When Washington rolled out legal recreational marijuana sales last year, a lot of customers got sticker shock. Some of my friends were reporting grams costing $25 and higher. A lot of that was due to the fact that there weren’t many producers operating at the time, so supplies were very low. However, another big contributing factor is taxes. As supplies flooded the market, prices dropped, but they are still around $15 per gram due to Washington’s high tax rate on marijuana. It sounds like there may be some tax relief on the way. Per Marijuana Business Daily:
Washington State recreational marijuana shops have been struggling underneath a heavy tax burden, but state lawmakers could soon deliver some relief – in stages, at least.
A proposed bill being considered by policymakers would reduce the current excise tax structure – 25 percent each time cannabis changes hands, from producer to processor to retailer – to a single tax paid by consumers. According to The Seattle Times, the suggested change would institute a 37% tax, and downgrade that to 30% in July 2017, and then 25% in 2019.
Sales tax would still be collected as well.
The tax rate would be a tremendous boost to the profit margins for businesses. Consumers would carry a heavier burden of the taxes on marijuana, which sounds harsh at face value, but it would result in a cheaper end product so it works out on the consumers end. Businesses would still have to deal with 280e provisions, which dramatically cut into profit margins, but at least they would pay less taxes overall. Thoughts?