Suppose one of Washington's prospective marijuana growers decides to call its brand "Grays Harbor Ganja."
That trademarked brand name would be taxed under a bill before the Washington House's Finance Committee.
Rep. Jeff Morris, D-Mount Vernon, introduced the bill to levy a tax of $3.60 per $1,000 assessed value of marijuana-related trademarks, brand names, patents and copyrights. No calculations have been made yet on how much revenue such a tax would produce. In fact, no one in Washington's government has figured out the value of even one such trademark.
A fiscal note attached to the bill acknowledges uncertainty about how to determine where the assets involved are located. But it says the Department of Revenue would be required to develop rules to establish the value of the trademarks and the like.
"What was the value of 'Marlboro' when it was filed as a trademark?" Morris said at a Finance Committee hearing Friday on his bill.
That tax trademark money would go to the state's Life Sciences Discovery Fund specifically for marijuana farming research. Then-Gov. Chris Gregoire and the Legislature established a program to spend $350 million — supposedly $35 million a year from 2008 though 2017 — to bolster life sciences research and turn that research into jobs.
Perhaps ironically, the fund Morris would like to bolster was set up with money from another product that is generally smoked: tobacco. The funding came from part of an annual settlement payment that tobacco companies make to numerous states, including Washington.
The fund finances projects that cover a broad spectrum of health-related undertakings including brain, breast cancer, and blood and diabetes research; developing technologies for human cell therapies; improving surgery safety in hospitals; and helping rural communities deal with mental health and substance abuse issues.
The actual tobacco payments and allocations for research from the Life Sciences Discovery Fund initially turned out to be close to the projections, about $33 million each in fiscal 2008 and fiscal 2009. Then the Legislature began dipping into Washington's tobacco settlement revenues to pay for other programs, sending less than $15 million to life sciences research in 2010 and about $5 million in 2011. The 2012 figure was less than $5 million.
Overall, $88 million in tobacco settlement money has been set aside in the Life Sciences Discovery Fund with all of it currently allocated to specific projects.
Chris Mulick, representing Washington State University, was the sole person testifying at Friday's public hearing. WSU wants to make sure that the Legislature won't cut money from its overall research allocations from the state's general fund if Life Sciences Discovery Fund money goes to it for marijuana-growing research. WSU gets about $21 million annually from the state for agricultural research with about twice that amount coming from the federal government and private grants.
"We're for anything that generates new support for agricultural research," Mulick said.
WSU is leery about federal laws against growing and using marijuana, wanting to wait for the federal government to say whether it will allow Washington to be a pot-legal state. "We don't want to grow it until we get an OK from the federal government to do so," Mulick said.
If Washington's develops a marijuana growing and selling industry, the state Liquor Control Board estimates that the excise taxes and licensing fees will translate into roughly $248 million in fiscal 2014, $434 million in fiscal 2015, $447 million in fiscal 2016, $460 million in fiscal 2017, and $474 million in fiscal 2018. Almost all of those amounts would come from excise taxes, and a tiny fraction would come from licensing fees.
Because of the iffy legal situation with the federal government, the state's economists and the Legislature's budget writers are not counting on any marijuana-related revenue for 2013-15 budget calculations.
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