The Capitol Record

Liquor Control Board discusses plans to tax marijuana sales

Members of Washington’s Liquor Control Board met with the House Finance Committee Friday to talk about issues they are facing as they come up with a taxing scheme for recreational marijuana.

Last fall, Washingtonians passed Initiative 502 to legalize the recreational use and sale of marijuana in the state. Now, the state’s liquor control board is tasked with coming up with taxation and regulatory scheme.

“There’s a wide gap between some of the perceptions of revenue opportunities and some of the realities,” said committee chairman Rep. Reuven Carlyle (D – Seattle), addressing members of the board. “So we’re looking to you for some of the insights and counsel around how we can increase the probability of a successful taxation model.”

Pat Kohler, director of the control board, says marijuana taxation could bring in up to $2 billion over the next five years.

“This assumes that revenue would start coming in in January of 2014,” said Kohler.

Deputy director of the board Rick Garza said they hope to begin issuing producer licenses by mid-August of this year, and for processor and retailer licenses around the end of the year. But he also stated that the only deadline they actually have to meet is to have rules adopted by the beginning of December.

One of the biggest complications facing the board in their attempt to create a market for recreational use is the existing market for medical marijuana.

“Medical marijuana is unregulated and untaxed. About 90 percent of the people that purchase medical marijuana from dispensaries do not meet the qualifications of a medical marijuana patient,” said Garza. “Our concern is that you can’t have two markets running at the same time.”

Garza said there are also concerns about conflicts with federal laws which categorize marijuana as a Schedule I drug, and how that will affect companies that try to enter the industry.

“As you all know, banks are federally insured. And the difficulty that some may have in acquiring capital, or even being able to open a bank account once they hold a license with the state as a producer, as a processor or as a retailer,” Garza said.

Garza said there does seem to be some interest in reclassifying the drug in Congress, which he said he would make the liquor control board’s job easier.

For regulation of the product, Kohler said the board plans to implement a “seed to sale” system, similar to a process that has been adopted in Colorado.

“What we’re looking for is something that would track it from when it’s a plant, all the way to when it gets to the retail store,” Kohler said.

Earlier this week the board named Botec Analysis as the winner of a contract for consultation services to help in their efforts. Botec CEO and author of “Marijuana Legalization: What Everyone Needs to Know,” Dr. Mark Kleiman will head the project.

The consultation firm will work with the control board in areas of product knowledge and quality and in identifying usage and consumption in the state. The findings will be essential in determining proper regulation methods.

“We’ll try to build a system that only meets the needs of consumers in Washington,” said Garza.

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