New Rules for Cannabis Excise Tax Payment

Cannabis excise taxes must now be paid via check, cashier’s check, money order, electronic payment, or a wire transfer.

Cannabis excise taxes must now be paid via check, cashier’s check, money order, electronic payment, or a wire transfer. This new rule will become active on July 1, 2016. The excise tax on cannabis in Washington is 37% of the final retail sales price. With over $213,000,000 in marijuana excise tax payments since legal recreational sales began in June 2014, we can certainly understand why the Liquor and Cannabis Board doesn’t want to keep accepting cash payments.

But, for many cannabis businesses, maintaining an active and reliable bank account that would enable them to make a check or electronic payment can be very difficult due to federal banking regulations.

Businesses can apply for a waiver to allow them to continue paying their taxes in cash, but only if they have a good reason, and acceptable reasons are limited. To qualify for a waiver a business must demonstrate that they do not have and cannot obtain a bank account or cashier’s check, or have some other very good reason.

The LCB may ask for documentation that you have recently closed or been denied a bank account as evidence of your circumstances.

What effect will this have on cannabis businesses? Little.

Businesses have had the ability to make check or electronic excise tax payments for a long time. The only businesses that we know of that have continued making cash payments are those who do not have banking services–the very businesses who would qualify for the waiver. I struggle to think of a good reason why a marijuana business owner would want to regularly transport tens of thousands of dollars in cash to Olympia (especially if you are driving from Eastern Washington), nor why they would want to forgo the benefits of having a bank account. If a cannabis business owner can make remote payments, then they probably already are.

Therefore, I am forced to conclude that this payment is most likely for the convenience of the LCB, to discourage cash payments, encourage more energetic efforts to secure banking services, and charge an extra 10% fee for those who make cash payments without a waiver.