Washington State Legislature Passes Marijuana Reform Law
On June 27, 2015, the Washington state legislature passed HB 2136, a bill aimed at revising and streamlining the state’s marijuana regulatory system. With a vote of 36-7, the reform bill passed the Senate with overwhelming bi-partisan support, while the House vote was much closer at 59-38.
For those in the industry, the biggest change brought about by HB 2136 is in how marijuana is taxed. Under the previous law, recreational marijuana was taxed at three points in the supply chain at a rate of 25 percent. Medical marijuana faced no such tax.
With HB 2136 marijuana, both recreational and medicinal, will be taxed at a rate of 37 percent paid at the point of sale. In addition, recreational marijuana users will also have to pay a 10 percent state sales tax, making the effective recreational tax 47 percent.
In an effort to encourage towns from banning the sales of medicinal and recreational marijuana, the bill allows for a portion of the marijuana tax revenue to return to the area from which the sale was made.
Although recreational marijuana taxes are still considered rather high, many in the industry are still considering the bill a victory. Ever since the recreational market opened up last year, dispensary owners have complained that it was very difficult to compete with the medical market because medicinal market faced fewer costs.
Now that medical marijuana is taxed at a closer rate to recreational marijuana, the market should become more competitive for business owners. Naturally, those in the medical marijuana market are crying foul over having to pay more just so the recreational market can stay competitive.
Many are also claiming that the state has over-estimated the potential revenue from marijuana taxes, estimating that more than 6.2 million ounces of marijuana will be sold this year. In a state of seven million people, that is nearly one ounce per person.
Rep. Reuven Carlyle, chief tax-writer for the House Democrats, told The Spokesman Review that the legislature’s over-zealous tax policy was “a political addiction…to a new revenue pillar that is shaky at best.”
Another provision in the bill allows local towns to reduce the required 1,000-foot buffer zone around marijuana businesses to be lowered to 100 feet, with an exception being made for schools. The bill also bans marijuana clubs, drive-thrus, and vending machines.
With overwhelming support from both houses of the legislature, HB 2136 will now head to Gov. Jay Inslee’s office for approval.
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