In November 2012, Washington voters approved the production, processing, and retail sales of recreational cannabis within Washington state under what is known as Initiative 502 ("I-502"). Washington state then provided a regulatory framework for how the legalization of recreational cannabis production, processing, and retail sales would be regulated under what would become the Washington State Liquor and Cannabis Board ("LCB").
The LCB is tasked with reviewing, approving, regulating, and monitoring cannabis licenses within Washington state. The LCB is also tasked with administering and collecting excise taxes concerning the retail sale of cannabis concentrates, useable cannabis, and cannabis-infused products within the state. Cannabis sales in Washington state are currently taxed at a rate of 37%, in addition to the general state and local sales and use taxes. Qualifying patients and providers are exempt from the general and local sales and use taxes on the sale of cannabis products compliant with the Department of Health ("DOH") but have continued to be subject to the 37% excise tax until now.
On March 6, 2024, the Washington Senate passed HB 1453, which will provide an exemption from the 37% excise tax for medical cannabis patients and designated providers. The bill now waits for signatures and executive action to become law. First introduced in 2023, HB 1453 sought to harmonize the existing medical exemptions from general sales and use taxes with the 37% excise tax on cannabis sales.
Medical cannabis patients and providers face a significant financial burden when patients and providers are unfairly taxed the same as recreational consumers.
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