Sales at shops along Washington's border with Oregon are dropping, according to a recent article in the Oregonian. From a high of $2-million in Washington last September, to just $1.3-million In October, dispensaries have seen a steady decline since Oregon started allowing recreational sales.
Reasons cited for the declining sales won't surprise anyone who is familiar with border politics and shopping, be it state by state or between countries.
Taxes and consumer choice are the main motivators for Washingtonians travelling across the border for Oregon's cannabis. Washington's tax rate is 37 percent while Oregon's is 25 percent. And while Washington was first to legalize recreational sales of cannabis, The Evergreen State has not as yet legalized and regulated the sale of edibles, which are available from Oregon dispensaries.
Border wars an America-wide problem
As more states that border each other move towards legalization, such as the potential legalization triangle formed by California, Nevada, and Arizona, those crafting regulations and tax rates would do well to more closely consider the regulations and tax rates of bordering states.
It is illegal to transport cannabis across state lines, but if possession is legal on either side of the border it may prove impractical for the federal government to regulate consumer behavior attracted by more favorable conditions in other states.
Canadian provinces, too, should take notice of the Washington, Oregon sales story. We don't yet know what legalization will look like in Canada, but we do know that individual provinces have been taking steps to plan for the sale and regulation of recreational cannabis, and similar issues with taxes, pricing, and selection have caused issues with alcohol sales in some Canadian provinces for years.