Pubdate: Fri, 10 Apr 2015
Source: Seattle Times (WA)
Copyright: 2015 The Seattle Times Company
Author: Evan Bush



Under the 2012 Voter-Passed Initiative, Revenue From Marijuana Taxes 
Was to Go to Substance-Abuse Programs and Health Care. But That's Not 
Exactly What Lawmakers Have in Mind.

The initiative approved by voters to legalize recreational marijuana 
included a specific shopping list for spending the tax revenue, but 
the state Legislature looks poised to tweak those instructions, or 
even lose them entirely.

To the dismay of public-health officials, that could mean cutting 
millions in prevention and treatment funds intended to offset the 
costs to society of legalizing pot.

Complicating matters: No one really knows how much marijuana money 
the Legislature has to work with because both the House and Senate 
plan substantial changes to the pot law, such as regulating medical marijuana.

Right now, marijuana is taxed at 25 percent for each rung in the 
supply chain. Most of the revenue was intended to fund substanceabuse 
prevention and treatment programs and health care, and to study 
marijuana's effect on society.

In February, the Washington State Economic and Revenue Forecast 
Council forecast the pot industry would bring in $221 million during 
the next two-year budget term, though the House and Senate budget 
proposals expect more.

Republicans want to use marijuana revenue to avoid raising taxes 
while paying for education. Democrats seek to funnel more money into 
social services and low-income health care.

Two years after voters approve an initiative, the Legislature can 
alter it with a two-thirds majority vote.

The Republican-led Senate estimates the marijuana industry will 
generate about $296 million in the next two years. Save for $8 
million a year for the Liquor Control Board and $6 million a year 
split among cities and counties, that money will go toward education 
funding, a priority for the Legislature after the state Supreme Court 
ruled the state was legally obligated to increase funding to public schools.

The Senate budget assumes that medical marijuana becomes part of the 
state system. It would condense marijuana taxes to a single tax of 37 
percent, paid by the consumer when pot is sold.

Rejiggering the tax structure should help marijuana businesses, 
because it would allow them to avoid some federal taxes.

But public-health officials are concerned about the Senate's budget 
plan. Dr. Gary Goldbaum, the director of Public Health for Snohomish 
County, did not support the initiative to legalize marijuana because 
he was concerned there wouldn't be a focus on prevention and 
substance-abuse treatment.

The Senate's budget "raises a real concern for me that the 
Legislature is not taking seriously the need for investments in 
prevention," he said. "It's really important whenever we legalize any 
drug that we pay attention to how we avoid hooking a next generation 
on those substances. Once people get hooked, there are adverse social 

ACLU lawyer Alison Holcomb, who sponsored Initiative 502, said the 
Senate plan would make it easier to produce and sell marijuana while 
also "gutting the balancing features of Initiative 502" like prevention.

Rep. Reuven Carlyle, D-Seattle, accused the Republicans of "sweeping 
away the spirit of the initiative" by seeking to use the revenue to 
fund education.

Sen. Andy Hill, the GOP's chief budget writer, balked at that characterization.

"We're upfront, we're transparent," the Redmond Republican said of 
the plan, noting the Senate increases mental-health spending, which 
he believes goes hand in hand with substance abuse.

The Democrat-led House budget expects about $270 million in marijuana 
revenue. About $7.4 million a year would go to the Liquor Control 
Board, $720,000 to fund studies and $6 million a year for cities and 
counties. The rest is distributed, by percentage, to a number of 
prevention, treatment and health-care programs.

As in the Senate, the House plan would condense marijuana taxes into 
one, but at a lower rate of 30 percent.

Although that plan closely follows the initiative's outline for 
spending, Hill noted the Democrats redirect funds, too.

The House budget expands how agencies can use the money. For example, 
the Department of Social and Health Services would get funding for 
pregnant and parenting women's services and life-skills training for 
youth. The Department of Health would be able to use pot revenue to 
help fund the Washington Poison Center.

The revenue also would supplant other budget considerations, like 
funding for community health centers.

Carlyle said the House budget still gives voters what they approved in I-502.

"The House budget invests those dollars in prevention, low-income 
health care, which was the essential promise of the initiative," said 
Carlyle. "It's hard to write good policy in the initiative process. 
You can reform and update it."

Complicating matters further, legislators know they face a moving target.

Because the recreational-marijuana market has only been running for 
about nine months, forecasters don't have much historical data to 
work with. Just 137 stores of the 334 allowed under Liquor Control 
Board rules have opened. Local moratoriums can affect predictions.

"Forecasting is difficult, period," said Steve Lerch, of the 
revenue-forecasting council. Marijuana forecasting "is a little more 

Plus, the Legislature must consider how substantial changes to the 
law, such as the regulation of medical marijuana, would affect future 
revenue projections.

Rep. Cary Condotta, R-East Wenatchee, said he thought the Senate's 
projection of $296 million was "a little enthusiastic" compared with 
the House's estimate. Condotta believes lowering the tax rate on 
marijuana will sell more pot, and ultimately bring in more revenue.

So far, revenue has outpaced projections. In November, forecasters 
predicted the state would make about $10 million on the cannabis 
excise tax for the fourth quarter of 2014. The state actually made 
nearly $12 million, according to a follow-up report in February.

Hill said the forecasters have been very conservative.

"If you look at receipts coming in this fiscal year, (marijuana tax 
revenues) are ahead of schedule," he said.

The House and Senate will negotiate a compromise budget in the coming weeks.

"It's like a puzzle," said Condotta, "You just have to keep moving 
the pieces around."

Unclear of size, marijuana revenue might be one of the trickier pieces to fit.
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MAP posted-by: Jay Bergstrom