Pot producers would lose tax break under bill

The Associated PressJanuary 22, 2014 

Marijuana producers in Washington state would be prohibited from qualifying for agriculture tax breaks under a bill considered Tuesday by state lawmakers.

Officials estimate that the industry could currently qualify for three dozen different tax breaks, largely surrounding agricultural production. A state House committee is exploring a bill that would block those tax breaks for 10 years.

Democratic Rep. Reuven Carlyle, a sponsor of the bill, said it’s important that marijuana producers pay taxes so that lawmakers will have access to data in order to make better decisions in the future. Carlyle said he doesn’t think the tax preferences were designed to help the marijuana industry, which is currently under development after voters approved legalization in 2012.

“I don’t know that we have a problem in the marketplace that these exemptions would be designed to fix,” said Carlyle, who represents portions of Seattle.

Officials estimate that the new rules would increase state and local tax revenues by a combined $3.5 million over the span of one year.

Rep. Cary Condotta, R-East Wenatchee, questioned the bill, saying it may make it more difficult for the legal marijuana market to compete with the unregulated market. He noted that the product is already going to face some hefty taxes before it gets into a consumer’s hands.

“Why is this product different than any other ag product?” Condotta asked.

Lawmakers have not scheduled any votes on the bill. It is one of a variety of proposed changes to the marijuana industry as the state works to implement the voter-approved law, find solutions to protect medical marijuana users and satisfy the concerns of the federal government, which still considers marijuana a controlled substance.

Washington voters passed Initiative 502 in November 2012 to legalize and regulate the recreational use of pot by adults over 21, and the first state-licensed pot stores are expected to open in the coming months. The nation’s first recreational sales began Jan. 1 in Colorado, which legalized marijuana the same time as Washington.

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