Washington State has Brought in $70 Million in Tax
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Washington State has Brought in $70 Million in Tax
Posted by CN Staff on July 05, 2015 at 07:28:53 PT
By Gene Johnson, The Associated Press
Source: Associated Press
Seattle -- Washington launched its second-in-the-nation legal marijuana market with just a handful of stores selling high-priced pot to long lines of customers. A year later, the state has about 160 shops open, tax revenues have soared past expectations and sales top $1.4 million per day.And who knows  the industry might even start making some money.
Washington pot farmers, processors and retailers have complained all year that heavy state and federal tax burdens, along with competition from an unregulated medical marijuana market, have made it difficult for them to do business.But at least some relief is here: This month, two new laws take effect, one to regulate and tax medical marijuana, and one to cut Washington's three-level excise tax on pot to a single, 37-percent tax.Despite some industry gripes and those tweaks to Washington's legal pot law, which voters passed in 2012 to legalize marijuana for adults over 21, officials and legalization backers say the state's slow and deliberate effort to regulate marijuana has been a success.A year after stores opened on July 8, 2014, here's a look at the state of legal weed here.The TaxesWashington's racked up more than $250 million in marijuana sales in the past year  roughly $62 million of which constitute marijuana excise taxes. That's beyond the state's original forecast of $36 million. And when state and local sales and other taxes are included, the total payday for the state and local governments tops $70 million.That's real money, if only a drop in Washington's $38 billion two-year budget. Colorado's recreational sales began Jan. 1, 2014, and brought in taxes of $44 million in the first year.The tax revenue could continue to keep climbing.And as other states watch Washington and Colorado, the only other state with legal marijuana sales, bring in more money, they're ever more seriously considering following suit, as Oregon and Alaska have already."Nobody's counting on the revenue from cannabis sales to save us, but it has an impact," David Zuckerman, a Vermont state senator and legalization advocate, said during a recent visit to Seattle. "The more important thing is that the sky didn't fall in Colorado. The tidal wave hasn't hit Seattle. They're showing us that this can be done."... And The TaxesThe flip side has been the burden of the taxes on pot businesses, with marijuana taxed 25 percent each time it moves from the growers to the processers to the retailers. That's been especially tough on retailers, who must pay federal income tax on the marijuana tax they turn over to the state.James Lathrop, who owns Seattle's first legal marijuana shop, Cannabis City, says through the end of 2014, his estimated federal tax liability was $510,000, on top of the $778,000 he owed the state on $3.1 million in sales."I'm basically doing this for free," Lathrop says. "Nobody's gone out of business, but I'm not driving a new truck either."It hasn't been much easier on the growers."Looking back now, it's amazing we could be so successful and unsuccessful at the same time," says Jeremy Moberg, a long-time black-market grower who went legal and now runs CannaSol Farms in north-central Washington. "We're the No. 9 grower in the state, and my bank account just seems to stagnate."The new tax rate should help. The law makes clear that the 37 percent tax is the responsibility of the customer  not the retailer. That means stores won't have to claim that money as income on their federal filings.Isn't legal weed expensive in Washington?With few growers harvesting by the time the first stores opened, the average price of a gram of legal marijuana spiked to nearly $30 last summer  about three times the cost in medical marijuana shops. But prices have been dropping as more weed gets harvested. In fact, Washington has harvested 13.5 tons of marijuana flower intended to be sold as bud, but stores have only sold about 10 tons.Some of the excess can be turned into marijuana extracts, such as oil, but the harvest has helped drive down the prices to an average of about $11.50 per gram.Nevertheless, Lathrop says that in addition to tourists eager to visit the city's historic first legal pot shop, his clientele primarily consists of customers in the 25-and-older range."It's a more of an adult demographic, but that's OK," he says. "They have jobs and they can afford to buy the product."What's Next?Rick Garza, director of Washington's Liquor Control Board  soon to be renamed the Liquor and Cannabis Board  says he's most proud of Washington's efforts at meeting the top priorities the Justice Department laid out when it announced it would allow Washington, Colorado and other states to regulate marijuana: keeping criminal organizations out of the industry, keeping the marijuana in-state and keeping pot away from kids.The state adopted background checks and financial investigations of pot-license applicants, and capped the total amount of production to try to keep it in line with in-state demand.While public health advocates say they wished the state had done more to stress the potential harms of pot to teens, the state required strict packaging and labeling requirements to keep children from getting into the weed. Products that appeal to kids also remain banned  no marijuana cotton candy or gummy bears.Those will remain priorities as the state moves forward with the big task of merging the recreational and medical markets, Garza says.Less of a concern, he says, is competition from the next state to offer legal marijuana sales: neighboring Oregon. So far, the stores in Vancouver, just across the Columbia River from Portland, Oregon, have been some of the top-selling stores in the state. The flow of customers across the river will likely reverse as Oregon's medical marijuana stores are allowed to start selling for recreational use this fall."This isn't the first time people have gone to Oregon to buy something either because it's cheaper or because they don't apply sales tax," he said. "We saw it for liquor, we see it for tobacco."Source: Associated Press (Wire) Author: Gene Johnson, The Associated PressPublished: July 4, 2015Copyright: 2015 The Associated PressCannabisNews  -- Cannabis Archives 
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Comment #12 posted by John Tyler on July 08, 2015 at 11:03:11 PT
other interested parties
I saw an article recently that said that the Altria Corp, formerly known as the Philip Morris Tobacco Company, has been showing some serious interest in getting into the cannabis business. 
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Comment #11 posted by Sam Adams on July 07, 2015 at 11:28:05 PT
price collapse is on
From what I've seen, Colorado's prices are falling rapidly, looks like they're fallen by at least half in the last 6-12 months.It will take some time, but the government will be overgrown. If beer was $200 per case you'd see a huge wave of home-brewing, and that's exactly what's happening with cannabis.  If cannabis is still $100 or more per ounce people will grown their own. Pretty soon they'll realize how easy it can be, especially in western states. Stores can sell a female clone for $15 in a 2-gallon pot that will deliver an ounce or two after a few months on the patio or deck.  It's fully legal in every way. Good luck taxing that.
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Comment #10 posted by runruff on July 07, 2015 at 09:15:45 PT
$800-$1000 per elbow.
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Comment #9 posted by runruff on July 07, 2015 at 08:42:31 PT
We have cheap herbs getting cheaper
In Grass Pants Oregon 1 oz = $70 to $100, lately.
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Comment #8 posted by kaptinemo on July 07, 2015 at 08:07:31 PT:
It's always been about the money
Now there's more in re-legalization than in prohibition. And nobody asked us if we wanted to fund a DrugWar, anyway."End the DrugWar we didn't ask for!" should be our rallying cry. And that we refuse to pay for it any longer should be our message. Why pay for a gun leveled at our heads due to our choice of intoxicant, when we are the social and political majority paying for that gun? A point to make with our pols. It's simple: Tell them that with over half the electorate on our side, that translates into political pressure to end cannabis prohibition by defunding the DrugWar.. He or she can either apply the necessary political pressure to end cannabis prohibition...or feel it. Just think: the pols cannot withstand against the sheer numbers. The special interests that have been able to get their way for so long from behind the scenes are being flushed out into the open. (Project SAM is a perfect example of them trying to camouflage themselves again.) They can no longer cloak themselves in (faux) moral righteousness when their connections to Big Pharma are exposed. Stripped of its faux moral cover, the DrugWar's become just another plain ol' naked, self-serving, revolving-door, 'bidness-as-usual' corruption factory; the incestuous relationships between self-serving bureaucracies and the equally parasitic industries serving them are becoming harder and harder to hide.Well, this time, the new boss is NOT the same as the old boss. The new tax-paying, voting boss wants cannabis legal again...and has heard all the lies and half- $$ed excuses why it shouldn't be, and are not impressed...or amused. And they will not be placated with more propaganda and lies; they've heard it all before as kids, remember?It's all over but for the shouting. And we'll hear lots of that from the prohibs. Towards the end, we'll see them do and say stuff that Jerry Springer wouldn't have put on his show. Grab some popcorn.
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Comment #7 posted by The GCW on July 06, 2015 at 18:48:49 PT
Breckenridge, Colorado1 ounce with tax, two hundred nine dollars. Before voters decided to force government to regulate the God-given plant, the price was higher w/o a tax.It's difficult to complain.
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Comment #6 posted by schmeff on July 06, 2015 at 08:38:04 PT
Amen, Sam
Twelve bucks an ounce. Expensive for wine, cheap for caviar. Or if $12 an ounce is still too steep, all God's children should free to grow God's own plant as the creator intended.Wouldn't this turn the black market into a green market?
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Comment #5 posted by Sam Adams on July 06, 2015 at 07:12:12 PT
taxed to death
I've read reports that estimate only 25% or less of the black market was displaced in Washington. So still plenty fo black market dealers to sell to kids, fight each other, etc.The price should be $12 per ounce, not gram. 
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Comment #4 posted by Hope on July 05, 2015 at 16:36:16 PT
Why not all of them? Right now?
After reading more... I see why.
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Comment #3 posted by Hope on July 05, 2015 at 16:10:06 PT
Halleleujah! Good News! 
Obama to Free Scores of Non-Violent Drug Offenders from Prison not all of them?
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Comment #2 posted by The GCW on July 05, 2015 at 08:49:16 PT
Obama to Free Scores of Non-Violent Drug Offenders from Prison
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Comment #1 posted by runruff on July 05, 2015 at 08:20:20 PT
To cops and politicians 
New tax money is like blood in the water to sharks.They will soon be circling the mounting revenue the way sharks circle a bleeding animal.
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