Tax Changes For The Marijuana Industry
Major Tax Changes for WA Marijuana Industry **Unless otherwise noted, all of this takes effect starting July 1, 2015.**
RETAILERS AND TAXES
You now have your base price, which you then calculate 37% and add to that price.
- The final price is the price that you advertise and list at the store. You are free to put just the final price, or show the base price + tax, but you need to show what the total will be so customers aren’t blindsided at the cash register.
- However, on the receipt, you must itemize those prices so that the customer sees your base price and the 37% tax separately. This is good news because it empowers the customers to understand just how much they’re paying in taxes, which should help come next legislative session when trying to reduce that tax.
- You also have to add the normal 9+% sales tax. That tax is calculated on the base price, not on the base price plus 37%.
- That tax will also be reflected on your receipt as an added sales tax.
Various new sections added to address and end the practice of “bundling,” or retailers selling cannabis for a small amount but then requiring the purchase of a service, like a membership, or another product that cost a lot of money, like a $10 lighter, in order to avoid the excise taxes. If a retailer does that, they’ll have to pay the excise tax on the entire transaction.
Starting next July, there will be tax exemptions on certain products considered “medical,” that are sold to patients with recognition cards, by retailers with medical marijuana endorsements. The LCB will be providing information for retailers to understand how to get the endorsement once that program is developed.
REVENUE DISTRIBUTION TO LOCAL JURISDICTIONS
Only jurisdictions that do not prohibit the siting of any state licensed marijuana producer, processor, or retailer will receive a share of the revenues from marijuana sales.
MEDICAL NO LONGER PAYS SALES TAX
Current dispensaries (collective gardens) no longer have to collect sales tax from their sales to patients. That is, until they’re completely outlawed on July 1, 2016. In the meantime, they will have to report to the DOR how much they are exempted from paying.
Note: There is some concern that this may only apply to products with less than 0.3% THC content. It is unclear from the wording of the law, but trying to confirm legislative intent based on the record and get a definitive answer from DOR. Considering dispensaries are collective gardens, it would make sense that contributions by patients were not taxed (especially in light of this recent court decision).
MARIJUANA RESEARCHER LICENSE
Starting July 24, 2015, a marijuana researcher license has been added, who can “produce, process, and possess marijuana for the purposes of conducting research on marijuana and marijuana-derived drug products.” The LCB will probably put out more information on this type of license once they develop the full regulations around it.
RESIDENCY REQUIREMENT EXPANDED
The residency requirement for marijuana license applicants has now been changed from 3 months to 6 months.
FLEXIBLE ZONING BY LOCAL JURISDICTIONS
Local jurisdictions can now reduce the 1000 foot buffer zones to only 100 feet from everything but schools and playgrounds (or including schools if a research licensee). That includes recreation centers, child care centers, public parks, transit centers, libraries, and arcades. Time to start lobbying your locals!
USE IN PUBLIC
Marijuana use of any kind has been expanded from “in general view of the public” to include “public place.” So don’t use marijuana in any form either in a public place or where the public can see you. That could include your front porch if the general public can see you there, or a park even if you’re hidden from public view.
TRANSPORTATION OF PRODUCTS BY COMMON CARRIERS
Starting October 1, 2015, licensed producers and processors can start using “the services of a common carrier,” or a delivery company, to transport their product to each other and to retail outlets. Common carriers and their employees must be licensed by the state to perform this function. This does not allow retailers to use delivery services to their customers.
Among other things, the LCB will be required to report back to the legislature on Oregon’s marijuana sales and tax collection. Considering Oregon’s tax will probably be 17%, with a possible additional 3% by local jurisdictions, it’s good that the legislature pays attention.
Check back to the blog in the next few days for updates on Oregon’s recent legislation affecting the implementation of Measure 91 and the current medical marijuana program.
Topicals, or “health and beauty aids,” that contain marijuana but have less than 0.3% THC are no longer subject to criminal penalties relating to marijuana or marijuana regulations. That means that unlicensed topical processors can sell their products at any store, as long as it’s intended for “topical application to provide therapeutic benefit or to enhance appearance,” has less than 0.3% THC, and “does not cross the blood-brain barrier.”
The LCB may still come up with advertising and labeling regulations around these products.
SIGNAGE AND PUBLIC NOTICE
Applicant’s for a marijuana license must display a sign provided by the LCB on the outside of the premises that there is an application for a license within 7 days of submitting an application for a license for that location.
Local jurisdictions can require applicants to provide notice to playgrounds, recreation facilities, child care facilities, churches, public parks, transit centers, libraries and arcades (or schools, in the case of research centers) if they applicant’s location is less than 1000 feet.
Starting July 1, 2016 (for some reason), retailers can have two signs outside of their store that are permanently affixed to a building or other structure, that identify their store – as long as the signs are not less than 1000 feet from a school or playground.
THC LEVEL CHANGES FOR INFUSED PRODUCTS
The definition of marijuana-infused product has been changed from having no more than a 60% THC level to having no more than 10% THC level.
The new medical marijuana cooperatives coming into effect starting next July 1, 2016 will have the same location buffer zones as 502 licensees and cannot be located within a mile of a 502 retailer.
VENDING MACHINES, DRIVE-THRUS, MARIJUANA CLUBS
Vending machines and drive-thrus are off-limits for marijuana licensees. And clubs devoted to allowing the consumption of marijuana are now specifically outlawed.
…And some stuff about bath salts and synthetic cannabinoids. Just say no, folks.