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When Oregon legalized weed in 2014, Portland capitalized on the newfound market. The city knew the industry would create big money.
Two years after weed was legalized, the city approved a tax on recreational cannabis sales, promising the tax dollars would go towards public safety, substance treatment programs and support for small businesses.
A new city audit released today shows, however, that more than three-quarters of the tax revenues have been allocated to traffic safety, and that little money has gone to treatment programs and small businesses.
When city officials proposed a 3 percent tax on recreational weed sales in 2016, part of their rationale was that the funds would help make reparations to those who were disadvantaged when weed was illegal in Oregon.
The city collected $3.6 million from the new tax during the 2018 fiscal year and $4.6 million in 2019.
But the new tax went into effect without specifications about how the money should be allocated between the three broad categories. According to the report, the majority of the funds were funneled to police and transportation programs.
In the evaluation of the tax they released today, city auditors say Portland failed to bring interested parties into the process of dividing up tax receipts and have not been transparent about allocations.
"Community members, cannabis businesses, or others affected by past cannabis policies have not been involved in the overall budget decisions, and the City has not reported on how it's used the tax revenues," the audit said.
The report shows that in 2018 and 2019, 79% of the tax went to public safety projects, the bulk of it being handed to the Portland Police Bureau to enhance traffic safety. Also falling under the umbrella of public safety was funding given to the Portland Bureau of Transportation for its Vision Zero project, a crusade to lower traffic deaths.
Only 16 percent of the tax was allocated to substance abuse treatment programs, and a meager 5 percent went to supporting small businesses.
The audit says the city must do a better job of reporting on the tax's allocations.
"There has also been no public reporting on the use of the funds, despite the ballot measure requirement for annual reporting," the audit reads. The audit claims that the few reports that have been made public have focused on the $500,000 dollars given to substance abuse programs, but that the $7.7 million remaining dollars has gone unreported.
The auditors chastised the city for not allocating the funds more equitably between the three categories. The audit also took issue with the city's grant process for small business owners, saying the city made the grant application process unclear and delayed the administration of those grants.
"Voting on recreational cannabis tax allocations as part of the overall City budget, with no separate opportunity for comment or description of how the funds will be used, leaves community members with no way to influence the allocation decisions," says the audit.
The audit recommended that the Office of Community and Civic Life and an oversight committee be created to work with City Council on forming a structured framework for how future funds from the cannabis tax will be allocated.
In a response to the report, Commissioner Chloe Eudaly and the Office of Community and Civic Life penned a letter saying they have already taken steps to "demystify" the grant process for small business owners, and "stand ready to work with City Council to improve the transparency of cannabis tax allocations and decisions in the coming months and years."
Correction: An earlier version of this story incorrectly stated that 16 percent of the tax went to substance abuse treatment programs and 5 percent went to small businesses.