Pot tax revenue a welcome source for government coffers


Kitsap News Group

PORT ORCHARD — Four and a half years after Washington voters passed Initiative 502 to legalize the sale of marijuana, state, county and city elected officials are looking toward the heavily taxed product to generate growing excise tax revenue for some of its cash-starved initiatives.

It’s easy to see why. The state Liquor and Cannabis Board, which regulates the marijuana sales industry in Washington, estimates that of the nearly $1 billion in sales nationwide last year, this state accounts for nearly half that amount. Since sales commenced in the state, nearly $200 million of tax revenue has been collected, most of that amount going to state programs. Over the next two years, legislators estimate sales here will bring in about $730 million.

Statewide, there are myriad recipients of those tax distributions. Fifty percent of the funds go to the state basic health plan trust account and 15 percent heads to the Department of Social and Health Services for marijuana prevention programs; 10 percent goes to the Department of Health for marijuana education programs; 5 percent to the state health care authority to study the long-term effects of marijuana use; and 1 percent to the University of Washington and WSU to study the short- and long-term effects of using pot.

There’s also slightly more than $1 million collected every three months from marijuana revenue that’s split up for control board administration, regulation and other departmental studies.

The city of Port Orchard, in turn, received a tax distribution of $69,571 in 2016 from the state Department of Revenue, according to Allan Martin, city treasurer. The amount is nearly twice the amount Port Orchard received — $38,552 — in 2015. In the abbreviated 2014 sales year, the city was the recipient of $2,422 in tax distribution.

Martin said the city also receives marijuana enforcement funding distributions from the collected excise taxes. Last year, $52,659.64 was allocated to Port Orchard. In 2015, it received $32,605.96.

Those amounts were calculated through an excise tax revenue split of 30 percent for cities and counties where marijuana retailers are located, with distribution based on sales from within each jurisdiction, and 70 percent to cities and counties on a per capita basis, with counties receiving 60 percent of this portion.

In 2015-16, about $12 million in tax revenues were distributed to cities and counties in the state over the two-year period, thanks to the passage of House Bill 2136 by the state Legislature, which devised a program of tax fund sharing between state, city and county governments.

In Kitsap County, marijuana sales are following the rising pattern seen elsewhere in the state. Last year, county pot shops sold $23.7 million and generated almost $9 million in tax revenue. That’s nearly double the amount recorded in 2015, the first full year of sales after Initiative 502 passed, according to the state board.

In Port Orchard, residents have four recreational marijuana outlets to choose from: The 420 Spot Shop, Greenway Marijuana, Legal Marijuana Superstore and Pot Zone. Last year, Martin said, Pot Zone was the top sales producer among the four. It had sales of $4.24 million and collected $1.57 million in excise taxes. Greenway sold $2 million in marijuana products and collected $743,000. Stores in Bremerton — Destination Highway 420 and Highway 420 — also were significant sellers.

Coming up: Pot shops swimming in profits? Think again, say local recreational shop owners.