Spin Control

Lege to pot businesses: No tax breaks for you

OLYMPIA -- Legal marijuana growers in Washington will not get any of the tax breaks other farmers get, under a bill passed today by the Legislature.

The House gave final passage to a bill that makes marijuana farming different from any other agricultural product, and not eligible for various exemptions or credits for business and occupation, sales or utility taxes. 

Thousands of would-be pot growers have applied for licenses and the Liquor Control Board, which regulates recreational marijuana under Initiative 502, began awarding licenses last week. They'll have to make their new operations work without the kind of tax help the state gives many other new industries.

House Finance Committee Chairman Reuven Carlyle, D-Seattle, said other agricultural producers get help to keep them competitive with farmers in other states, which also offer tax breaks. But marijuana farmers won't have that kind of competition, because growing marijuana remains illegal in most other states, he said.

If the marijuana industry needs help down the road, the Legislature can always consider tax breaks in a future session, Carlyle said.

But legal marijuana growers do have competition, Rep. Cary Condotta, R-East Wenatchee, said, from illegal growers who pay no taxes or fees to the state. Without tax breaks, legal recreational marijuana  might be so expensive that people won't switch from the black market, and the system the state sets up will be "destined for failure."

Legal growers will get no breaks from the state or federal government and pay a 25 percent excise tax on sales to processors, who will pay a 25 percent tax on sales to retail stores. The stores will add another 25 percent excise tax, plus a sales tax, to consumers.

An estimate by the Office of Financial Management said will collect some $25 million over 10 years on the taxes that marijuana businesses will pay, that many other businesses don't.

The bill passed on a 55-42 vote, Speaker Pro Tem Jim Moeller ruled it didn't need a two-thirds supermajority because it didn't change any provision of I-502.




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