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Washington State: Temporary Sales Tax Exemption for Medical Marijuana

  • Jul 14, 2015 | Gail Cole

 Washington creates new exemption for medical marijuana.

Washington State’s fledgling recreational marijuana industry started off slowly in the summer of 2014, when the first retail shops opened for business. Supply was initially low, meaning prices were high. Several communities banned pot shops outright. Yet in spite of multiple challenges, the industry generated more than $65 million in tax revenue in its first year. Today, with about 160 shops in business, “sales top $1.4 million per day.” And recent changes to Washington marijuana taxes may enable sellers to make money.

Marijuana, both recreational and medical, was featured in the new Washington State budget, signed by Governor Jay Inslee on June 30, 2015. Among other changes, there is now a temporary sales and use tax exemption provided for medical marijuana from collective gardens and certain individuals participating in collective gardens.

As explained by the Washington Department of Revenue, “From July 1, 2015 until June 30, 2016, sales of certain products by collective gardens to qualifying patients and designated providers are exempt from retail sales tax.”

Exempt products

  • Marijuana products:
    • Marijuana concentrates
    • Useable marijuana
    • Marijuana infused products
  • Low-THC products:
    • Absorbable, inhalable, and ingestible products with a THC concentration of 0.3% or less

Sales of clothing, memorabilia, paraphernalia and posters by collective gardens are not exempt. Additional information, including reporting requirements, is available on this DOR special notice. Information about marijuana excise tax changes is available here. The full text of the new law is here.

Please note that ineligible collective gardens remain subject to the retail sales and use tax.

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.