State pot taxes to be reduced

marijuana_pot_reporters.jpg

Reporters and pot-enthusiasts created a circus in front of Cannabis City, Seattle's first recreational pot store, on its opening day.

A bill to make it easier and cheaper to buy legal pot in Washington is headed to Gov. Jay Inslee for his signature.

The big question is whether the state’s revenue predictions from a pot tax will hold up over time.

On Saturday, the Washington Senate passed a marijuana reform bill by Rep. Reuven Carlyle, D-Seattle, on a 36-to-7 vote. The House passed the bill 59-38 on Friday.

Sen. Ann Rivers, R-La Center, worked with Carlyle on the bill. She said that “it’s not perfect,” but addresses some major problems in implementing initiative 502, in which Washington’s voters legalized recreational marijuana.

Right now, Washington has a three-tiered tax system on marijuana, beginning with a 25 percent tax when growers sell to processors. There’s another 25 percent tax when processors sell to retailers, and a final 25 percent tax is levied when retailers sell to customers. Carlyle’s bill will replace that system with a 37 percent tax when retailers sell to medical and recreational customers. However, medical-pot customers in a state registry would be exempt from the tax.

Also currently, a 1,000-foot buffer zone exists between marijuana establishments and schools, parks, libraries, arcades, transit centers and childcare centers. The new bill keeps the 1,000-foot buffer intact for schools, but would allow cities and counties to reduce that buffer down to 100 feet for the other facilities.

And counties and cities that choose to ban marijuana establishments within their jurisdictions would become ineligible to receive marijuana tax revenue collected by the state.

The bill also says how the marijuana tax revenue would be allocated.

Fifty percent would go to low-income health programs. Another $50 million would go to substance-abuse prevention and to research programs, with the University of Washington and Washington State University identified as potential research centers. The rest of the money would go to the state’s general fund, which means it could be used for almost anything in the state’s main budget.

The current projection for 2015-2017 is that Washington will collect $367 million in marijuana taxes. Carlyle and Rivers take that estimate with a huge grain of salt.

Carlyle noted that Colorado and Washington have based their pot revenue estimates on the same study. While Washington’s number crunchers used the full estimate of taxed pot from the study, their Colorado counterparts sliced that estimate in half, and still came up significantly short in actual collected taxes, he said. As an example of suspicious estimates, he said that the figures could be interpreted to show that 5 million Coloradans smoked roughly 23 percent of the pot smoked by 7 million Washingtonians.

“This is an art. It is not science. It is a mistake to assume this is fiscal science,” Carlyle said of making estimates with no existing long-term track records of marijuana tax revenues. Rivers added, “We’ll be doing our best to collect numbers" to improve future revenue estimates.

  

About the Authors & Contributors

John Stang

John Stang is a freelance writer who often covers state government. He can be followed on Twitter: @johnstang_8