Washington to Eliminate 37% Tax on Medical Marijuana, Reducing the Burden on Patients and Providers
After more than a decade of collecting taxes on all cannabis sales Washington lawmakers have passed a bill that, if signed into law by Democratic Governor Jay Inslee, would effectively eliminate a 37% excise tax for qualifying medical marijuana sales. This is estimated to lower the cost of medication for patients and providers while also recognizing that medical marijuana shouldn’t be taxed at the same rate as its recreational counterpart.
Gov. Jay Inslee Still Has to Sign HB1453 Before It Becomes Law
Originally reported by Harris Sliwoski’s Cannabis Law Blog, House Bill (HB) 1453 was passed this week with a vote of 85–12 in favor in the House and 36–13 in the Senate. This high approval rate overall suggests that most lawmakers are understanding of the differences between medical and recreational cannabis use.
The bill makes specific exemptions that would allow eligible patients or a designated provider with a recognition card to qualify for fully tax-exempt purchases of eligible products. However, these products are subject to additional testing to comply with the state Department of Health (DOH) requirements.
“This bill will lead to a wider variety of DOH-compliant cannabis products on the market available to qualifying patients and designated providers, will improve program participation, and will help ease suffering,” a legislative staff summary of public testimony in support of the legislation says according to The Marijuana Moment.
Because of the high cost of additional testing, the number of eligible products may be few and far between as brands don’t often opt for additional testing when the number of people maintaining a medical card in the state seems to be stagnant or dwindling since recreational legalization. This is increasingly common for those who find themselves strapped for cash as the gap between median incomes and inflation continues to widen.
When Will Washington Stop Charging Taxes on Medical Marijuana?
If signed into law by Gov. Inslee there will be a 90-day window before HB1453 goes into effect. This would give both patients and companies time to prepare for the change. Once in effect, the tax exemption would be effective through at least July 2029.
For businesses, this means time to ensure employees are prepared to track eligible medical marijuana sales to ensure that they remain compliant with the new law. It also allows time for them to have products tested to prove DOH compliance.
For patients, chances are those who haven’t been maintaining their MMJ card to reduce costs may take the opportunity to renew their registration with the state to take advantage of future savings. In states where medical marijuana is legal, the cost of maintaining a card and high dispensary prices are the two most common barriers for patients who often fall into lower fixed-income brackets.
Considering Washington was the second state to legalize medical marijuana and first alongside Colorado to pass adult use laws, this seems like something that should’ve happened a long time ago. However, no matter how progressive voters in the state may have been in getting these ballot initiatives passed, it doesn’t mean lawmakers were nearly as focused on these issues.
How Much of Washington’s Cannabis Tax Revenue Came from Medical Sales?
Since Washington legalized adult use the state has been collecting taxes on both medical and recreational sales without much differentiating between the two. At this time, it’s hard to say what percentage of their millions in tax revenue have come from medical sales that under this new law would not be taxed.
It’s likely that with the passage of this new law, we will see better record-keeping on medical versus recreational sales within the state, providing a more accurate look at how much the state stands to lose (or gain) by making these changes.
The hope is that while it will reduce the overall tax revenue it will provide a much-needed financial reprieve for patients who cover all their expenses out-of-pocket and businesses that pay the highest taxes of any industry in the U.S.
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