Measure 80 2012 General Election, Estimate of Financial Impact Statement

This measure legalizes the private manufacture, possession and use of cannabis in Oregon. Investigations and prosecutions for related offenses would no longer take place after the effective date of this measure. State and local expenditures and revenues will be impacted by passage of this measure. The measure creates the Oregon Cannabis Commission, appointed by the Governor, to carry out the provisions of the measure. The states Chief Financial Office believes the appointment of the commission will not add noteworthy cost to state expenditures. The cost of operating the Commission may be similar to the cost of operating the existing Oregon Liquor Control Commission, which is about $22 million per year, excluding the variable expenses related to compensating liquor store owners and paying bank card fees. Total additional revenues to state government are indeterminate, but revenues are likely to be sufficient to offset the expenditures of the Commission. The measure requires the Oregon Cannabis Commission to consult with the Board of Pharmacy on various issues and, if practicable, to establish certain rules. As the Commission is not granted rule-making authority, the Board of Pharmacy may be called upon to establish those rules. The Board of Pharmacy estimates the need for one half-time pharmacist, at a cost of approximately $75,000 per year, to carry out these additional duties. State expenditures would be reduced by the amount that the state pays for felony offenders with related convictions in prison and on probation. The savings to the state as a result of the passage of this measure is estimated to be between $1.4 million and $2.4 million a year. The measure prohibits the disclosure of names and addresses of applicants, licensees, and purchasers of cannabis except upon the persons request. The Oregon Judicial Department estimates additional expenditures of between $1.6 million and $3.3 million per year to ensure court case files do not contain such names or addresses prior to allowing them to be viewed by parties to a case, the public, or the media. The amount of the impact for local law enforcement, district attorneys, and the courts is indeterminate.

Impact on Expenditures

Impact on Revenue

Operation of the Commission

May increase $22 million per year

Indeterminate, but likely sufficient to cover expenditures

Board of Pharmacy

Increase $75,000 per year

None

Felony convictions

Decrease of $1.4 - $2.4 million per year None

State Courts

Increase of $1.6 - $3.3 million per year

None

Total Impact to the State:

May increase $22.3 - $23 million per year

Indeterminate, but likely sufficient to cover expenditures

Impact to Local Government:

Indeterminate

Indeterminate

Explanation of Estimate of Financial Impact

The measure replaces the states existing laws relating to cannabis, except those relating to operating a motor vehicle while intoxicated and the Oregon Medical Marijuana Act (OMMA). The OMMA is administered by the Oregon Health Authority, which expects the measures legalization of cannabis to reduce OMMA revenues from application and renewal fees, slightly more than half of which support other public health programs. The magnitude of this reduction in OMMA fee revenues is indeterminate. Under the measure, additional revenues to the state would result from the value of sales of cannabis in excess of expenditures to operate the Oregon Cannabis Commission (OCC). It would also compensate OCC contractors and provide legal defense of the provisions enacted by the measure and of persons prosecuted for acts licensed under the measure. The value of gross sales of

marijuana by the OCC depends on several variables, each of which has a large degree of uncertainty: (1) the amount of cannabis sold per year through OCC stores; and (2) the proportion of those sales that would be at cost for medicinal use and research (provided for in the measures language for ORS 474.045) or at a profit (provided for in the measures language for 474.055). The uncertainty of these variables results in an indeterminate value of additional revenues to the state. The measure outlines the distribution of revenues to a variety of programs, including two new hemp-related state committees. Because the amount of revenue generated is unknown, any related increase of expenditures is also indeterminate. The Judicial Department has identified potential indeterminate financial impacts of the measure on the states court system including: Motions to determine which laws the measure repeals Additional cases in the Court of Appeals to address OCC rulemaking and licensing authority Additional state court time required to resolve unclear or conflicting provisions of the measure Additional cases filed under new misdemeanors and felonies created in the measure Additional cases of DUII offenses, child endangerment, and juvenile dependency Additional court time taken to impose a fine to deprive a defendant of profits. The measure requires the states Attorney General to vigorously defend the provisions of the measure and any person prosecuted for acts licensed under the measure. The Oregon Department of Justice is not able to predict the number and difficulty of such legal defenses and therefore this potential expenditure impact is indeterminate. The Oregon Department of Revenue and Legislative Revenue Office have indicated that the measures impact on personal income tax is indeterminate. The Association of Oregon Counties has indicated that the potential costs and savings of county operations would be indeterminate. Committee Members: Kate Brown, Secretary of State Ted Wheeler, State Treasurer Michael Jordan, Director, Department of Administrative Services James Bucholz, Director, Department of Revenue Debra Guzman, Local Government Representative (The estimate of financial impact and explanation was provided by the above committee pursuant to ORS 250.127.)