There is levied and collected a cannabis excise tax equal to 37 percent of the selling price on each retail sale in Washington of cannabis concentrates, useable cannabis, and cannabis-infused products. This tax is separate and in addition to general state and local sales and use taxes that apply to retail sales of tangible personal property, and is not part of the total retail price to which general state and local sales and use taxes apply.
The tax must be reflected in the price list or quoted shelf price in the licensed cannabis retail store and in any advertising that includes prices for all cannabis products. All revenues collected from the cannabis excise tax must be deposited each day in the Dedicated Cannabis Account.
Qualifying patients and designated providers who have opted to participate in the Medical Cannabis Authorization Database and be issued a recognition card, have an exemption from sales and use taxes on purchases of cannabis products identified by the Department of Health (DOH) as being a compliant cannabis product, but do not have an exemption from the 37 percent cannabis excise tax.
Cannabis products are subject to several mandatory fields of testing pursuant to the rules of the Washington State Liquor and Cannabis Board. Additionally, cannabis producers and processors may voluntarily opt to submit their products for additional testing for compliance with another layer of quality assurance standards established by the DOH and, if passing, may be labeled as a DOH "compliant product" bearing a label logo developed by the DOH. For example, heavy metal screening is required for all DOH-compliant product. Heavy metal screening is optional for a non-DOH-compliant product; however, heavy metal limits apply to all products and any product exceeding the provided limits are subject to recall and destruction.
A tax exemption is provided to qualifying patients and designated providers who hold a recognition card, from the 37 percent cannabis excise tax, on their purchases of cannabis products that are labeled as a Department of Health (DOH)-compliant product and tested in accordance with the DOH's rules.
Each seller making exempt sales must maintain information establishing eligibility for the exemption in the form and manner required by the Washington State Liquor and Cannabis Board (LCB). The LCB must provide a separate tax reporting line on the excise tax form for exemption amounts claimed.
(In support) This legislation makes a long overdue change to Washington's law to enable qualifying patients and designated providers with terminal or debilitating medical conditions to have more affordable access to their medicine. The state's merger of the medical and recreational cannabis systems in 2016 did not work as planned and patients who were provided assurances that did not come true are angry. The once thriving medical system is on the verge of collapse. Of the cannabis stores that have a medical endorsement, very few are actually capable of entering patients into the registry or carry Department of Health (DOH)-compliant product. There are only about 10,000 qualifying patients or designated providers in the registry, which is the lowest participation per capita in states with medical cannabis, and there is little incentive to participate. Currently only about four cannabis producers in Washington produce products that are sold and labeled as DOH-compliant products. Cannabis is the only form of medicine subject to tax. This is unethical. Washington's cannabis tax rate is also the highest tax rate in the United States. Medical cannabis helps patients relieve impairments from pharmaceutical drugs and is an incredibly important part of treatment. Unaffordability of cannabis is currently a huge problem for patients. Patients are being forced to choose between their medicinal cannabis and putting food on their table or paying utility bills. A monthly supply of cannabis can cost a patient up to $800 or even over $1,000. The current 37 percent tax applicable to qualifying patients and designated providers purchasing cannabis is the single biggest impediment to the program's success. The tax is stifling innovation with medical cannabis products and drives medical patients to the illicit market. The medical cannabis system is for children and adults with rare and untreatable diseases who need to access safe cannabis products as part of their treatment plan with their healthcare professional. Veterans and seniors use the program and will benefit from this legislation. This bill will lead to a wider variety of DOH-compliant cannabis products on the market available to qualifying patients and designated providers, will improve program participation, and will help ease suffering.
(Opposed) None.