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Bill to increase tax on high-THC products stuck in Washington House committee

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(The Center Square) – A bill that would impose a higher tax on high-potency cannabis in Washington state has stalled in the House Committee on Finance.

Senate Bill 6271 would require the Liquor and Cannabis Board to collect data on tetrahydrocannabinol, or THC, content in commercial cannabis products, with a report to the Legislature due in November 2025. The bill also calls for the LCB to formulate a recommended approach and implementation plan for a revenue-neutral shift in the tax structure such that the higher the THC content, the higher the tax, with a report to the Legislature due in September 2026.

The current excise tax is set at 37% of the selling price on each retail sale of cannabis products. This is the highest rate in the U.S. and is more than double the rate in some other states.

The cannabis excise tax is separate from the general state and local sales and use taxes, and is not part of the total retail price.

“If revenue-neutral adjustments can be made to reduce the rate on low THC cannabis products, and increase the rate on high-THC cannabis products, Washington will be better off,” a staff summary of the bill states.

Supporters of the tax modification said that taxing high-THC products could reduce consumption of those products, pointing to higher taxes on cigarettes, alcohol and sweetened beverages they said had reduced overall consumption of those products.

“Taxation works; we have seen it in tobacco, alcohol, sugar-sweetened beverages and many other areas,” Washington State Public Health Association Executive Director Megan Moore said at a House Regulated Substances and Gaming Committee meeting on Feb. 14.

Data from the House Bill Report on SB 6271 indicates that cannabis sales in January 2024 saw cannabis flower represent the majority of sales in the state at 53%, with concentrates representing about 31%. Cannabis flower is considered a relatively lower-potency product.

An executive session was scheduled for Monday morning, but no action was taken in the House Committee on Finance.

Since 2013, Washington state has collected $3.3 billion in excise taxes and $37.3 million in fees alone through 2023, according to the Washington State Liquor and Cannabis Board annual report for fiscal year 2023.

Notably, the amount of tax revenue the state is bringing in through cannabis purchases has been on a downward trend. The state collected $511.1 million in cannabis taxes in 2022, and $464.5 million in 2023. That is a 9% decrease year-over-year.

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