Washington State Raking in the Dough from Marijuana Tax


If you live in a state where marijuana is still illegal then you might not even know that several states have actually made the drug legal in the past year or so. While 23 states have made marijuana legal for medicinal purposes, otherwise known as medical marijuana, four states and the District of Columbia have legalized recreational pot use as well. Washington D.C., Colorado, Oregon, Alaska and Washington state have all made marijuana legal. In Washington, recreational marijuana use has now been legal for a year and for pot boutiques that sell the drug business is booming. That’s also good news for the state tax coffers.

More Puffing Means More Tax Dollars

Washington, known as the Evergreen State, is certainly benefiting from the green plant that has become so popular in the past 12 months. Since the drug became legal last July, vendors have popped up all over the state and their business appears to be flying high…pun intended. In fact, in the first year since the drug went on sale vendors have made nearly $260 million. So what does that mean for the state treasurer in tax income? Well, according to reports from the Washington State Liquor Control Board, that means the state has collected nearly $65 million in marijuana excise taxes since the drug went on sale. However, the taxes don’t stop there. If you take into consideration all the state and local sales taxes collected from the sale of marijuana, it is more likely that marijuana has produced about $70 million in total tax revenue for the state. That’s nearly double the number that was originally predicted, which was $36 million.

Blowing Colorado Away

For the sake of comparison, the state of Colorado reportedly raked in about $44 million dollars in taxes from marijuana sales the first year it was made legal. With the massive tax hauls that these states are accumulating as a backdrop, Alaska and Oregon are both expected to start allowing pot shops to open in 2016, thus providing those states the opportunity to also collect taxes on marijuana sales.

Changes Still Coming in Washington

Despite the first-year success of tax collections in the state of Washington, changes are still coming for year number two. Effective July 1 of this year the marijuana tax structure shifted away from its three-tier excise tax system on marijuana. During the first year the producer, the processor and the retailer were assessed a 25 percent tax. With the new system in place retail customers will now pay a 37 percent tax. That means vendors won’t have to count the tax as federal income as they did previously. It also means that legal vendors should have a better chance to compete against the black market.

Green All the Way Around

Of course, the changes will also likely mean that the state tax collector in Washington will continue to be very happy with the total tax intake from marijuana sales. It also means as long as the residents of Washington continue to buy the popular green leaf, the tax reserve in the Evergreen state will keep seeing more green as well.

This post was published on August 6, 2015

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