After One Year of Retail Sales, Washington Rakes In Over $70 Mil in Taxes

On July 8, 2014, recreational marijuana dispensaries opened in Washington state. Now, nearly a year later, the state has reported over $70 million dollars in tax revenues from their first year of retail sales, a number which is lower than the projected maximum tax windfall, but still substantially larger than Colorado’s $44 million for their first year.

Recreational dispensary sales totaled around $260 million from the beginning of July 2014 to the end of June 2015, according to information released by the state’s Liquor Control Board that regulates the industry. The state’s three-tier tax system taxed the cannabis producers, processors and retailers heavily and raked in about $65 million, plus millions more from sales taxes and local taxes. A report released by the Drug Policy Alliance on Monday asserted that the total state revenue was as high as $83 million for their first year of retail sales, not including revenue from licensing and fees.

“Nobody’s counting on the revenue from cannabis sales to save us, but it has an impact,” said David Zuckerman, a Vermont state senator and legalization advocate, as he visited 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.”

In the upcoming years, Washington can expect recreational sales to continue to grow, as the roll out of the recreational retail market was stymied by slowly opening stores and a lack of marijuana supply. July 2014 saw only $3.3 million in sales and $840,000 in taxes, while June 2015 saw over $43 million in sales and $10.8 million in taxes, according to the Washington Liquor Control Board.

However, the state overhauled their marijuana tax system on June 30, eliminating the hefty three-tier tax system and replacing it with a lower 37 percent flat pot tax. The state may find itself with less tax revenue — or maybe not, as those in the legal cannabis industry might be able to lower prices and hence see more sales as the state tries to make inroads on the black market.

Not only has Washington reaped large tax revenue benefits in the past year, it has also saved millions of tax dollars by no longer prosecuting marijuana offenses, the report from Drug Policy Alliance asserted. Washington spent over $200 million on marijuana enforcement from 2000 to 2010, according to the report, but since Initiative 502 legalized marijuana in 2012, the state has seen marijuana law violations decrease by 63 percent from 2012 to 2014 and marijuana-related convictions decrease by 81 percent between 2011 and 2014.

“Marijuana prohibition has been a costly failure — to individuals, communities, and the entire country,” Tamar Todd, the director of marijuana law and policy at the Drug Policy Alliance, said in a statement. “Washington should be praised for developing a smarter, more responsible approach to marijuana.”

In the coming elections, as states examine the possibility of following Colorado, Washington and now Oregon toward marijuana legalization, tax reports with numbers as large as these are likely to bode well for legalization campaigns and marijuana advocates.