Analysis Complete for House Bill 1995

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HB 1995, titled AN ACT Relating to direct sales from certain marijuana producers and processors, 10 year analysis complete.

The Office of Financial Management has identified this bill as requiring a ten-year projection of increased cost to the taxpayers or affected fee payers.

Ten-year projection:

Fiscal Year		Direct to Consumer Retail Sale Endorsement
2020		$ 30,000
2021		52,875
2022		52,875
2023		52,875
2024		52,875
2025		52,875
2026		52,875
2027		52,875
2028		52,875
2029		52,875
Total:		$ 505,875

This bill allows for marijuana producers and processors to sell marijuana at retail, directly to a consumer from their licensed location.  A “direct to consumer retail sale” license endorsement to the marijuana producer’s or marijuana processor’s license must be obtained prior to any sales.  All sales of marijuana are considered retail sales under RCW 69.50.535 (and therefore the 37% marijuana excise tax applies)

The Washington State Liquor and Cannabis Board ("Board") assumes that half of the 1,410 currently licensed marijuana producers and processors would apply for the endorsement.  The annual fee for the endorsement is $75.  400 would apply in FY20, 305 in FY21 (in addition to the 400 renewals).  

FY20: 400 x $75 = $30,000

FY21+: 705 x $75 = $52,875

The Board makes no assumptions regarding any change in marijuana excise tax collections as a result of this bill, therefore the marijuana excise tax component of this analysis is indeterminate.

Sales of marijuana may increase, leading to increased marijuana excise taxes, or existing sales may shift from retailers to endorsed producers and processors.  If existing sales shift, there is a possibility of decreased marijuana excise tax revenue as it could be assumed that the price of marijuana offered at these endorsed producers and processors might be cheaper.  Since the marijuana excise tax is based upon the retail value of the product, if the product offered for sale is cheaper, the excise tax collected would be less.