OLYMPIA – Medical marijuana patients would pay many of the same taxes as recreational pot users under a bill approved Friday by the House.
On a 59-38 vote, the House passed major revisions to Washington’s rapidly evolving marijuana laws, even though some lawmakers argued the rates were too high and the state is expecting to collect far too much in tax revenue by projecting sales that amount to nearly 1 ounce of marijuana for each of the state’s residents.
The bill also allows city councils and county commissions to ban or restrict marijuana businesses within their borders, something medical marijuana supporters said could restrict access to a drug some patients need.
The law makes a technical change to the way marijuana taxes were set up in Initiative 502, the voter-approved law that made recreational marijuana legal in 2012. Under the initiative, the state levied a 25 percent excise tax on each level of the supply chain – the grower, the processor and the retailer. The bill changes that to a 37 percent tax on the price at the retail level, an amount that is “revenue neutral” as far as customers are concerned, supporters said. But it has some tax advantages for the businesses.
While I-502 taxes were only applied to recreational pot, the bill extends those same taxes to medical marijuana, whose users previously did not pay excise taxes on their supplies. That’s in line with other legislation, already signed into law, that merges the two marijuana systems and places them under the Liquor Control Board, which previously regulated only recreational marijuana.
The bill gives medical marijuana users one tax break: They wouldn’t have to pay the 10 percent sales tax that is collected for recreational sales.
Rep. Reuven Carlyle of Seattle, House Democrats’ chief tax writer, supported the bill even though he criticized the level of taxation as too high.
“The people expected a well-regulated and appropriately taxed system,” Carlyle said. But in budget negotiations, Senate Republicans are insisting on a high level of taxes and projecting heavy sales of about 6.2 million ounces per year in a state that has 7 million people. Other states that have legalized marijuana aren’t expecting such high sales, and the high taxes may make legal marijuana not competitive with the illegal market, causing sales to fall far short of that level, he said.
“It’s a political addiction … to a new revenue pillar that is shaky at best,” he said.
Rep. Christopher Hurst, D-Enumclaw, agreed the tax level was “way too high” but predicted legislators will get a chance to drop it next year as Oregon opens its recreational marijuana market with far lower taxes. He urged lawmakers to vote yes for the state to take the next step in an evolving system.
Some legislators wanted to restrict city and county governments’ ability to prohibit marijuana businesses within their boundaries by requiring voter approval of any ban. But they lost that argument to those who argued that in a republic those decisions are best left to local elected officials who have time to study the issues.
The bill now heads to the Senate.
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