On the first day of the special legislative session, Washington House members took up a bill that would change the way the state taxes recreational marijuana.
Washington lawmakers are back in Olympia this week after failing to pass a two-year operating budget during the regular legislative session. Now, lawmakers have 30 days to address the operating budget, a transportation package and satisfy a court mandate to adequately fund the state’s public school system.
Also on their to-do list is cracking down on the illicit marijuana market by addressing the current tax structure.
With Oregon’s recreational market about to come online, the bill could have particular implications for border counties such as Clark County.
Rep. Reuven Carlyle, D-Seattle, chief sponsor of House Bill 2136, which passed the House in a 70-25 vote, said a lower tax rate would better align with both the black market and Oregon. Carlyle’s bill would change the tax structure to a 30 percent tax applied only at the point of sale. Currently a 25 percent tax is applied to recreational marijuana three times as it goes from grower to producer to processor.
Rep. Liz Pike, R-Camas, said she voted in favor of the measure because it would protect medical marijuana patients from having to pay taxes. And Pike said she believes it’s a key measure if the recreational industry wants to win the battle against the black market.
“If the state has a big tax on marijuana, no one is going through the legal market … and for all us border counties, people will just cross the river,” Pike said.
The House bill also prohibits local governments from banning pot shops unless it’s approved by local voters.
Carlyle said negotiations with the Senate are ongoing. There are several sticking points, he said, the biggest being the rate of tax. The Senate is pushing for a 37 percent tax rate. The Senate’s proposed two-year operating budget, which doesn’t raise taxes, relies, in part, on marijuana revenues. It’s a move Democrats have blasted as unsustainable. It could mean the marijuana measure will be embroiled in the end-of-session budget game.
“Their entire budget is predicated on the idea that 7 million people in Washington need to smoke a lot of pot,” Carlyle said. “I’m decidedly unenthusiastic about that budget principle.”
Sen. Ann Rivers, R-La Center, is one of the lawmakers negotiating in the Senate. Rivers did not return a call seeking comment.
Ramsey Hamide, owner of Main Street Marijuana, said a change to the tax structure would help the industry and reduce prices at his store.
“It will have a ripple effect,” Hamide said. “I think we’ll see lower prices from it everywhere.”
Sue Vorenberg contributed to this report.