Where Does Cannabis Tax Money Go in Washington? 

One of the top arguments for legalizing cannabis has long been the tax revenue states can bring in with regulated cannabis sales. The economic benefits touted by legalization supporters are plentiful, from increased tax revenue to bettering communities to the creation of new jobs to employ citizens. As one of the first states to legalize recreational cannabis, you may be wondering, where does cannabis tax money go in Washington? 

Where Does Cannabis Tax Money Go in Washington? 

June 27, 2023

Cannabis revenue over the years 

When voters approved I-502, it was decided that the Liquor and Cannabis Board (LCB) would approve, regulate, and enforce cannabis licenses. The LCB is also in charge of collecting the 37% excise tax that is tacked on to all cannabis sales. That’s right, Washington tacks on a 37% excise tax on all cannabis sales, which gets split across several categories. It’s the second-highest cannabis tax in the nation, next to Alaska. 

By the end of the first fiscal year nearly a decade ago, Washington’s recreational cannabis sales generated $65 million in tax revenue. By the end of the 2022 fiscal year, cannabis sales had generated more than $511 million in taxes just that year. There’s no doubt that the state is bringing in a large chunk of change by legalizing cannabis. Just compare it to the tax revenue generated by liquor sales in 2022, which came out to $261 million, and you’ll see just how valuable cannabis tax revenue is to Washington state. 

Where does cannabis tax revenue in Washington go?

With so much tax revenue generated, many people wonder where the cannabis tax money really goes. According to the Washington State Treasurer, 2022’s cannabis tax revenue was distributed among the following services:

  • General Fund – $157 million
  • Basic Health – $264 million
  • Local Governments – $20 million
  • Washington State Health Care Authority – $53 million
  • Department of Health – $9 million
  • Washington State Patrol – $2.2 million
  • Washington Liquor and Cannabis Board – $11.8
  • Other – $1.5 million

Over the years, one of the largest reported allocations for cannabis revenue has been to the state’s Basic Health Plan Trust Account. This account provides health care to low-income people or those without health insurance. The state’s Health Care Authority, which funds primary care and dental services for low-income residents, also takes up a large portion of the tax revenue. 

Operating a regulated cannabis industry does not come cheap, either. A good chunk of the state’s cannabis tax revenue goes straight back into regulating the industry. Cannabis businesses must follow a host of rules, including keeping businesses a minimum distance away from schools and keeping products out of the hands of minors. As such, some of the generated tax revenue goes to the Liquor and Cannabis Board to regulate both the state’s cannabis and liquor industries. Some of the tax revenue also goes toward the Washington State Patrol, which is in charge of stopping illegal cannabis operations and runs a toxicology lab for testing drugs. 

The state Department of Health takes a hefty chunk of change as well, with money going toward cannabis education and public health programs. Some of the revenue goes to a public health hotline to give referrals to substance abuse treatment providers. Additionally, a portion of the tax revenue goes toward the state Office of Superintendent of Public Instruction’s “Building Bridges” grants program, which aims to keep at-risk kids in school through mentoring, academic coaching, alternative instruction methods, and online courses. 

Local governments see a portion of the tax revenue, too. When recreational cannabis was first legalized in Washington, i-502 didn’t include any money for local governments, but cities and county officials ended up asking the Legislature to share some of the state’s tax revenue with them. 

A good chunk of the collected tax revenue also goes to the general fund, which is the easiest fund for the state to use and helps to balance out the operating budget. What exactly is in the general fund, though? K-12 education is a big one, taking up about half of the state’s operating budget. 

Research and testing take some of the tax revenue as well. Both UW and WSU receive some money to help researchers examine the long-term effects of cannabis use and to analyze existing research and inform state policy. Additionally, the Department of Ecology gets some money to conduct research for lab testing and accreditation standards. Likewise, the Department of Agriculture gets some money to analyze the pesticides found in cannabis products and make sure the levels are consistent with state requirements. 

In the grand scheme

When it comes to the entire state revenue, cannabis taxes generate just a sliver of the full picture. Though cannabis brought in more than $500 million dollars in tax revenue last year, the state as a whole brings in dozens of billions of dollars with a 2022-2023 biennial budget of $59.2 billion for the general fund.

Stock up at Piece of Mind Cannabis 

Now that you know where that extra tax money goes, it’s time to stock up on some green. Stop by Piece of Mind Cannabis to shop our large selection of flower, edibles, concentrates, beverages, and so much more. We’re here to answer any questions and help you have a great experience. Our Bellingham dispensary, Spokane pot shop, and other locations are ready for you to stop by and say high today! 

Piece of Mind Cannabis is a medical marijuana and recreational Cannabis dispensary with locations in North Spokane, South Spokane, Bellingham, and Pullman, Washington.

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