As the only state with a medical cannabis excise tax, advocates persuasively argue that patients in Washington State suffer undue hardship. To address this, Senator Karen Keiser introduced legislation to eliminate the 37% excise taxes on qualifying purchases by registered patients. The bill (SB5004) passed out of the Commerce & Gaming Committee, with passage appearing likely.
Many medical patients meet their needs by purchasing in retail stores without officially registering with the state as medical patients. As a result, the number of medical purchases is understated, as is the fiscal note for the bill which bases its analysis on the current portion of cannabis sales that are DOH-certified as 0.05%. Using this metric, the fiscal note estimates an annual loss of state tax revenue of about $5 million. With the opportunity to purchase products for 37% less than the adult-use price, it’s a safe bet that there will be a significant shift toward obtaining medical cards and purchasing medically-endorsed product.
What does this mean for your business?
In the short term, to remain competitive, retailers should consider pursuing a medical endorsement, as sales will likely shift to medically endorsed products. In the long term be prepared for a potential increase. Although Washington has the highest excise tax in the country, the shift will have a huge impact on revenue and the state will be looking for other ways to offset the loss.