Cannabis is big business for states that legalize and Washington is no exception. The state rakes in millions and millions of dollars each year thanks to retail cannabis sales. Let’s take a look at the WA state MJ tax rate, revenue, and distribution.

WA State MJ Tax Basics

  • The WA state marijuana excise tax is 37%.
  • The consumer pays this tax at the time of purchase.
  • Retail dispensaries are responsible for collecting the tax revenue.
  • Cannabis bought for medical reasons is exempt from the state’s MJ tax. A person must be a registered medical marijuana patient to not pay taxes.

Washington State MJ Tax Revenue

It’s been five years since Washington state legalized cannabis. Since then, annual sales have surpassed one billion dollars. And with a 37% excise tax on marijuana products, that’s a big boon to the state’s coffers. As mentioned, Washington has collected more than $720 million from retail cannabis sales since voters legalized the industry.

The magnitude of tax revenue from the cannabis industry is more than experts of the Washington State Liquor & Cannabis Board (WSLCB) expected. A very smart data visualization from local news station King 5 and in partnership with Microsoft shows just how off initial projections were.

Initial WA MJ tax revenue projections for 2017 was $120 million. In reality, 2017 brought in more than $315 million in MJ tax revenue! That’s 2.4x more than the state or experts anticipated. The WSLCB predicts 2019 MJ tax revenue to be $194 million, but since the all projections have been wrong in the past, it’s likely that $194 million figure will be a vast underestimation.

If you’re interested in getting into the weeds (no pun intended) on WA state MJ tax revenue projections, the WSLCB, the agency that administers and collects the tax, provides data. You can see data on estimated sales tax collections on marijuana products for retailers and estimated sales of cannabis and cannabis products that are exempt from sales tax for medical purposes.

Where Does WA MJ Tax Revenue Go?

A figure like $720 million sounds like a lot of money, but in reality, it only makes up 0.49 percent of the state’s budget. But of course, it’s important to understand how tax revenue is spent. So let’s dive into what WA MJ tax revenue was spent on in 2018.

In contrast to Colorado, a state that puts most of its cannabis tax dollars into public education, Washington spent MJ tax revenue in these ways in 2018:

  • The largest portion of WA State MJ tax revenue goes towards $262 million on Washington’s state Medicaid program. Medicaid is a government health insurance program for low-income residents of the state.
  • The second largest chunk ($80 million) of WA state MJ tax revenue was put into the State General Fund.
  • Twenty-eight million dollars went to the Department of Social & Health Services with the purpose of promoting prevention and reducing substance abuse. Of that, $5.3 million (between 2017-2019) is allocated to youth residential treatment services for addiction and the state’s addiction hotline.
  • Marijuana education and public health programs are also an important allocation for WA state MJ tax revenue. In 2018, $10 million went towards these programs.
  • Importantly, Washington spent $500,000 of MJ tax revenue for research on the long and short-term effects of cannabis.

If you’re a cannabis business owner in Washington with questions on WA state MJ tax, Gleam Law can help point you in the right direction. As the leader in cannabis law, our team of experienced marijuana lawyers is there for you and your cannabis brand.