In a move celebrated by many advocates of patient rights for cannabis users, Washington state has decided to put a halt on its 37% excise tax on cannabis for those holding a medical card. This suspension will take effect from June 6, 2024, and will last for five years. Bloomberg Tax reports.
This exemption from sales and excise tax on particularly expensive cannabis products marks Washington as a unique case. With both taxes removed, it seems that the tax burden on patients is lower than in other states. For instance, Colorado applies sales tax but does not place an excise tax on medical sales, while California charges excise tax but exempts patients holding cards from sales tax.
In contrast, other states that allow adult use do not require patients to buy specifically tested cannabis to be eligible for their medical discount. This requirement imposes an increased financial strain on medical patients in Washington who are often least equipped to bear it.
Though the higher product costs needed to qualify for tax relief questions the impact’s weight, the singnificant savings for patients and new business potential for Washington’s dispensaries make it a pivotal move. The 37% reduction, reinforced with a 6.5% savings on sales tax, might be enough to reignite medical cannabis sales.
Dispensaries might potentially utilize the tax savings realized from eliminating the excise and sales taxes to attract medical patients back to certified medical brands which present viable substitutes to pharmaceuticals.
Apart from this, consumers who are conscious of toxins, pesticides, and heavy metals and are willing to pay a premium for organic products might provide dispensaries with a wider market. With a physician’s prescription, 43.5% excise and sales tax savings and the health perks of high-grade cannabis, could be strong enough incentives for these consumers to opt for the state’s medical cannabis process.
An informal price analysis conducted recently in the Seattle area made a comparison between adult-use flower and a well-known medically compliant flower brand. The analysis suggested that the cost savings with excise tax and sales tax removed will result in the medical-grade flower cost less than the higher end brands and are comparable to the cost of the most popular mid-priced brands.
In conclusion, the reduction in excise tax will greatly benefit patients having major health issues in Washington by significantly lowering the cost of medicinal cannabis. This price reduction could likely increase demand and put high-quality cannabis products into the hands of more people who need them.