Cities and counties hungry for marijuana tax money

OLYMPIA — The financial stakes of the state’s new marijuana industry are no longer theoretical.

Washington’s chief economist predicts the legal recreational market will generate $636 million for the state through the middle of 2019.

Those millions are already trickling in, and next month the state will make the first payouts from a portion of excise taxes and fees collected from growers, processors and retailers.

That portion — $4 million as of Monday and $450 million in the economist’s forecast — are sequestered in a special account, not the general fund used to pay for the state’s daily operations.

The initiative specifies how money in that account is to be doled out. Ten percent is for a public education campaign, and 15 percent is for substance abuse prevention programs, for example.

The University of Washington gets a few dollars for operating a website, and the Liquor Control Board, which regulates recreational marijuana, is promised money to cover the myriad costs of overseeing the industry.

But there’s a problem: The initiative directs half the money to the Basic Health Plan, a state health insurance program that no longer exists. It went away with the arrival of the federal health care law.

The treasurer and the governor’s budget folks aren’t sure what to do and asked Attorney General Bob Ferguson for advice. Until it comes, they’ll keep those dollars under wraps.

If it turns out that the money is up for grabs, lawmakers will be able to amend the state law to make clear who should get it.

Cities and counties have a suggestion: us.

The ballot measure doesn’t promise local governments a share of marijuana revenue. And, so far, lawmakers have been unwilling to provide them a piece of the financial action.

That’s a sore point with members of city and county councils. They argue their communities are where growing and retailing occurs and thus are entitled to a share of the revenue to cover costs of things like zoning, regulating and policing.

Lawmakers went down to the wire of the 2014 session debating a revenue-sharing plan and came up empty.

Some legislators simply didn’t want to see money going to cities or counties that have enacted bans on the industry. Communities, they argued, needed “skin in the game” — meaning they allow growing, processing and retailing — to be entitled to a cut of the proceeds.

Counties and cities will try again in 2015, with possibly different pitches.

For example, counties might be willing to agree to leave out counties that enact bans and include them should their policy change. Cities, on the other hand, are said to prefer an incentive-based approach. Every city would get something, and those with marijuana businesses could get more because their community is generating revenue.

At times, the conversation might feel like a repeat of the 2014 session, but it won’t be the same.

For one thing, all the hand-wringing took place before any dollars had poured in.

That’s changed. There’s money in the bank. There’s a clearer idea of the stakes, and they are real. Very real.

Political reporter Jerry Cornfield’s blog, The Petri Dish, is at www.heraldnet.com. Contact him at 360-352-8623; jcornfield@heraldnet.com and on Twitter at @dospueblos.

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