Dems introduce bill to tax state's medical marijuana sales

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SEATTLE -- With Washington working on plans to tax recreational marijuana sales, some Democrats in Olympia say it's time for the state to take a similar cut of sales at medical dispensaries.

Reps. Ross Hunter of Medina and Reuven Carlyle of Seattle introduced a bill Thursday that would hit dispensaries with a tax equal to 25 percent of their sales of cannabis and cannabis-infused products.

Under Initiative 502, passed by voters last fall, adults over 21 are allowed to have up to an ounce of pot. The state is due to start issuing licenses to marijuana growers, processors and retail stores, with the marijuana taxed 25 percent at each stage.

The state Liquor Control Board is developing rules for the fledgling marijuana industry, possibly including such measures as digital tracking of inventory to prevent diversion to the black market. Sales are set to begin late this year.

Hunter, chairman of the House appropriations committee, and Carlyle, chairman of the finance committee, said having a tax on medical sales would encourage people to get their weed from the state-licensed stores instead.

"What we don't want to have is two sources of supply, one of which is regulated and taxed, and one that is not," Hunter said.

Representatives of medical marijuana dispensaries didn't like the sound of the measure, and Alison Holcomb, the campaign manager for I-502, said she wasn't sure it was a good idea either.

"There will be much gnashing of teeth in the patient community," said Philip Dawdy, spokesman for the Washington Cannabis Association. "Anything that drives up the cost of medicine is not going to be helpful for patients."

The bill is one of several marijuana-related measures pending in Olympia. One would allow anyone with a misdemeanor pot conviction to have their record cleared and another would protect medical marijuana patients from arrest.

Legitimizing business

One problem with the bill is that it calls for taxing businesses that are operating "pursuant to" the state's medical marijuana law as dispensaries. In reality, the state's medical marijuana law provides only for community gardens by which patients can share their marijuana with each other. Dispensary businesses aren't allowed, but they've been tolerated by law enforcement to varying degrees around the state.

Taxing those dispensaries would legitimize them, even though they're operating outside the legal framework and oversight provided by I-502, Holcomb said.

Instead, she suggested that law enforcement in jurisdictions with medical dispensaries should urge them to obtain licenses as recreational cannabis stores under I-502, once the Liquor Control Board starts issuing those licenses. If they decline, they could face being shut down, Holcomb said.

Medical patients could still grow their own 15 plants or designate someone else to grow for them, and true community gardens of up to 150 plants and 10 patients would still be allowed.

Prescription medications aren't taxed in Washington, and Douglas Hiatt, a Seattle medical marijuana attorney, said medical marijuana -- which requires a doctor's authorization -- should fall into that category. Hunter responded that many medical items -- a back brace your doctor tells you to get, for example -- are taxed.