Washington House Passes Bill to Eliminate Three-Tier Tax Structure on Recreational Cannabis
Washington’s House of Representatives voted on Friday to pass House Bill 2136, a proposal to make several changes to the state’s recreational cannabis market, including eliminating the three-tier tax structure. The vote was 59 to 38.
Under current law, recreational cannabis is taxed at three different levels, 25% on the producer, 25% on the processor and 25% on the retailer. Under House Bill 2136, this structure would give way to a new system where cannabis is taxed just once, at the point of sale at the retailer, with the tax being set at 37%.
An amendment to the bill that was approved before passage of the full measure unfortunately removed language that would have only allowed local bans on licensed cannabis businesses if approved by the jurisdiction’s voters. However, to encourage more cities and counties to allow cannabis businesses, the bill directs the state to share revenue from cannabis sales only with jurisdictions that allow them.
The proposal also allows counties and cities to reduce the current restrictions limiting cannabis outlets from being located within 1,000 feet of a childcare centers, public park, transit center, library or arcade.
– TheJointBlog
Scott Rellim
37%… why didn’t they just go for 50%? Good Lord.
R V
Because now you’re effectively paying a 95.3% tax rate from the cost of the producer to the cost of the retailer at the point of sale.
R V
Correction as I did my math wrong. It’s 135%
Anonymous
Isn’t it just a single 37% tax at the retail sale?
R V
Yes, the previous 25% 3-tier tax results in a 135% increase in price over the producer cost. That’s why complaining about a 37% tax at the retailer doesn’t make much sense in comparison.
David M
RV
“complaining about a 37% tax at the retailer doesn’t make much sense in comparison”
Not true for elderly disabled persons living on fixed incomes. People living in beach homes with car elevators will probably be OK.
R V
Do realize you’re paying way more than that under the 25% 3-tiered tax now?
Let’s ignore profit margin for a minute and look at the effects of the two rates.
Let’s assume that the producer has $1 in costs that to cover.
Under a 3-tier tax:
Each level has to remit 25% of the sales price as tax, thus the producer must charge $1.33 to the processor to keep $1 in net revenue.
This means the processor must cover at least $1.33 in costs, so must sell it to the retailer for $1.77
This means the retailer must cover at least $1.77 in costs and thus must sell it to the consumer at $2.36. So $1 of product has been increased by 135% at the consumer end.
Under 37% retail tax:
Producer sells to Processor at $1
Processor sells to Retailer at $1
Retailer sells to Consumer at $1.37
$1 of product has been increased by 37% at the consumer end.
Once you start including profit margins and markups the 3-tier system produces an even greater difference from a single retail tax.
David M
There is no way this bill had to be this complicated. It took two special legislative sessions for them to accomplish their obvious goal: killing medical marijuana in Washington and forcing medical patients into buying their pesticide laden products.
The politicians in Olympia will wish they had sided with State medical patients November 2016.
David M
There is no way this bill had to be this complicated. It took two special legislative sessions for them to accomplish their obvious goal: killing medical marijuana in Washington and forcing medical patients into buying their pesticide laden products.
The politicians in Olympia will wish they had sided with State medical patients November 2016.
calicorock
Scott Rellim :
Don’t worry they’ll those taxes jacked up until it all fails and comes crashing down. The Republican’s in Olympia after over 40 years of knashing their teeth finally won the State Senate (due to Washington residents not voting handing Washington it’s lowest voter ballot count in almost 50 years. The Republican’s have wanted to destroy Medical marijuana since it was passed by a citizen vote in 1998. Washington’s medical marijuana law is now as dead as fried chicken
A GOP State Senator from a cannabis banned spot in the road town of less than 2,000 people brought all of these cheer and joy to Washington. Hear anyone celebrating this ? Nt me and I live in the middle of Seattle. People are bummed and ready to move as soon as their dispensaries close.
David M
This makes the new lawsuits stopping SB5052 even more important than ever for WA. MMJ patients. This law wiill neever be impoxed. Please donatteee’til it hurts
David M
Apolgies for my broken keyboard
calicorock
R V
This legislation is a perfect example of American style phoney faux freedom. It illistrates for me another legitimate reason why Great-Grandparent’s left America to eventually become naturalized Canadians in the early 1900’s . My Grandfather used to say that American freedom is like cotton-candy, fluffy, attractive, tastes good for a few minutes until you realize that it’s all empty and hollow on the inside
R V
Because no taxes have ever been levied on other products? Cigarette taxes are massive by comparison.