Taxes on recreational marijuana businesses in Washington State are so extreme that some shops are struggling to stay open despite burgeoning sales.
Cannabis City, the first retail marijuana store to open in Seattle, has racked up $2.5 million in sales, but much of that has been eaten up by state and federal taxes, owner James Lathrop told the news website Crosscut.com
“We’re just taking a hit to pay those taxes and keeping the doors open,” he said.
Aside from having to pay hefty state taxes, cannabis retailers can’t write off many of their common businesses expenses when filing their federal taxes. Additionally, the feds treat money stores pay in state taxes as income, and tax it accordingly.
Lathrop told Crosscut that he would have to boost shelf prices of cannabis by around 70% or more “to make it work.”
Two lawmakers said they plan to introduce a bill next year that would alter the 25% excise tax marijuana vendors, growers and processors have to pay Washington State. The bill change the excise tax to a business and occupation tax. That would allow cannabis firms to write off the state tax when they file their federal taxes.