Cities Scrapping for Share of Marijuana Tax Revenues

OLYMPIA--A new eco­nomic forecast predicts recreational-marijuana busi­nesses will bring millions to the state, and the fight is underway for how the proceeds will be spent, with cities vying for a share.

Recreational-marijuana business is expected to bring in $51 million in state rev­enue during 2015-2017, ac­cording to a recent financial report released by the Wash­ington State Economic and Revenue Forecast Council. During 2017-2019, marijua­na tax revenue is projected at $138.5 million.

The new source of rev­enue represents a fraction of the total state revenue, with a total expected of more than $35 billion in 2015-2017. The revenue forecast for the 2015-2017 biennium has in­creased by $82 million from previous estimates.

This is the first time retail- marijuana revenue has been included in an economic calculation. Now lawmakers have to decide what to do with the additional money.

All marijuana tax rev­enue would currently go to the state. But the As­sociation of Washington Cities wants the state to share the revenues with local jurisdictions. This week, the group submitted a letter to the Legislature, signed by almost 100 mayors, calling for lawmakers to take action this session.

In the letter, they said it's "a matter of common sense and fairness" to provide some of the marijuana rev­enue to cities and towns if the "state is relying on local cities to enforce new mari­juana laws."

Rep. Ross Hunter, D- Medina, chair of the fore­cast council and the House Appropriations Committee, said the state has many re­quests for funding and needs to address important respon­sibilities, such as education.

Hunter said the financial impact on local jurisdictions is unclear, and wants to see how they are affected before committing to share tax revenues.

Rep. Terry Nealey, R- Dayton, the House Repub­lican representative on the Economic and Revenue Forecast Council, said said he supports sharing the mar­ijuana tax revenues with cit­ies, and doesn't believe the state should just "sit back and collect the tax" without doing any of the work.

Fourteen counties have imposed a moratorium on retail-marijuana businesses. Bob Ferguson, the state attorney general, issued a letter that Initiative 502 does not prevent local jurisdic­tions from enacting such bans.

House Bill 2144 would create a dedicated fund for marijuana tax-revenue for local jurisdictions, includ­ing cities, towns, counties and other municipalities. Twenty percent of the excise tax on transactions between retailers and consumers and 10 percent of the excise tax between producers and pro­cessors would be deposited into the fund.

There is a 25 percent excise tax on transactions at all three steps of the process: production, processing and retail.

The bill also prevents lo­cal laws or ordinances from interfering with the legal marijuana market. Cities, towns or counties would not be able to ban retail mari­juana businesses under the legislation. It was given a public hearing in the House Appropriations Committee Feb. 7, but has been held up in committee.

The Washington State Liquor Control Board is set to issue its first marijuana- producers and processors licenses next week, depend­ing on when applicants meet the final licensing require­ments. It plans to announce the date of a marijuana retail-license lottery in about two weeks. Stores are ex­pected to open in late June.