I have long said that if the black market for marijuana is going to be eliminated, legal marijuana prices have to be lower, or at least close to lower, than prices on the black market. I’m all for paying a bit more at a store, but when someone can get marijuana on the black market for 5 dollars a gram, and it costs 19 dollars a gram at a store, that’s not going to work. That is the case in Washington State, where the tax structure for marijuana is hurting the industry quite a bit. This week the Washington Senate voted to make big changes to the tax structure for marijuana. Per Marijuana Business Daily:
There may be a glimmer of hope for what is widely considered an untenable tax structure in Washington State.
The Washington State Senate passed a bill removing the excise tax on recreational marijuana sales by producers and processors, and will tax only retail sales.
As it stands, a 25% excise tax at three transfer points: when producers sell to processors, when processors sell to retailers, and when retailers sell to end consumers. Business owners in the industry say that tax structure inhibits their ability to do business and drives up prices.
The new bill proposes a one-time tax of 37% on retail sales.
I still think a 37% tax is too high, but that’s less than half of what it is now (25% times 3). I would like to see Washington move to a tax structure like what Oregon is going to have, which should be a flat rate of $35 per ounce. That of course is assuming the Oregon Legislature respects the will of the voters. If that proves to be the case, Oregon would have the lowest marijuana taxes in the country, and would be bordered by Washington which would have the highest.