Washington's weed - A look back at the first year

Recreational Marijuana in Washington state got off to an official start July 8, 2014. The lines were long, the supply was short and the prices were astronomical. It has been a full year now, and the results are in - it's been a worthwhile experiment. Washington has been criticized for it's slow and deliberate effort to open and regulate the Marijuana market but revenue greatly outpaced expectations.

The first year of annual sales for recreational Marijuana totaled more than $250 million. Sales average around $1.4 million per day. When all of the various taxes are combined, legal sales of Marijuana netted over $70 million of revenue for the state. Washington had originally forecasted income of $36 million in tax revenue from recreational sales. Anticipated tax revenue was nearly doubled.

There has not been an increase in Marijuana related crimes, Highway fatalities have not spiked and new studies point to an actual decline in teen use. The sky has not fallen.

While the sales are soaring, profits are elusive for most recreational owners due to special tax liabilities. 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 for $3.1 million in sales.

Washington recently passed legislation eliminating the current tax structure of 25% at each level (producer, processor, retailer). In its place is a new 37% tax at only one level, point of sale. The law makes clear that the 37% 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 nor will the producers and processors be responsible for 25% tax on their products. This signals a time when recreational owners might begin to experience some of the wild profits that the general public assumes everyone is making.

As a patient, things haven't gone so well. The Medical Marijuana program, which operated in a legally grey area, has been squeezed out by new laws. Effective July 1, 2016, medical patients will be forced to shop at recreational outlets and pay the 37% tax on Marijuana that is already priced higher than they are accustomed to. There will be a fraction of available outlets as well, due to dispensaries being forced to close or face penalties. Grow limits and personal possession rights were drastically cut too. Many looked at all of this as an attempt to bolster what was supposedly a "struggling recreational market".

Going forward, many questions arise. How deeply will this new tax rate effect tax revenue for the state? Will the now illegal medical "collectives gardens" turn to black-market sales due to their inabilities to participate in the legal I-502 marketplace? Will legally licensed producers have enough outlets for their harvests? Will this years increased harvests drive down prices in the same fashion that brought recreational prices for a gram down from $30 to $11.50? These are the questions that we will be answering next year, we look forward to another year in the grand, legal Marijuana experiment.

What has your experience been in this first year of legalization? Let us know at - seniorsMMJnetwork@gmail.com

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