The Department of Liquor and Cannabis Board recently released

the study conducted by Capstone which confirms suppositions that there are thousands of people who consume cannabis for health reasons that avoid registering into the legal I502 system. Patients are opting out of buying legally grown, tested, and properly labeled cannabis products from licensed businesses that are produced in our tightly regulated system.  Additionally, spending in the underground market does not create any tax revenue for the state nor revenue for licensees. Patients’ access to medicine does not rely upon the legal system created by Initiative 502 to provide safe, consumable products intended for better health.

Washington State’s unregulated cannabis farmer markets are thriving by serving this significant population of consistent cannabis consumers.

How did we get here?  Washington used to be known as a compassionate state that welcomed medical marijuana refugees from prohibitionist areas across the country. When we consider the origins of adult-use cannabis in Washington state it is hard to understand why we would have maintained a 37% sin tax on those who use it as their chosen medicine.  Furthermore, no one before I502 would have imagined we would still be charging individuals with a felony for growing at home for personal use while broadly turning a blind eye to commercial illicit growing and sales.  How did we go from a state that had compassion for cannabis patients since 1998 to one that ignores their needs and pushes their business away? 

Senate Bill 5052 Killed Washington’s Compassion for Patients

Students of our state’s cannabis history point to the 2015 legislative session when a high-paid lobbyist, working on behalf of newly minted cannabis opportunists, bent the ear of state legislators.  The Senate Bill 5052 opening statement claims: The legislature finds that since voters approved Initiative Measure No. 692 in 1998, it has been the public policy of the state to permit the medical use of marijuana. Between 1998 and the present day, there have been multiple legislative attempts to clarify what is meant by the medical use of marijuana and to ensure qualifying patients have a safe, consistent, and adequate source of marijuana for their medical needs.

The medical cannabis program in Washington State has badly faltered since the bill’s passage.  The stores that served patients for years under the collective garden model were mostly shuttered in the wake of licenses awarded to the new opportunists. The new law also stepped on the doctor-to-patient relationship by restricting qualifying conditions in the statute. Then the Department of Health created onerous rules that stifled attempts to bring medical-grade cannabis products into I502 stores. The state’s preference for the newbie cannabis entrepreneurs all but eliminated the patient consumer base of multiple thousands who followed their loyalties into the unregulated market as their favorite stores were shuttered.

The Numbers Tell the Tale

Consider that the state of Arizona, with a similar population, has 78,398 registered cannabis patients compared to Washington’s paltry 12,122 registered patients. Colorado has about two million fewer people and their registry is pushing 71,000 cannabis patients. There are many factors contributing to why this is so, but our 37% ‘sin tax’ on patient purchases is a clear culprit in deterring registry.

Based on the chart, one can conservatively estimate close to 60,000 patient consumers are buying outside of the regulated market.

According to Headset, the median basket purchase is $33 per visit to a legal store.  Patients tend to buy frequently and heavily but even if a patient only made one purchase per month at the median expense, Washington’s regulated stores are missing out on an estimated $1,980,000 in monthly sales or a whopping $23,760,000 annually going to the makers of non-licensed cannabis products with no oversite.

The Cannabis Alliance is the only cannabis trade group seeking fixes to this preventable issue.

While it might be easy to disparage patient advocacy as a bleeding heart issue unworthy of business focus, it is clearly an economic issue for licensees and the state in general. This out-of-sight / out-of-mind stance is obtuse to the reality that thousands and thousands of dollars are changing hands and licensees and the state are not the beneficiaries.

The Alliance has supported legislation for years to lift the highest-in-the-nation 37% sin tax on registered patient purchases. (There is still the local sales tax rate, which would remain.)  The Department of Revenue admits the annual fiscal note loss would only amount to less than $45,000 yet it gets held up in committee every year. The legislators seem to not understand that if they give up that small amount of tax revenue collected from just over twelve thousand patients currently registered, the industry as a whole lifts up with hundreds of thousands more dollars flowing between regulated hands.

Win Win Win

The patients would pay about a third less, they would receive tested products, they’d receive properly labeled and dosed products, the retail stores would see increased cash flow and the producers/processors would have an expanded base of sophisticated consumers. Capturing those untapped consumer dollars would likely help the supply/demand imbalance.  Bring in these frequent customers and the products they need will quickly follow. The entire supply chain would naturally see increases and Washington would again be considered a compassionate state for medical cannabis consumers.

Supporting The Cannabis Alliance’s push to lift the sin tax from patient purchases is supporting regulated business and guiding patients to reliable and tested products– A WIN – WIN – WIN