Notice of Public Hearing for House Bill 1260 - Update: 10 Year Analysis Completed

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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		Craft Cannabis Producer/Processor Application Fee	Craft Cannabis Producer/Processor License Fee	Marijuana Processor License Fee	Marijuana Producer License Fee	Total
2022		$ 150,000	$ 1,582,626	$ -477,826	$ -552,400	$ 702,400
2023		150,000	3,165,252	-955,652	-1,104,800	$1,254,800
2024		12,500	3,165,252	-955,652	-1,104,800	$1,117,300
2025		12,500	3,165,252	-955,652	-1,104,800	$1,117,300
2026		12,500	3,165,252	-955,652	-1,104,800	$1,117,300
2027		12,500	3,165,252	-955,652	-1,104,800	$1,117,300
2028		12,500	3,165,252	-955,652	-1,104,800	$1,117,300
2029		12,500	3,165,252	-955,652	-1,104,800	$1,117,300
2030		12,500	3,165,252	-955,652	-1,104,800	$1,117,300
2031		12,500	3,165,252	-955,652	-1,104,800	$1,117,300
Total:		$ 400,000	$ 30,069,894	$ -9,078,694	$ -10,495,600	$10,895,600

Liquor and Cannabis Board:

Section 1 of the bill creates a craft cannabis producer/processor license.  The amount of the application fee is $250 and the amount of the annual license fee for the license is $2,762.   

The current cost in statute of a marijuana producer license is $1,381.  The current cost in statute for a marijuana processor license is $1,381.  Currently licensed producers that also hold a processor license pay both license fees for a total of $2,762.  

The Liquor and Cannabis Board (LCB) estimates 600 new craft cannabis producer/processor licenses would be issued per year over the first 2 years of the bill taking effect for a total of 1,200 new licenses.  The LCB assumes that two-thirds (400) of the 600 new craft cannabis producer/processor licenses per year would be issued to existing licensees transitioning from either a producer or producer/processor license.  There is a total of 1,076 existing producer and producer/processor licenses, of which 13.5% are producer only.  For the purpose of this estimate, the 13.5% ratio was applied to the two-thirds (400) of licensees estimated to transition to the new license in order to determine the estimated number of 54 producer only licensees that would transition.  The remaining 346 existing licensees estimated to transition to the craft producer/processor license are assumed to be producer/processors.  This distinction is important as producer only licenses would be required to pay an additional $1,381 from their current annual license fee in order to obtain the craft producer/processor license, whereas the license fee will remain unchanged for existing producer/processor licenses that transition to the new license.    

Note: For purposes of this estimate the LCB assumes in FY2024 and beyond the number of craft producer/processor licenses remains at 1,200 with the number of new licensees entering the market being offset by existing licensees deciding to leave the market. 

CASH RECEIPT IMPACT:

APPLICATION FEES:

FY2022: 600 Applications x $250 = $150,000

FY2023: 600 Applications x $250 = $150,000

FY2024+: 50 Applications x $250 = $12,500

LICENSE FEE REVENUE FROM CRAFT CANNABIS LICENSE:

Producer only licenses transitioning to a craft producer/processor:

FY2022: 54 licenses x $1,381 = $74,574

FY2023+: 108 licenses x $1,381 = $149,148

Producer/Processor licenses transitioning to a craft producer/processor:

FY2022: 346 licenses x $2,762 = $955,652

FY2023+: 692 licenses x $2,762 = $1,911,304

New Licensees:

FY2022: 200 licenses x $2,762 = $552,400

FY2023+: 400 licenses x $2,762 = $1,104,800

Total Revenue from Craft Cannabis Licensing Fees:

FY2022: $1,732,626

FY2023: $3,315,252

FY2024+: $3,177,752

LOST LICENSE FEE REVENUE FROM EXISTING PRODUCERS & PRODUCER/PROCESSORS TRANSITIONING:

Producer only licenses transitioning to a craft producer/processor:

FY2022: 54 licenses x $1,381 = ($74,574)

FY2023+: 108 licenses x $1,381 = ($149,148)

Producer/Processor licenses transitioning to a craft producer/processor:

FY2022: 346 licenses x $2,762 = ($955,652)

FY2023+: 692 licenses x $2,762 = ($1,911,304)

Total Revenue Lost from Existing Producers & Producers/Processors Transitioning:

FY2022: ($1,030,226)

FY2023+: ($2,060,452)

NET TOTAL CASH RECEIPTS IMPACT:

FY2022: $702,400

FY2023: $1,254,800

FY2024+: $1,117,300

*****

EXCISE TAX:

It is assumed this bill could generate additional excise tax as section 1(4) of the bill allows craft cannabis producer/processors to make retail sales from their licensed production facility.  The cash receipt impact from the marijuana excise tax is indeterminate as the LCB does not make any assumption as to how much excise tax revenue could be generated.

Ten-year projection prepared in consultation with the following agencies:

Liquor and Cannabis Board


Bill sponsors and contact information:

Representative Emily Wicks, Prime Sponsor
Democrat
(360) 786-7864
WICKS_EM@leg.wa.gov

Representative Laurie Dolan
Democrat
(360) 786-7940
Laurie.Dolan@leg.wa.gov

Representative Liz Berry
Democrat
(360) 786-7860
Liz.Berry@leg.wa.gov

Representative Joe Fitzgibbon
Democrat
(360) 786-7952
Joe.Fitzgibbon@leg.wa.gov

Representative Tarra Simmons
Democrat
(360) 786-7934
Tarra.Simmons@leg.wa.gov

Representative Alex Ramel
Democrat
(360) 786-7970
alex.ramel@leg.wa.gov

Representative Lillian Ortiz-Self
Democrat
(360) 786-7972
lillian.ortiz-self@leg.wa.gov

Representative Jessica Bateman
Democrat
(360) 786-7992
jessica.bateman@leg.wa.gov

Representative Mike Sells
Democrat
(360) 786-7840
mike.sells@leg.wa.gov

Representative Debra Lekanoff
Democrat
(360) 786-7800
LEKANOFF_DE@leg.wa.gov

Representative Nicole Macri
Democrat
(360) 786-7826
nicole.macri@leg.wa.gov




Legislative Bill Information Website: http://apps.leg.wa.gov/billinfo/

Initiative 960 Website: http://www.ofm.wa.gov/tax/default.asp