Marijuana taxes net $22.5 million in 6 months

  • By Amy Watkins For The Herald Business Journal
  • Thursday, January 29, 2015 3:31pm
  • Business

LAKE STEVENS — Reed Evans and his family members make frequent trips to the Washington State Liquor Control Board office in Olympia.

That’s because they, like others who have recreational marijuana businesses, owe a monthly excise tax of 25 percent on all marijuana sales. Evans and his family in October opened Cannablyss, the only retail marijuana shop in Lake Stevens.

“We drive on down with our 25 percent,” Evans said. “We’re smart about it. It was really confusing in the beginning but we have an awesome accountant and he just helps us along.”

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The excise tax is applied to all taxable sales of marijuana, marijuana-infused products, marijuana concentrates and useable marijuana. At Cannablyss, that means a gram of marijuana sold for $20 nets a profit of less than $4 after accounting for purchase price, state taxes, and setting some aside to pay federal income tax, Evans said.

“Out of that we have to pay for rent, employees, PUD, cable, a little marketing and really any normal expense of a business,” he said. “If that means just breaking even for a while, it’s great with us but the taxes are expensive.”

The state’s Liquor and Control Board updates a list every Tuesday with figures showing the amount of excise tax on retail marijuana sales from the state’s 334 retail locations.

Totals posted from June 16 through Jan. 19 showed marijuana sales activity reaching approximately $75.7 million with the state collecting more than $18.9 million in excise tax.

Last year, budget forecasters predicted that the still young industry could generate as much as $143 million in the state’s next biennium, which runs through 2015-2017.

Payments are always due no later than the 20th day of every month for the previous month’s sales, said Brian Smith, communications director for the state’s Liquor Control Board.

“So far it’s been 100 percent compliance,” he said. “It’s been smooth. We’re finding that about roughly three quarters (of marijuana business owners) are paying with check. People are finding banks. It’s slowly opening up.”

The Washington State Department of Revenue also plays a role in collecting marijuana taxes.

The department collects business and occupation tax from marijuana producers, processors, and retailers, as well as retail sales tax on sales of marijuana and marijuana-infused products.

Figures released through Dec. 11 show the department has collected approximately $3.6 million in recreational marijuana taxes.

“We have done our own contact with businesses to walk them through tax forms and how to file electronically and pay electronically,” said Kim Schmanke, communications director for the state’s Department of Revenue. “To the best of my knowledge it’s run rather smoothly with businesses telling us they appreciate the customer service.”

Reed’s parents, Bob and Denise Evans, were the ones to get the license to open the shop at 2705 Hartford Drive NE. Although he’s looked, Reed said he hasn’t yet found a bank to do business with but that paying cash is working for now. They make sure to keep only a limited amount of cash on hand.

He and his family are also carefully saving money from gross sales to pay federal income tax when it’s due.

“We’re just starting to understand the business and it’s working for us,” Reed said. “We’ve really gotten in a routine.”

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