Washington: Marijuana Not Eligible for Tax Exemptions
- Sales Tax News
- Apr 8, 2014 | Gail Cole
Updated, 11.10.2014: Washington voters were given the opportunity to repeal Senate Bill 6505 on November 4, 2014; however the bill was maintained.
Update, 6.19.14: The Washington State Department of Revenue has issued a special notice explaining the tax requirements for sales of recreational and medical marijuana.
The governor of Washington State has signed into law a bill that prohibits the marijuana industry from enjoying certain sales and use tax preferences—at least temporarily. According to the summary of Senate Bill 6505, these tax preferences are delayed for the marijuana industry “to ensure a regulated and safe transition to the controlled and legal marijuana market in Washington.”
In short, the new law clarifies “that marijuana, useable marijuana, and marijuana-infused products are not agricultural products.” In addition, “The terms ‘agriculture,’ ‘farming,’ ‘horticulture,’ ‘horticultural,' and ‘horticultural product’ may not be construed to include or relate to marijuana, useable marijuana, or marijuana-infused products unless the applicable term is explicitly defined to include marijuana, useable marijuana, or marijuana-infused products." As a result, marijuana and related products are not eligible for the tax preferences granted to agricultural products.
Furthermore, Section 19 of the bill prevents marijuana and related products from benefitting from the sales tax exemptions that normally apply to sales of drugs prescribed for human use.
The majority of Senate Bill 6505 takes effect on June 12, 2014. However, certain sections take effect at later dates.