Lawmakers in Washington State “recently passed a bill granting an exemption from the 37% excise tax for medical marijuana patients and designated providers,” according to Forbes.

The passage of the measure eliminates  what has been characterized as “one of the highest tax rates imposed on medical marijuana products.” 

The bill, HB 1453, was originally introduced last year. 

Per an official legislative summary of the proposal, the bill aimed to provide “a tax exemption from the 37 percent cannabis excise tax for qualifying patients and designated providers with a recognition card on purchases of cannabis products that are labeled as Department of Health (DOH) compliant product and tested in accordance with the DOH’s rules.”

“There is levied and collected a cannabis excise tax equal to 37 percent of the selling price on each retail sale in Washington of cannabis concentrates, useable cannabis, and cannabis-infused products. This tax is separate and in addition to general state and local sales and use taxes that apply to retail sales of tangible personal property, and is not part of the total retail price to which general state and local sales and use taxes apply,” the summary said. “The tax must be reflected in the price list or quoted shelf price in the licensed cannabis retail store and in any advertising that includes prices for all cannabis products. All revenues collected from the cannabis excise tax must be deposited each day in the Dedicated Cannabis Account.”

The summary continued: “A tax exemption is provided to qualifying patients and designated providers who hold a recognition card, from the 37 percent cannabis excise tax, on their purchases of cannabis products that are labeled as a Department of Health (DOH) compliant product and tested in accordance with the DOH’s rules. Each seller making exempt sales must maintain information establishing eligibility for the exemption in the form and manner required by the Washington State Liquor and Cannabis Board (LCB). The LCB must provide a separate tax reporting line on the excise tax form for exemption amounts claimed.”

The Seattle law firm Harris Sliwoski provided more background on the measure and its journey through the Washington legislature, noting that the 37 percent tax imposed an unnecessary burden on patients.

“On March 6, 2024, the Washington Senate passed HB 1453 which will provide an exemption from the 37% excise tax for medical cannabis patients and designated providers. The bill now waits for signatures and executive action to become law. First introduced in 2023, HB 1453 sought to harmonize the existing medical exemptions from general sales and use taxes with the 37% excise tax on cannabis sales,” the law firm explained. “Medical cannabis patients and providers face a significant financial burden when patients and providers are unfairly taxed the same as recreational consumers. Primarily, medical cannabis is not recreational or a luxury, but a necessity for many people who suffer from chronic pain, epilepsy, PTSD, and other conditions. Medical cannabis is often the only effective treatment that allows them to function and improve their quality of life. Medical cannabis patients and providers must already jump through additional regulatory hoops to stay compliant with the LCB and the DOH and the imposition of additional taxes only exacerbates this hardship. Medical cannabis patients and providers follow strict rules and guidelines to access the medicine not required by recreational cannabis users and providers, and it is unjust to further penalize those medical patients and providers.”

As the firm pointed out, the 37% tax was all the more onerous given that medical cannabis is both “already expensive and not covered by insurance or public health programs.”

“Adding a tax aimed at recreational sales on top of that makes it even more unaffordable for many patients who are already struggling financially. This can force them to reduce their dosage, switch to cheaper but less effective products, or even turn to the recreational market which does not have the same DOH requirements and compliance standards,” the firm said. “Taxing medical cannabis patients the same as recreational consumers is a form of discrimination that harms their health and well-being. It also goes against the principle of harm reduction, which is one basis of medical cannabis legalization policy.”

The bill will now head to the desk of Democratic Gov. Jay Inslee. If he adds his signature, the bill “will take effect ninety (90) days after the adjournment of the current legislative session and will provide medical cannabis patients and providers a much-needed tax exemption for their medicine,” Harris Sliwoski said.

“Washington lawmakers have finally acknowledged that medical cannabis should be treated as a medicine, not a commodity, and exempted from the 37% excise tax along with the current exemption from general and local sales and use taxes,” the firm added. 

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Senate Bill 5376 was recently passed in the House in Washington state on Feb. 29, which would establish new rules for cannabis waste if it became law.

Currently, cannabis waste (specifically roots, stalks, leaves, and stems that aren’t considered to be “dangerous”) is dumped into landfills and produces methane gas as it decomposes. According to the U.S. Environmental Protection Agency, 50% of landfill gas consists of methane, which is 28 times more effective than carbon dioxide to trap heat in the atmosphere.

SB-5376 aims to reduce the amount of cannabis waste, and methane gas, that is being produced in Washington landfills. If the law is signed by Gov. Jay Inslee, it would allow cannabis cultivators and processors to sell that plant material with 0.3% THC or less to the general public instead. According to a report from The Spokesman-Review, public buyers could use plant waste for composting or use it to make certain hemp products such as hempcrete, which can be used to make hempcrete or insulation, or hemp fiber products like clothing or animal bedding.

Seth Shamberg, who is the operations manager at Blue Roots Cannabis, a Spokane County-based producer and processor, told The Spokesman Review that they dump an estimated 2,200 pounds cannabis waste material into the landfill every month (approximately 26,400 pounds of material per year). “Usually, we mix it with dirt, cocoa, wood chips, all kinds of (organic material),” said Shamberg. “There isn’t anything recoverable once it’s been ground and mixed like that.”

The material fills up a 40-yard container dumpster, and costs $600 for each one. “This doesn’t do our society any good to be continuing to fill landfills, especially when it’s being mixed with nonorganic garbage piling up or being put into plastic contractor bags before it’s dumped,” Shamberg explained.

Current law in Washington state requires that processors mix cannabis waste with 50% other materials such as paper waste, cardboard waste, plastic waste, or soil. Many processors utilize cat litter or mulch wood chips.

According to Zero Waste Washington executive director Heather Trim mixing in non-cannabis material with cannabis waste only further contributes to the production of methane gas. Trim estimates that nearly 500-1,100 pounds of cannabis is dumped into landfills each week during the growing season in Washington state (based on approximately 1,000 licensed growers).

Trim added that SB-5376 is supported by a House Bill 1799, which was passed in Washington state in June 2022. The bill aims to “reduce methane emissions by diverting organic materials from municipal landfills where they would decompose and create the gas.” Currently, the goal is to require residents and businesses to remove organic material from the garbage and have it collected by an “organics collector or composting facility.”

According to SB-5376, cannabis waste can’t be reused if it’s considered to be “dangerous.” This includes both its THC content, but also any pesticides that were used during the cultivation process. Any materials that are toxic or flammable would not be permitted.

During the sale process, it must be available to the public “on an equal and nondiscriminatory basis.” All purchases and details, including the quantity, price, and name of person or organization who purchases the cannabis waste, must be reported to the Washington State Liquor and Cannabis Board as well as the Department of Agriculture. “It would be nice to see the [Legislature] start to give more detail to some of the cannabis policies that we have in order to give us the opportunity to better rectify the issues that we face,” said Shamberg.

At the House meeting on Feb. 29, Rep. Shelley Kloba offered support of the bill, which she described as creating “a circular economy.” Cultivators would potentially be able to earn extra revenue, and those who buy the waste can benefit from reusing the products, while all parties help reduce waste in the landfill.

However, Rep. Leonard Christian expressed his opposition due to personal negative memories of how cannabis affected his youth. He explained how his mother worked as a cross country trucker and would leave money for he and his siblings. Unfortunately, his sibling would use the money to buy cannabis, leaving Christian only able to obtain food at school. “I’ve seen it wreck a lot of lives over the years,” said Christian. “It’s just not for me, and I’m not going to vote for a marijuana bill.”

A recent report published by Health Canada in January shows that the country has disposed of 3.7 million pounds of cannabis since legalization began in 2018. The disposed cannabis wasn’t waste however, an expert believes it was mainly product that was either too old or had too little THC to be sold. “There is no demand for old and low-THC products, so manufacturers of finished products are not buying this biomass as inputs,” said industry consultant Farrell Miller. “It’s likely low-quality material with no value. As consumers become more savvy with packaging dates on dried cannabis products, this trend will only continue.”

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In July, Washington State recently opened its online reimbursement center, called the Blake Refund Bureau, to cover court-ordered fines or costs in relation to drug possession convictions. Since then, the state has already approved reimbursements for a total of $276,000.

The Administrative Office of the Courts (AOC) launched the Blake Refund Bureau more than two years after the court ruling was made for State v. Blake in February 2021, when the Washington Superior Court ruled that arresting people for drug possession was unconstitutional.

The foundation of the case involved a woman who received a pair of jeans from a friend in 2016, which had a small bag of methamphetamine hidden in the coin pocket. The state charged her with possession of a controlled substance, but she claimed “unwitting possession” in her defense.

This premise established a discussion of those who unknowingly handle or harbor drugs. According to Justice Sheryl Gordon McCloud, a postal worker can unknowingly deliver packages that contain drugs, or a roommate can hide drugs in a shared living space. “Attaching the harsh penalties of felony conviction, lengthy imprisonment, stigma, and the many collateral consequences that accompany every felony drug conviction to entirely innocent and passive conduct exceeds the legislature’s powers,” Gordon explained.

“In 2021, the Washington State Supreme Court found the law criminalizing drug possession unconstitutional,” AOC stated. “As a result of this decision, known as State v. Blake, any Blake-related convictions qualify to be removed (vacated) from one’s criminal record, and any legal financial obligations (LFOs) paid as a result qualify for financial reimbursement.” Washington State police departments were instructed to no longer arrest people for simple drug possession.

Anyone convicted of drug possession prior to the conclusion of State v. Blake, or before February 25, 2021, is eligible to have their conviction cleared, as well as reimbursed for any relative costs. The Olympian stated that an estimated 20,000 felony drug possession charges that date back to the 1970s could be eligible for vacating, in addition to 150,000 misdemeanor cannabis charges.

Robin Zimmerman, a senior communications officer at the Washington State Administrative Office of the Courts, recently told The Olympian that the reimbursement amount is increasing every day, and that “payments for the online application refunds are on track to be processed and issued within 90 days.”

Zimmerman also added that state courts have paid out $9.4 million in LFO refunds. Before the Blake Refund Bureau was established, refunds were issued to state cities and counties until June 30. Now, more than 30,000 people have viewed the website, and 25,000 cases have been made online, with that number increasing daily. “Blake team members are working on processing applications and collaborating with justice partners in outreach efforts to help inform Blake-impacted individuals across Washington State about the relief opportunities now available,” Zimmerman said.

The initial court ruling was on track to expire this year on July 1, but in May 2023 Washington State legislators attended a special session to pass a law that was later signed by Gov. Jay Inslee.

According to Sen. June Robinson told The News Tribune in May that it was the most challenging legislation she’s worked on throughout her entire career. “Luckily we are moving as a society to understand that addiction is a disease,” Robinson said. “However, unfortunately, we do not have built-up infrastructure and committed and trained staff to suitably address this disease in every corner of our state today. Over and over again we’ve heard that a solution we propose needs to put treatment options in front. I believe this striking amendment does that.” 

May was a good month for Washington State, which also saw other bills passed by Gov. Inslee. He signed a bill that expands the number of social equity licenses by 52 between 2024 and 2032. Bill sponsor Sen. Rebecca Saldaña explained the importance of her bill. “Building pathways of opportunity and flexibility for people of color disproportionately harmed by the war on drugs is not only a moral imperative, but a crucial step towards a more just and equitable society,” said Saldaña. “We heal the harms of the past by our commitment to action and change today.”

Inslee also signed a separate bill that would protect employees from pre-employment drug testing. According to NORML Deputy Director Paul Armentano, this was a huge step forward. “Urine screening for off-the-job cannabis consumption has never been an evidence-based policy,” said Armentano. “Rather, this discriminatory practice is a holdover from the zeitgeist of the 1980s War on Drugs. But times have changed; attitudes have changed, and in many places, the marijuana laws have changed. It is time for workplace policies to adapt to this new reality and to cease punishing employees for activities they engage in during their off-hours that pose no workplace safety threat.”

The Seattle Times reported in December 2022 that the state saw a decrease in sales for the first time since legalization began in 2014. Although the state reported $509 million in excise tax revenue for fiscal year 2022—an 8% decline compared to sales from fiscal year 2021. Washington Liquor and Cannabis Board spokesperson Brian Smith explained that one reason for this could be because of the transition from pandemic-based remote work back to in-person work. 

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Washington state will soon provide measures to protect employees from pre-employment drug tests for cannabis in many situations.

On May 9, Gov. Jay Inslee signed Senate Bill 5132 to lay out broad protections for employees who consume cannabis while imposing limitations on employment drug testing for cannabis.

Employers must prepare to comply by January 1, 2024, the bill’s effective date. The bill was sponsored by Sen. Karen Keiser (D-Des Moines) who serves as chair of the Senate Labor & Commerce Committee.

“It is unlawful for an employer to discriminate against a person in the initial hiring for employment if the discrimination is based upon: (a) The person’s use of cannabis off the job and away from the workplace; or (b) An employer-required drug screening test that has found the person to have non-psychoactive cannabis metabolites in their hair, blood, urine, or other bodily fluids,” the bill reads.

With i502, Washington legalized adult-use cannabis sales in 2012. During the 2022-2023 legislative session, lawmakers in Washington worked to implement a bill that will bridge the gap between hiring practices and current law.

SB 5132 provides exemptions for jobs that involve federal security clearances or background investigations, in law enforcement, the fire department, first responders, corrections officers, the airline or aerospace industries, or in safety-sensitive positions.

Why Drug Testing for Cannabis Doesn’t Work

The Spokesman-Review reports that cannabis metabolites can be detected long after impairment, lasting up to 30 days or more. But cognitive impairment only lasts from three to 10 hours, according to a 2021 study by the University of Sydney. Those researchers found that drug tests for cannabis are likely an inaccurate way of determining impairment.

“Urine screening for off-the-job cannabis consumption has never been an evidence-based policy,” said NORML Deputy Director Paul Armentano. “Rather, this discriminatory practice is a holdover from the zeitgeist of the 1980s ‘war on drugs. But times have changed; attitudes have changed, and in many places, the marijuana laws have changed. It is time for workplace policies to adapt to this new reality and to cease punishing employees for activities they engage in during their off-hours that pose no workplace safety threat.”

Armentano added, “Those who consume alcohol legally and responsibly while away from their jobs do not suffer sanctions from their employers unless their work performance is adversely impacted. Those who legally consume cannabis should be held to a similar standard.”

Nevada enacted a similar law to ban employers from drug testing for cannabis in 2019. California, Connecticut, Montana, New Jersey, New York, and Rhode Island enacted workplace protections limiting employers’ ability to either test for THC or to sanction employees for their use of cannabis while off the job. At the local level, Atlanta, Baltimore, Philadelphia, and the District of Columbia approved bills to limit employers’ ability to pre-screen job applicants for past cannabis use. 

The effects of cannabis wear off within hours. Numerous studies show that employees who consume cannabis off the clock perform no differently than their non-cannabis-consuming peers. 

The new law means that employers in Washington must review and revise their drug testing policies to align with the protections provided by SB 5132. They must remove any pre-employment cannabis drug testing requirements that test or report non-psychoactive cannabis metabolites and ensure that policies clearly outline the exemptions for drug testing, such as post-accident or suspicion-based situations.

New York issued similar guidelines. In October 2021, the New York State Department of Labor (DOL) released new guidance regarding legalized recreational marijuana use and the workplace including the new worker protections. The new guidance makes it clear that off-the-clock cannabis use should be tolerated by employers in most situations. It defines mandatory pre-employment drug testing for cannabis as “discrimination.”

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Washington will add dozens of more cannabis retail shops to its existing adult-use market in the next decade after the state’s governor signed a bill into law on Monday.

The measure, signed by Democratic Gov. Jay Inslee, is aimed at bolstering the social equity component of the state’s legal marijuana program. 

Under the terms of the new law, the state’s Liquor and Cannabis Board is to “issue up to 52 cannabis retailer licenses” between January 1, 2024 and July 1, 2032 to individuals who qualify for the social equity program.

Per Axios, that represents “almost a 10% increase over the current number of licensed pot shops, which has been capped at 556 statewide since 2016.”

According to the bill’s official summary, an individual who qualifies for the social equity program is someone who: “has at least 51 percent ownership and control by one or more individuals who have resided in a DIA for a period of time defined in the Liquor and Cannabis Board’s (LCB) rules after consultation with other specified entities; has at least 51 percent ownership and control by at least one individual who has been convicted of a cannabis offense, a drug offense, or is a family member of such an individual; or meets criteria defined in LCB rules after consultation with other specified entities.”

The bill also “waives annual fees, and provides a one-time, one-license annual fee reimbursement to current cannabis licensees who submit a social equity plan to [the Liquor and Cannabis Board],” according to a press release from Democratic lawmakers.

“Building pathways of opportunity and flexibility for people of color disproportionately harmed by the war on drugs is not only a moral imperative, but a crucial step towards a more just and equitable society,” said the bill’s sponsor, Democratic state Sen. Rebecca Saldaña. “We heal the harms of the past by our commitment to action and change today.”

Democratic lawmakers in Washington say that state data “reveals that the vast majority of Washington’s cannabis business owners are white, and only 4% of the state’s retail cannabis licenses went to Black applicants,” and that the bill “helps create a more inclusive cannabis licensing program for Black and brown business owners in Washington.”

“The bill also amends the definitions of ‘disproportionately impacted area,’ ‘social equity applicant,’ and ‘social equity plan’ in the program, and modifies the time period for cannabis licensees to qualify for a social equity technical assistance grant. It enables additional retail stores to be established over time, giving social equity licensees more flexibility in choosing a location, while also preserving local control over zoning and outlet density,” Democrats said in the press release.

Inslee, who announced this week that he will not seek a fourth term in next year’s gubernatorial election, said that he will be calling a special legislative session that will focus on “passing a new drug possession law.”

The special session is scheduled for May 16.

The regular legislative session ended on April 23, before lawmakers there were able to pass a new drug possession law, which was needed after the “Washington Supreme Court struck down the state’s felony drug possession law in 2021, ruling it unconstitutional,” according to Washington public radio station KUOW.

“Legislators put in place a temporary fix that treated drug possession as a misdemeanor. That measure, known as the Blake fix, is set to expire over the summer,” the station reported.

Inslee said that he and aides in his office “have been meeting with legislators from all four caucuses and I am very optimistic about reaching an agreement that can pass both chambers.”

“Cities and counties are eager to see a statewide policy that balances accountability and treatment, and I believe we can produce a bipartisan bill that does just that. Details are still being negotiated, but caucus leaders share the desire to pass a bill. I believe that starting the clock on May 16 will put us on a path to getting the job done this month,” Inslee said in a statement on Tuesday.

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Washington State’s Senate Bill 5263 was introduced on January 11, and passed on to the House on March 9. As of April 14, it received final passage from the Senate on April 14. Previously there was some concern about the House and Senate agreeing on certain amendments for SB-5263, but ultimately the new bill text was approved by the Senate on Friday and now heads to governor’s for final consideration.

The bill, sponsored by Sen. Jesse Salomon and Sen. Liz Lovelett, originally would have allowed psilocybin for people 21 years or older to obtain and use psilocybin with the assistance of licensed facilitators. Now, the bill simply implements a dedicated Psilocybin Advisory Board, an Interagency Psilocybin Work Group, and a Psilocybin Task Force, as well as a pilot program through the University of Washington.

The Psilocybin Advisory Board would consist of a variety of individuals, including the Secretary of the Department of Health, policy experts, a military veteran with knowledge of psilocybin, a social worker, mental health counselor, or marriage/family therapist, a representative of a family tribe, a psychologist, and an individual who specializes in either mycology, ethnobotany, psychopharmacology, harm reduction, or scientific research in regards to psychedelic therapy, among others. These individuals serve four-year terms, and would be required to meet five times per year.

Interagency Psilocybin Work Group would be created to “provide advice and recommendations” covering everything from regulatory framework, reviewing indigenous practices, studying various research on the “possible use and misuse of psilocybin therapy,” and developing a social opportunity program.

Finally, Psilocybin Task Force will enlist many of the same requirements as the Psilocybin Advisory Board to create a comprehensive panel of experts who will discuss gaps in scientific research, clinical trials, and much more. SB-5263 requires that the task force to submit a final report to both the governor and legislature by December 1, 2023.

Additionally, SB-5263 was expanded with help from Rep. Nicole Macri. If Inslee signs the bill, it would also create a University of Washington clinical pilot program that would provide military veterans with access to psilocybin treatment if they suffer from post-traumatic stress disorder or mood/substance use disorders and “offer psilocybin therapy services through pathways approved by the federal Food and Drug Administration (FDA).” The program would be set to establish and administer its program by January 1, 2025.

In 2019, Gov. Inslee expressed support for cannabis legalization, followed by positive support of decriminalizing and/or legalizing psilocybin as well. “I would consider it. I haven’t had a chance to think about [legalization] so I can’t give you a ‘yes’ or ‘no,’” said Inslee. “I do believe that our War on Drugs has had all kinds of untoward effects and it’s one of the reasons that, for instance, not only have we legalized marijuana in Washington but I’ve offered pardons—I’m the first governor to offer pardons to several thousands people who have misdemeanor convictions on their records.”

According to The Seattle Times, Inslee’s policy adviser for public health, Samantha Pskowski, told Sen. Salomon in February that “The bill as proposed would create a system for regulation and use of psilocybin that is not supported by the available scientific and medical evidence.” Now that the bill focuses more on the pilot program, there’s hope that Inslee will agree.

Dr. Anthony Back, a University of Washington researcher who is currently working on studying psychedelic therapies, told The Seattle Times that this bill should be passed to help patients in the state. “I think waiting for three years or waiting for more years, is not doing justice to the mental health crisis that I’m seeing now,” Back said.

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The Washington State Liquor and Cannabis Board (LCB) has officially announced that it will open up social equity applications on March 1. The window for applications will only last 30 days, ending by 5 p.m. on the deadline.

Only 44 licenses that were previously “forfeited, canceled, revoked, or never issued” are being made available to those who qualify. Applicants must have been living in a disproportionately impacted area (DIA), which is defined as having a high poverty rate, participation in “income-based federal programs,” unemployment, and rate of convictions, between 1980 to 2010. Applicants must have been convicted of a cannabis-related offense themselves, or know a family member who was convicted as well. Finally, the applicant’s income must be less than the state average, which is $82,400.

The LCB has set up webinars for Jan. 24 and 28 in order to assist potential applicants through the licensing process.

While social equity has become a standard in the industry, especially in states that have only recently legalized adult-use cannabis, Washington State’s initial legalization did not include these provisions. 

“The 2012 ballot measure Initiative 502, which legalized recreational use of cannabis by adults, did not include provisions or create programs to acknowledge the disproportionate harms the enforcement of cannabis laws had on certain populations and communities,” the LCB stated. “The LCB recognizes that cannabis prohibition laws were disproportionately enforced for decades and that the cumulative harms from this enforcement remain today.”

In March 2020, Gov. Jay Inslee signed House Bill 2870 (which was introduced to the legislature by Rep. Eric Pettigrew), which took effect on June 12, 2020. This created a state social equity program, a Social Equity Task Force, “…and the opportunity to provide a limited number of cannabis retail licenses to individuals disproportionately impacted by the enforcement of cannabis prohibition laws.”

Currently, there is a new bill being proposed that aims to improve upon the original social equity bill. Senate Bill 5080’s first hearing was held on Jan. 10 with the Senate Labor & Commerce Committee, Washington CannaBusiness Association, and Craft Cannabis Coalition. Many who were present discussed their concerns with market oversaturation, asking that the number of social equity licenses be reduced.

In December 2022, a Headset report found that annual cannabis sales in Washington State were in decline by about $120 million in comparison to data from the previous year. “From March 2020 to March 2021, legacy cannabis markets saw drastic increases in growth,” wrote Headset about the decrease. “In the beginning months of the pandemic for example, Colorado’s total adult-use sales grew by 63% from February to July 2020.” However, the increase of sales during the pandemic prompted an unusual meteoric rise. “What you’re seeing as a ‘dip’ is really sales returning to normal growth as more people returned to in-person work,” said LCB spokesperson Brian Smith. He added that this downward trend isn’t isolated to just Washington state, but is being seen across the country in other legal states as well.

Washington State also made strides in 2022 to work on other outdated laws. In April 2022, Gov. Inslee signed House Bill 1210, which replaced all references of “marijuana” in state legislation with “cannabis.” According to bill sponsor Rep. Melanie Morgan, the connotations behind marijuana needed to be removed. “The term ‘marijuana’ itself is pejorative and racist,” Morgan said. “As recreational marijuana use became more popular, it was negatively associated with Mexican immigrants. Even though it seems simple because it’s just one word, the reality is, we’re healing the wrongs that were committed against Black and Brown people around cannabis.”

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