It’s one thing to explain to consumers why marijuana costs so much and another to tell them where that money will go. With the passing of Initiative 502, the state dictated that three new 25 percent excise taxes will be placed on each of the three levels of marijuana licensed businesses: producers, processor and retailers. This could give some wary customer a little as to the why their legal pot costs $840 an ounce, but it might also help to explain how the state plans to spend that money.
dedicated marijuana fund
In setting up the parameters of the legal marijuana industry, the state dictated the creation of the Dedicated Marijuana Fund, in which all excise taxes would flow. More than that, the fund was meant to be the catch all for license fees, penalties, forfeitures and all other moneys, income, or revenue generated by the Liquor Control Board in setting up the structure. Now that the industry is somewhat underway with operating businesses pouring money into the fund, under I-502, the Liquor Control Board has the obligation to disperse money every three months. The language in the Initiative is extremely specific on this front and already is met by some real world shifts that affect the future of the formula. Keep in mind, this will happen every three months. According to the approved initiative, “$125,000 goes to the Department of Social and Health Services to design and administer the Washington state healthy youth survey, analyze the collected data, and produce reports.” It is meant as a state sponsored evaluation of drugs and their effect on the youth of Washington and how substance use affects school performance and behavior. Additionally, $50,000 goes to that same department to conduct a cost-benefit evaluation of the industry at large and determine its effectiveness as a branch of the state government. University of Washington will also receive $5,000 of the Dedicated Marijuana Fund money to use within its alcohol and drug abuse institute, where it will study the health and safety risks posed by marijuana use. The Liquor Control Board itself will take no more than $1,250,000 for the upkeep and administration of marijuana’s regulation. That’s $1,430,000 every three months, which is cut off the top of all marijuana related revenue. The remainder is even more obscure. Deep breath.
spending the remaining collected marijuana taxes
Of the funds left, 50 percent will go to the state basic health plan trust account (which may have been subverted by Obamacare); 15 percent will go to the Department of Social and Health Services for marijuana prevention programs; 10 percent will go to the Department of Health for marijuana education programs; Five percent will end up with the Washington state health care authority to provide primary health and dental care; and 1 percent will go to UW and Washington State University to study the long-term effects of marijuana use. The rest will go into the state’s general fund, for the legislature to do with it what it will. We know what you and your customers will surely think: “How much will be left at that point?” Of course it’s too early to tell. Before implementation, the Office of Financial Management forecasted the state could net $1.94 billion in pot revenue over five fiscal years or nothing at all. It’s a pretty wide margin and the pricey marijuana must seem like a hefty wager. The thing to help your customers keep in mind is the flexibility of the whole system. In the past two years since I-502 was approved, many things have shifted already. With the legislature’s threatened dismantling of medical marijuana and the possibility of the state adjusting some of those percentage points, it will take a good long while before the system settles into a stable structure. These answers will probably cause more questions than answers from your customers, but it will help to have the information when they need it. Always remind them to give any of their opinions openly and often to the government and elected representatives. That’s why they are there.
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