By Rachel Kurtz
The passage of House Bill 2136 has brought about a wide range of reforms within Washington’s regulated cannabis industry, including the elimination of the three-tiered 25% excise tax rate, which has been replaced with a single 37% tax collected by retailers at the point of sale.
RETAILERS AND TAXES
After the base price is calculated, retailers must add 37% for the excise tax.
– 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 plus 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 sales tax (6.5-9.6%, depending upon the local surtax). 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.
New sections have been added to the regulations to end the practice of bundling (when retailers sell cannabis at a low cost, but require a qualifying purchase like a membership, or another product like a $10 lighter, in order to avoid the excise taxes). Retailers that do that will have to pay the excise tax on the entire transaction.
Starting in July 2016, there will be tax exemptions on certain products considered medical, that are sold to patients with cards by retailers with medical marijuana endorsements. The Liquor and Cannabis Board will be providing information for retailers to understand how to get the endorsement once that program is developed.
Other changes
– REVENUE DISTRIBUTION: 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: Existing dispensaries no longer have to collect sales tax from their sales to patients. However, unlicensed dispensaries will be completely outlawed on July 1, 2016. In the meantime, they will have to report to the Department of Revenue how much they are exempted from paying.
– MARIJUANA RESEARCHER LICENSE: Starting July 24, 2015, a marijuana researcher license has been added, which would allow licensees to “produce, process, and possess marijuana for the purposes of conducting research on marijuana and marijuana-derived drug products.” The Liquor and Cannabis Board will probably put out more information on this type of license once it develops the full regulations around it.
– RESIDENCY REQUIREMENT EXPANDED: The residency requirement for marijuana license applicants has now been changed from three months to six months.
– FLEXIBLE ZONING BY LOCAL JURISDICTIONS: Local jurisdictions can now reduce the 1,000-foot buffer zones to only 100 feet from all restrictions except schools and playgrounds (or including schools for a research licensee). This 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 even in a park 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.
– OREGON: Among other things, the Liquor and Cannabis Board 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.
– TOPICALS: 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 Liquor and Cannabis Board may still come up with advertising and labeling regulations around these products.
– SIGNAGE AND PUBLIC NOTICE: Applicants for a marijuana license must display a sign provided by the Liquor and Cannabis Board on the outside of the premises that there is an application for a license within seven days of submitting an application.
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 the applicant’s location is less than 1,000 feet.
Starting July 1, 2016, retailers can have two signs outside their store that are permanently affixed to a building or other structure, that identify their store, provided the signs are not within 1,000 feet of a school or playground.
– INFUSED PRODUCTS: The definition of marijuana-infused product has been changed from having no more than 60% THC to having no more than 10% THC.
– COOPERATIVES: The new medical marijuana cooperatives coming into effect starting July 1, 2016 will have the same location buffer zones as recreational licensees and cannot be located within a mile of an existing retail store.
– Miscellaneous: Vending machines and drive-thrus are off-limits for marijuana licensees. And clubs devoted to allowing the consumption of marijuana are now specifically outlawed. There is some additional language about bath salts and synthetic cannabinoids. Just say no, folks.