2026 Regular Session

ByRepresentatives Berg, Street, Gregerson, Pollet, and Ormsby; by request of Office of Financial Management

Read first time 01/30/26.Referred to Committee on Finance.

AN ACT Relating to removing a tax exemption for the warehousing and reselling of prescription drugs; reenacting and amending RCW 82.04.280; creating a new section; repealing RCW 82.04.272; and providing an effective date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature finds that, according to the most recent tax exemption study published by the department of revenue, there are currently 786 tax exemptions for the major state and local tax sources in Washington. A number of these tax exemptions have been unchanged in law for a long time and exist as the result of private interests securing preferential tax treatment. Furthermore, the legislature finds that the state's tax code must be periodically reviewed and updated to ensure that tax policy reflects our modern economy and provides adequate revenue to fund necessary and essential services to support the well-being of Washingtonians. Thus, it is the intent of the legislature to remove a tax preference in order to increase revenue to the state's general fund to maintain essential state services.

Sec. 2. RCW 82.04.280 and 2025 c 423 s 202, 2025 c 420 s 107, and 2025 c 9 s 2 are each reenacted and amended to read as follows:

(1) Upon every person engaging within this state in the business of: (a) Printing materials other than newspapers, and of publishing periodicals or magazines; (b) building, repairing or improving any street, place, road, highway, easement, right-of-way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle which is owned by a municipal corporation or political subdivision of the state or by the United States and which is used or to be used, primarily for foot or vehicular traffic including mass transportation vehicles of any kind and including any readjustment, reconstruction or relocation of the facilities of any public, private or cooperatively owned utility or railroad in the course of such building, repairing or improving, the cost of which readjustment, reconstruction, or relocation, is the responsibility of the public authority whose street, place, road, highway, easement, right-of-way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle is being built, repaired or improved; (c) extracting for hire or processing for hire, except persons taxable as extractors for hire or processors for hire under another section of this chapter; (d) operating a cold storage warehouse or storage warehouse, but not including the rental of cold storage lockers; (e) representing and performing services for fire or casualty insurance companies as an independent resident managing general agent licensed under the provisions of chapter 48.17 RCW; (f) engaging in activities which bring a person within the definition of consumer contained in RCW 82.04.190(6); and (g) warehousing and reselling drugs for human use pursuant to a prescription; as to such persons, the amount of tax on such business is equal to the gross income of the business multiplied by the rate of 0.5 percent.

(2) For the purposes of this section, the following definitions apply unless the context clearly requires otherwise.

(a) "Cold storage warehouse" means a storage warehouse used to store fresh and/or frozen perishable fruits or vegetables, meat, seafood, dairy products, or fowl, or any combination thereof, at a desired temperature to maintain the quality of the product for orderly marketing.

(b) "Drug" has the same meaning as in RCW 82.08.0281.

(c) "Storage warehouse" means a building or structure, or any part thereof, in which goods, wares, or merchandise are received for storage for compensation, except field warehouses, fruit warehouses, fruit packing plants, warehouses licensed under chapter 22.09 RCW, public garages storing automobiles, railroad freight sheds, docks and wharves, and "self-storage" or "mini storage" facilities whereby customers have direct access to individual storage areas by separate entrance. (("Storage warehouse" does not include a building or structure, or that part of such building or structure, in which an activity taxable under RCW 82.04.272 is conducted.

(c)))(d) "Periodical or magazine" means a printed publication, other than a newspaper, issued regularly at stated intervals at least once every three months, including any supplement or special edition of the publication.

(e) "Prescription" has the same meaning as in RCW 82.08.0281.

(f) "Warehousing and reselling drugs for human use pursuant to a prescription" means the buying of drugs for human use pursuant to a prescription from a manufacturer or another wholesaler and reselling of the drugs to persons selling at retail or to hospitals, clinics, health care providers, or other providers of health care services by a wholesaler or retailer who is registered with the federal drug enforcement administration and licensed by the pharmacy quality assurance commission.

NEW SECTION. Sec. 3. RCW 82.04.272 (Tax on warehousing and reselling prescription drugs) and 2013 c 19 s 127, 2003 c 168 s 401, & 1998 c 343 s 1 are each repealed.

NEW SECTION. Sec. 4. Sections 2 and 3 of this act take effect January 1, 2027.