State Looks To Share Marijuana Taxes

Washington state legalized marijuana more than two years ago, but in much of the state, there’s still no place to get the sanctioned stuff: More than 100 cities and counties have banned pot businesses, making it tough to undermine the black market.

Lawmakers think they have at least a partial solution: paying the locals to let licensed weed come to town.

Under bills introduced in both houses in Olympia, the state would share a chunk of its marijuana tax revenue with cities and counties – but only if they allow approved marijuana businesses in their jurisdictions. It’s an approach that has worked to some degree in Colorado, said Kevin Bommer, deputy director of the Colorado Municipal League.

Washington’s legal pot law, Initiative 502, passed with 56 percent of the vote in 2012. But in many parts of the state – especially in central and eastern Washington – voters opposed it. Officials in many cities have imposed bans on the pot businesses, seeing little reason to let them operate, and courts have upheld their authority to do so.

In Poulsbo, a city west of Seattle, a slim majority of voters approved the legal pot law, but the city adopted an outright ban on marijuana businesses. Councilman Ed Sterns said the ban was motivated entirely by the lack of revenue sharing. Sterns serves on the board of the Association of Washington Cities – an organization that was formed to press the state to share liquor revenue after alcohol prohibition ended in 1933.

Local governments continue to get a cut of liquor revenue, and if the state does the same with marijuana, Sterns said he’d urge Poulsbo to reconsider its ban.

Since legal marijuana stores opened in Washington last summer, the state has collected $20 million in pot taxes. In Colorado, sales and excises taxes on pot hit $50 million in the first year of legal sales, with about $6 million sent back to local governments.

But even in Colorado, three-quarters of the state’s 271 cities ban marijuana businesses.

Under I-502, the tax money was dedicated largely to health care: After the state paid off a few items, including the cost of administering the new law, half of the remaining tax collections were directed to a program that provided health insurance for low-income workers.

Under the national health insurance overhaul known as the Affordable Care Act, that program vanished. Some lawmakers, led by La Center Republican Sen. Ann Rivers, want to split the money that would have gone to it: One-third of it would go to cities and counties based partly on how much pot-related revenue they generate for the state. The rest would go into the state’s general fund.

Sen. Karen Keiser, a Democrat from the Seattle suburb of Kent, said at a committee hearing on the measure Monday that she was concerned about the turn away from health care, noting that local health departments are chronically underfunded.

The issue is one of many facing lawmakers on the marijuana front – the most pressing of which is reconciling Washington’s unregulated, largely untaxed medical marijuana system with taxed and regulated recreational sales. Other measures under consideration include requiring a vote of the public for communities to ban pot businesses, and allowing communities greater flexibility in where the businesses can be located.

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