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Cannabis industry concerned over new tax break for WA medical marijuana patients

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(The Center Square) – Washingtonians with a medical cannabis card are eligible for a new tax break for marijuana purchases.

The change, which took effect June 6, could encourage more people to get medical cards. Opponents say the incentive could potentially depress revenues from the cannabis tax, which brought in more than $470 million in fiscal year 2023, according to the Washington Liquor and Cannabis Board.

Rep Sharon Wiley, D-Vancouver, was the prime sponsor of HB 1453, which absolves medical marijuana patients in Washington from the 37% excise tax on sales.

During a February hearing of the House Regulated Substances and Gaming Committee, Wiley told fellow lawmakers the initial law concerning medical marijuana didn’t quite work out as planned.

“We had those who portended to have medical marijuana needs and those with legitimate needs,” said Wiley.

She suggested Washington trailblazing into the legalized marijuana realm was a rocky start.

“When you’re second in the nation to do something innovative, sometimes you have to make changes, and I think now is the time,” said Wiley

Washington legalized medical marijuana in 1998, but was the first state to legalize recreational marijuana use in 2012, with full implementation of the law in 2014.

It’s unclear how much cannabis taxes could be reduced under the new law.

Burl Bryson, executive director of the Cannabis Alliance, testified in support of the legislation. He told lawmakers the initial move to legalize recreational marijuana in Washington pushed out medical marijuana patients.

“These patients often least able to afford their medications were forced into an unregulated market, where they could not be sure their product was tested and safe,” said Bryson. “As a result the medical market in Washington has nearly been obliterated.”

The new tax break applies only to medically-compliant products. A store with a medical cannabis endorsement must have a medical consultant on staff and be able to register patients in the state Department of Health (DOH) database.

The Department of Health says the onus is on the medical cannabis consultant to verify the provider authorization form, and DOH says they will be issuing a “resource guide” for retailers and consultants on how to verify that a form is authentic.

The Washington CannaBusiness Association, a trade association, has expressed concern that the law is going into effect with little formal guidance for legal businesses.

Aaron Pickus, a spokesperson for CannaBusiness, tells The Center Square they are also concerned the new law creates a financial incentive for people to seek medical cannabis cards who may not truly qualify.

“Before, if you’re a registered person, you got waived the sales tax of about 10% on average, but you can now avoid the 37% excise tax, so about a 50% reduction in cost,” said Pickus. “There’s a pretty significant financial incentive for this to be taken advantage of.”

Pickus said they’re already hearing radio ads that concern them.

“There’s a lot of talk about the fact that despite the strict rules on working with your main provider and meeting in person, we’re already hearing radio ads from operations that are advertising virtual provider meetings to get your medical card for just a couple hundred bucks,” said Pickus. “Obviously that flies in the face of it being an in-person consultation, and it’s just really unclear how any of this is going to be enforced.”

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