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Washington: Marijuana Not Eligible for Tax Exemptions

  • Apr 8, 2014 | Gail Cole

 Marijuana not eligible for sales tax exemptions open to prescribed drugs or agricultural products.

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.

photo credit: smokershighlife via photopin cc

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.