Marijuana Excise Tax.
Retail sales of marijuana concentrates, usable marijuana, and marijuana-infused products are subject to an excise tax of 37 percent. The tax is in addition to state and local sales and use taxes. Revenues from this tax are deposited into the Dedicated Marijuana Account.
Qualifying Medical Marijuana Patients.
A Washington resident qualifies for medical marijuana use if they are a patient of a health care professional, have been diagnosed with a terminal or debilitating medical condition, have been advised of the benefits and risks of marijuana use, and have been advised they may benefit from the use of medical marijuana by their health care professional.
The qualifying patient must either have an authorization form from their health care professional, or must be entered into the medical marijuana authorization database and receive a recognition card.
All medical marijuana patients must pay the marijuana excise tax equal to 37 percent. Qualifying patients holding a recognition card are granted a sales tax exemption on the following products, when sold by a marijuana retailer who has a medical marijuana endorsement:
Medical Marijuana Endorsement.
Marijuana retailers may apply to the Liquor and Cannabis Board (LCB) for an endorsement to sell marijuana for medical use to qualifying patients and designated providers.
To qualify for this endorsement, the retailer must:
Tax Preference Performance Statement.
State law provides for a range of tax preferences that confer reduced tax liability upon a designated class of taxpayer. Tax preferences include tax exclusions, deductions, exemptions, preferential tax rates, deferrals, and credits. Currently, Washington has over 650 tax preferences, including a variety of sales and use tax exemptions. Legislation that establishes or expands a tax preference must include a Tax Preference Performance Statement that identifies the public policy objective of the preference, as well as specific metrics that the Joint Legislative Audit and Review Committee (JLARC) can use to evaluate the effectiveness of the preference. All new tax preferences automatically expire after 10 years unless an alternative expiration date is provided.
Sales of compliant medical marijuana products by a retailer with a medical marijuana endorsement to qualifying patients or designated providers are exempt from the 37 percent marijuana excise tax until June 30, 2025.
Each seller making exempt sales must maintain information establishing eligibility for the exemption in the form and manner required by the LCB. The LCB must provide a separate tax reporting line on the excise tax form for exemption amounts claimed.
The JLARC must review the exemption to identify changes in consumer behavior and to determine whether the exemption results in an unanticipated decrease in state revenue. The JLARC must report its findings to the Legislature by December 1, 2024.
The Finance Committee recommended changing the expiration date of the exemption from January 1, 2025, to June 30, 2025.
(In support) The Legislature has worked hard to create a well-regulated marijuana market that ensures that products are well-vetted and of high quality. The 37 percent excise tax makes medical productions uneconomical. People with medical conditions often avoid the high tax by buying products on the grey market, which is not regulated. The goal of this bill is to allow patients to purchase certified medical marijuana products with economic fairness. The fear of the general public gaming the system for a tax break is unfounded because that kind of behavior is very effectively prohibited in statute. Subjecting medicine to such a high tax is unethical and this bill addresses that. The current market often does not meet the needs of patients who need marijuana products. The cost and lack of availability of sufficient products disproportionately affects low-income and chronically ill people. Growing and testing medical marijuana products is very expensive and makes it difficult to get a proper return on investment, especially with the high tax rate. Medical marijuana patients are often on fixed incomes, so this bill helps increase access to affordable health care.