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Washington: The Conundrum of Taxing Marijuana


 Washington Considers Taxing Medical Marijuana Like Recreational Marijuana.

Possession of recreational marijuana is now legal in Washington, thanks to the passage of Initiative 502 in November 2012. The state has until December 1 of this year to create and implement the system for producing and selling the weed. It has to be built "from seed to sale."

Some lawmakers are concerned that a black market will develop for medical marijuana once recreational marijuana is available for retail. Medical pot is subject to Washington State sales tax, but not the steeper excise taxes being proposed for its recreational cousin.HB 1789, sponsored by Appropriations Committee Chair Rep. Ross Hunter (D-48) and House Finance Committee Chair Reuven Carlyle (D-36), would change that, standardizing tax rates for both medical and recreational marijuana.

Rep. Carlyle says his objective "is total equalization and a sense of fairness… ." He is concerned that "having two systems, one almost completely without oversight, would make it difficult to win federal approval for overall marijuana legalization. It will distort the market and drive non-medical use inappropriately into the medical channel."

Rep. Hunter says that a "responsible regulatory system requires that we have consistent, transparent oversight and tracking mechanisms, and that taxes be applied evenly, or we will create a lucrative black market."

HB 1789 reads: "… there is levied and collected from every person for the privilege of engaging within this state in a business operating … as a medical cannabis dispensary a marijuana excise tax equal to twenty-five percent of the gross proceeds of sales of useable cannabis and cannabis-infused products."

The House Government Accountability and Oversight Committee will hear HB 1789 on Friday, February 15, 2013.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.