ONTARIO — Enough product was sold at local recreational marijuana dispensaries in September to put another $96,000 into the city’s coffers. This brings this year’s total tax revenues to $185,183 in 67 days from the city’s 3% local sales tax on those goods.
Ontario City Manager Adam Brown reported the amount to the Argus on Friday and said that because the payments had to come in from the dispensaries in cash, the city’s accounting firm, Oster, had to purchase a cash counter.
“Oster actually purchased the cash counter themselves for $180.19,” said Brown in an email on Tuesday recalling that purchase took place back before the city started taking in tax money.
As far as knowing how much the dispensaries had sold, the city itself doesn’t invoice the dispensaries. Rather, dispensaries have a form they fill out and submit payment with.
“We reconcile with the numbers the state receives quarterly,” Brown said. “My understanding is that they just have to open their books to the state, not anyone else. But I’m not an expert on that.”
September’s 3% came from $3.2 million in combined gross sales between Weedology and Burnt River Farms, both of which were open the entire month.
The city’s third dispensary, Hotbox Farms, wasn’t open until Oct. 5. It is unknown at this time whether a third shop will actually mean more tax revenue for the city, Brown said, or whether the average spending will be spread out among more places.
During the budget sessions earlier this year, it was estimated recreational marijuana dispensaries could bring in about $750,000 per year for the city.
If the trend continues at the current average of $2,700 per day in tax revenues, the city could stand to gain $985,500 during a 12-month period; and may barely meet its projected budget by the end of its 2019-20 budget period in May.
Moving forward and into the final quarter of the year, the city will have the Department of Revenue collect tax payments on its behalf. This was decided in January by the Ontario City Council, and it was unknown at that time when the state would step in and take over.
Due to this, payments will be disbursed quarterly and the city won’t know until the first state disbursement in January, how much tax revenue was gained from October through December. And there is the potential that two more dispensaries will open in that time frame, including Top Crop, which currently has its certificate of occupancy permit from the city, according to Ontario Community Development Director Dan Cummings. However, the dispensary is still waiting on its license from the Oregon Liquor Control Commission.
The city decided earlier this year to eventually have the Oregon Department of Revenue collect taxes for a cost between $3,000 and $10,000. In addition to the state agency collecting the revenue, the agency will also let the city know if anyone is missing taxes.
Reports from other cities around the state made to Brown and the Argus were positive in having the state involved in tax collection, with a city manager from Bend saying doing so has kept a “really compliant industry” there.
“City officials and the budget committee agreed on a strategy to use new revenues in long-term sustainable ways,” reads information from this year’s budget committee.
With the expectation that marijuana legalization will spread to other communities, states or the nation as a whole, officials proposed using the taxes to “invest in our community and pay down debt, not for operating expenses or new programs.”
In addition to the revenue from the local tax and fees tied to recreational marijuana retailers setting up shop in Ontario there is also state revenue sharing for sales of those goods. That particular revenue must be used for law enforcement. It was estimated earlier this year to be about $250,000. Those funds will be used to fund two police officers.