House votes to relax pot taxes, tighten regulations

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A marijuana plant

The Washington House passed two bills Friday to mesh the state's medical and recreational marijuana systems into one entity, while dramatically reducing the taxes on recreational marijuana.

The House passed the marijuana-systems merger bill 60-36, and the tax reform bill 67- 28.

The merger bill is a heavily modified version of one by Sen. Ann Rivers, R-La Center, which the Senate passed earlier. That revised bill now goes back to the Senate.

Rep Cary Condotta, R-East Wenatchee, estimated that possibly a third of the House members were involved in modifying the Senate bill. "We've got to get some system in place because it's a lot better than what we have out there right now," said Rep. Terry Nealey, R-Dayton.

In 2012, Washingtonians approved an initiative for the legalization of recreational pot with 56 percent of the votes. Since then, the Legislature — working with the Washington Liquor Control Board, the administrator of recreational marijuana regulatory system — has been mulling and passing various pieces of legislation to help control the markets for pot. The House and Senate want to bring the medical pot regulations to the same strict standards as the recreational marijuana industry

Features in the newly passed regulatory bill include setting up a prioritization system for people applying for retail licenses, plus requiring the state Liquor Control Board to increase both the amount of legal space for marijuana production and the number of stores.

The House made revisions in the proposed medical patients' registry system to decrease the likelihood of the registration database being used to arrest people.

The regulatory bill would also limit the ability of a city or county to prohibit marijuana businesses, making a public initiative the only route for enacting a ban. If such a prohibition is imposed, it must stay in place for at least two years.

"We're going to be making revisions to this thing for years to come," said Rep. Maureen Walsh, R-Walla Walla.

Rep. Reuven Carlyle, D-Seattle, introduced the bill to revamp the state' marijuana taxation system.

Currently, each wholesale and retail marijuana sale is charged a 25 percent state tax. That tax is normally charged three times — on the sale from the grower to the processor, on the sale from the processor to the retailer, and on the retail sale to a consumer. Those taxes are added into the prices charged to the processors and to the retailers — and, ultimately, to the consumers.

The trio of 25 percent taxes has increased the price of recreational marijuana in Washington, putting it as a competitive disadvantage to the loosely regulated medical marijuana market — which is not subject to the 25 percent tax charges. Legal retail marijuana also competes with the black market, where no taxes are charged. Carlyle’s bill would eliminate the 25 percent taxes on the grower and processor sales, while bumping the retail tax from 25 percent to 30 percent.

Carlyle's bill now goes to the Senate. The Senate recently passed a similar bill 26-22 by Sen. Andy Hill, R-Redmond, that would eliminate the grower and processor excise taxes, and set the retail excise tax at 37 percent.

The House also voted 95-0 to create a licensing system for marijuana researchers. Sen. Jeanne Kohl-Welles' marijuana-research bill — in which the Washington Liquor Control Board would be told to map out research facility regulations — also easily passed the Senate earlier, and is now headed to Gov. Jay Inslee for his signature. Supporters have talked about Washington becoming the nation's center for marijuana research.


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About the Authors & Contributors

John Stang

John Stang

John Stang is a freelance writer who often covers state government and the environment. He can be reached on email at and on Twitter at @johnstang_8