fund. That provision drops a cool $3.8 million in marijuana revenues into the fund.
But that's not the end of the story.
The state runs the school fund sort of like a college endowment, investing the money to preserve the principal while taking a little bit out annually to spend. Every year, Oregon's 197 school districts receive 4 percent of the fund's value, averaged over the previous three years.
Based on the state's current rate of return on investments, the initial marijuana deposit could grow to $4.1 million in one year.
The marijuana money's average value over the preceding three years would be $1.4 million (0 plus 0 plus $4.1 million divided by 3). And 4 percent of that -- $55,000 -- is distributed among the state's school districts.
The Department of State Lands, which oversees the fund, used a slightly different methodology than ours and arrived at $48,000 available for schools after the first year -- close enough, in our book.
Let's put this $55,000 in perspective.
It cost an average of $85,000 to fund a teacher in the 2013-14 school year, an Oregon Department of Education spokesperson said. That means the first year's tax revenue won't be enough to hire even one teacher statewide.
The revenue office said it cost about $6,860 to teach an Oregon student in the 2013-14 school year, weighted for students who require more resources. New marijuana revenues will contribute 8 cents.
While the payout from the pot tax and retailer fees might seem extraordinarily small, it's important to keep in mind that it should grow quickly.
Most startup costs will be confined to 2017. Plus, the amount of marijuana money going into the fund for investment each year is much bigger than the amount coming out, so the principal grows by leaps and bounds.
The Legislative Revenue Office did not provide a full analysis of revenues and costs beyond 2019, but by the end of that period the annual distribution should reach about $550,000, or 82 cents per student.
Still, at one ten-thousandth the cost of teaching one student for one year, don't expect those three extra quarters, a nickel and two pennies to put an iPad in every child's hand or reduce class sizes. Ignoring likely salary increases between now and then, $550,000 in marijuana-derived cash would pay for a grand total of 6.5 teachers, statewide.
-- Fedor Zarkhin