After enjoying a three-month tax holiday, Oregon recreational marijuana users are now slapped with a 25 percent sales tax at the turn of the year. This will eventually be replaced by a 17 percent state tax when the Oregon Liquor Control Commission assumes control of recreational pot sales later this year.
Amazingly, not all of them seemed to mind.
According to Matt Price, owner of a marijuana dispensary chain known as Cannabliss, some customers simply shrugged off the tax, and many other dispensary owners supported this fact. “And then, we have people that say they would rather go back to their ‘guy,’ so to speak, and walk out,” he said.
In order not to lose his loyal customers, Glisan Buds and Foster Buds general manager Nathan Krytenberg took a radical ‘strategic decision’: He let his company absorb the tax, hoping that this move would generate customer loyalty that will lead to additional sales to cover costs.
“To be quite honest with you, if we even take a small hit, I believe the fact that we are doing this will put us in a better market position,” Krytenberg said. He is currently selling marijuana for $9 and $15 a gram—competitive enough in a city where more than 100 shops compete with each other, not to mention with the established black market.
However, not all dispensary owners were keen on Krytenberg’s idea.
“If you can do it and make any kind of profit, God bless you,” said Sam Heywood, owner of Farma dispensary. “It’s aggressive. Is it sustainable? I don’t know.”
As for Oregon Department of Revenue officials, their main concern is to have the tax paid in full. They say that shops are free to absorb the tax, or they can spread it among the shop, growers, and consumers.
“We have no authority over pricing. Dispensaries can charge whatever they decide,” said Julia Dodson, spokeswoman for the agency.
Brad Zusman, owner of Cannadaddy’s, said he tried to approach his cannabis suppliers regarding the possibility of sharing the tax burden, but it wasn’t welcomed with open arms. Absorbing the tax on his own wasn’t a good idea either, as his store generates $1,400 in sales taxes daily.
Instead, he is now shifting his focus on medical marijuana patients who don’t need to pay any taxes. After all, recreational shoppers typically spend $38 to $45 per transaction in his store, compared to medical marijuana patients who spend $100 to $110 per transaction.
“It’s really hard for any dispensary to survive just on recreational sales,” Zusman said.
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