Seattle Times
Thanks to a new state law, Washingtonians with a medical cannabis card can get a break from the nation’s highest tax on the drug.
The change, which took effect Thursday, could nudge more people to get medical cards and potentially depress revenues from the cannabis tax, which generated nearly $470 million in fiscal year 2023.
While the state is developing formal rules, a trade group representing cannabis businesses in Washington says the state needs to act faster to help them adapt to the new law and prevent the tax exemption from bolstering the illicit market for cannabis.
As of December, 21 states including Washington taxed recreational cannabis, according to the Tax Foundation. Most of those states levy an excise tax as a percentage of the retail price, as Washington does. Washington has a 37% tax rate — top in the nation — while neighboring Oregon taxes recreational cannabis at a rate of 17%.
It’s unclear how much state cannabis taxes could decrease under the new law, but if assuming there’s a demand for medical products and the supply meets the demand, state fiscal analysts predict “a significant negative impact.”
To receive the tax exemption, the buyer must be a registered patient in the Department of Health’s Medical Cannabis Authorization database, and the exemption only applies to products that comply with DOH’s standards, including testing for heavy metals and prohibited pesticides. Further, only those retailers who have a medical cannabis endorsement can provide the tax break. There are more than 500 licensed cannabis stores in Washington, according to the Liquor and Cannabis Board.
Julie Graham, a spokesperson for Washington’s Liquor and Cannabis Board, said that the board doesn’t expect the new exemption will have “a significant impact on the overall cannabis market” in the state
