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Proposed pot tax faces criticism

Opponents argue medicinal stores should be protected from sales tax

OLYMPIA – Washington will soon have two very different systems for legal marijuana, but a plan to tax medical patients similar to recreational pot users is unfair and unworkable, a legislative committee was told Monday.

The proposal did what a longtime cannabis advocate said was once unthinkable: turning a normally dysfunctional family of regular marijuana users into “normal citizens, complaining about taxation,” Jeff Gilmore said.

Medical marijuana has no state-regulated system for growing and selling the drug to people who receive a doctor’s recommendation to take it for certain conditions. The new law legalizing recreational pot calls upon the state to regulate and tax production and sale.

House Bill 1789 was introduced earlier this month as a way to standardize tax rates on all marijuana sold legally in the state. It would assess a business and occupation tax on medical marijuana dispensaries and require them to charge the standard state and local sales tax and a 25 percent excise tax, the same as state-approved stores for recreational marijuana will charge when they are set up later this year.

If taxes aren’t applied evenly, “we will create a black market,” state Rep. Ross Hunter, D-Medina, the chairman of the House Appropriations Committee, warned when the bill was introduced.

The Office of Financial Management estimates those taxes would raise $3.5 million next year and a bit more each successive year, for a total of $47.5 million over 10 years.

Most of that would come from the excise tax.

Ezra Eickmeyer, political director of the Washington Cannabis Association, argued Monday the price at many dispensaries is currently below the illegal street price. The taxes proposed by Hunter and state Rep. Reuven Carlyle, chairman of the House Finance Committee, would raise the price of medical marijuana at dispensaries and drive those patients back to the black market.

Washington shouldn’t even charge sales tax on medical marijuana, because it doesn’t charge sales tax on prescription drugs, said Dale Rogers, of Compassion in Action. While patients don’t have a prescription, they do need a doctor’s recommendation, so marijuana isn’t like over-the-counter drugs like aspirin, he argued.

The bill says the taxes are being levied on dispensaries for the privilege of doing business in the state.

That angered Stephanie Viskovich, of the Cannabis Action Coalition, who said patients will pay those taxes.

“It is not a privilege to have HIV. It is not a privilege to have cancer,” Viskovich said. “You can do this, but is it something that you should do?”

Gilmore, who described himself as a longtime marijuana activist, said opposition to the proposed tax hike was uniting different factions and was premature. The state Liquor Control Board is developing rules for growing and selling recreational marijuana that won’t be in place until December. No one knows yet what, if any, loopholes over sales from the different systems will arise.

“That’s an issue for next year,” Gilmore said. “Give the Liquor Control Board a chance.”