Washington Wants To Collect Medical Marijuana Sales Tax


Graphic: Boulder Weekly
Washington State wants its cut of medical marijuana sales — and if it doesn’t get them, the DEA could be visiting.

‚ÄčActivists Worry It’s A Way To Open The Door To The Feds

The Washington State Department of Revenue has launched a statewide effort to collect sales tax from medical marijuana dispensaries.

The department mailed letters to 90 dispensaries and “related organizations” on Friday, insisting that medical marijuana is not exempt from state sales tax — as are other medicines — and telling dispensaries they must collect that money and turn it over to the state, according to The Associated Press.
The letter also warned dispensaries that they must pay Washington state’s business and occupation tax, according to Department of Revenue spokesman Mike Gowrylow.
“Are sales of ‘Medical Marijuana’ subject to sales tax?” asks an informational page on the website of the Washington State Department of Revenue, and of course no time is wasted in giving the answer.
“In the state of Washington, sales of medical marijuana are retail sales,” the site informs us. “As such, the seller is subject to the business and occupation (B&O) tax under the retailing classification. This is true even if it is sold by a medical marijuana dispensary.”

“Sales of medical marijuana are not eligible for the retail sales tax exemption provided for prescription drugs,” according to the site. “RCW 82.08.0281 provides an exemption from retail sales tax for certain drugs, but only when prescribed as authorized by the laws of this state.
“However, marijuana is a Schedule I controlled substance and cannot be prescribed under either federal law or state law in Washington.” (This is also the reason that in Washington and all 14 other medical marijuana states, patients get “doctor recommendations” for marijuana rather than “prescriptions” for marijuana.)
What Does It Mean?
Washington’s medical marijuana sales tax could just be a way for the cash-hungry state — which is currently facing a $4.7 billion deficit for 2011-2013 — to raise a little more revenue.
But some dispensary operators and cannabis activists in Washington are entertaining a much darker scenario. They’re worried that the state sales tax could be a way to show that “medical marijuana providers are not following state law,” clearing the way for the federal Drug Enforcement Administration to come in and “clean up.”
Under the guidelines issued by the Department of Justice under Attorney General Eric Holder, federal agents are discouraged from pursuing medical marijuana providers and patients who are following their state laws.
Therefore, the state sales tax could possibly be a ruse to get around that directive and unleash the DEA dogs?
The other side of that coin is that if the dispensaries pay the sales and B&O taxes as requested by the state, that would possibly give them additional legal protection due to not only following state law, but also paying state taxes as legal businesses.
Will Washington dispensary owners pay the sales tax? Will the DEA start busting down the doors of the dispensaries that don’t pony up? Stay tuned.