WA House FIN - Committee Meeting
(March 25, 2021) - SB 5004 - Executive Session

Legislation to exempt registered medical cannabis patients from the State excise tax on compliant products received a near unanimous policy committee recommendation, but was not taken up by its fiscal committee.

Here are some observations from the Thursday March 25th Washington State House Finance Committee (WA House FIN) meeting.

My top 3 takeaways:

• Staff briefly went over the status of SB 5004 (“Providing a tax exemption for medical marijuana patients”).
  • SB 5004 was passed by the WA Senate on March 5th. The bill then received a public hearing in WA House FIN on March 16th.
  • WA House FIN Fiscal Analyst Rachelle Harris went over the bill analysis which described how the proposal “Exempts sales of medical marijuana products to qualifying patients from the 37 percent marijuana excise tax until January 1, 2025” (audio - <1m, video).
    • The bill would also require the Washington State Joint Legislative Audit and Review Committee (JLARC) to “identify any changes in consumer behavior and determine whether the exemption results in an unanticipated decrease in state revenue” and report their “findings to the legislature by December 1st, 2024.”
      • JLARC began a review of medical cannabis tax preferences in December 2020.
    • Harris noted that there was a proposed amendment by Representative Tina Orwall to extend “the duration of the exemption from January 1st, 2025 to June 30th, 2025.”
    • The last fiscal note published on the bill, released March 3rd, showed that the legislation could reduce revenues to the dedicated marijuana account (DMA) by an estimated $5,300 in the first biennium and by $5,500 in the second biennium according to staff of the Washington State Liquor and Cannabis Board (WSLCB) and Washington State Health Care Authority (WA HCA). JLARC requested $322,800 between fiscal years (FY) 2024 and 2025 to complete the required study.

• Committee members discussed an amendment to change the end date of the tax exemption which was subsequently adopted.
  • Vice Chair April Berg moved that Amendment HARA 288 be incorporated into SB 5004’s text (audio - <1m, video).
  • Orwall said the change “realigns the dates so that they match up with the JLARC reports so we have all the information we need to make decisions” about whether or not the exemption would be allowed to sunset in 2025 (audio - <1m, video).
    • This revision was suggested by The Cannabis Alliance Government Affairs Liaison Lara Kaminsky during the committee public hearing on the bill.
  • The committee Ranking Minority Member, Ed Orcutt, contributed that he was “recommending a yes...if for no other reason than you’ve seen me propose a couple amendments so that when we start a tax exemption we start it on the beginning of a biennium. Well, this actually ends it at the end of a biennium so that makes perfect sense.” Chair Noel Frame appreciated the “administrative efficiency” (audio - 1m, video).
  • Committee members unanimously agreed to adopt the amendment (audio - <1m, video).

• The amended bill was then brought up for a vote, and all but one lawmaker on the committee voted to support its passage.
  • Berg moved that the legislation be passed by the committee “with a do-pass as amended recommendation” (audio - 1m, video).
  • Representative My-Linh Thai spoke up to offer her support for the "reasonable legislation" as it would be “a step closer to, to align” medical cannabis with prescription drugs, which were not taxed by the State  (audio - 1m, video).
  • Orcutt said he was also in favor of the bill, “when we had the bills to implement Initiative 502…I had been a supporter of trying to make it tax exempt for the medical patients. So I’m very glad we have a bill here to do that.” He believed in equal tax treatment for those utilizing cannabis or pharmaceuticals, “and for many people pharmaceuticals don’t work and if you ever watch any of the pharmaceutical ads they’re enough to scare anybody to death.” Viewing some of these medications as high risk, Orcutt said he could “understand why some people would choose to go the route of medical cannabis...and I’m going to support them.” He added that he “wished we had done it with the amendment process when we were implementing” legalization in 2013, “but I’m glad that we’re doing it now” (audio - 2m, video).
  • Following a roll call of the committee, all members voted to move SB 5004 forward with the exception of Representative Jeremie Dufault, resulting in a tally of 16-1 (audio - 2m, video).
  • At publication time, SB 5004 awaited a public hearing and executive action in the Washington State House Appropriations Committee (WA House APP). The bill needed to be heard and recommended for passage by April 2nd before the opposite house fiscal committee cutoff. Late on Thursday April 1st, WA House APP cancelled their open time slot for Friday April 2nd, and all remaining bills in the committee queue became effectively inactive until the start of the 2022 session.

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