The Elephant in the Room? Nah, The Elephant in the Industry… Seattle recreational marijuana source

We interviewed James Lathrop, owner of Cannabis City, a few weeks back and he brought up the heavy taxation issue of not just recreational marijuana stores, but all recreational marijuana businesses. We highlighted this last week only to have the first Seattle cannabis store owner contact us with an even more detailed version of the issue. It’s important, so please take the time to read:

In Washington marijuana products are taxed at a multiple compound rate: That is 25% from the grower to processor, plus 25% from the processor to the retailer, plus 25% from the retailer to the customer [each of these levels of tax pay tax on the previous tax], plus another 10% of regular sales tax, city tax, and B&O [which includes taxation of the excise tax itself]; then there is an additional Federal tax of another 25% [that is a fed 35% tax on the ~70% gross profit [gross after cost of goods] falling out at about 25% of gross – including Federal taxation on the State excise tax itself.).

So on the retailer side alone that is ~60% of the product in pure tax, with ~30% going to to cost of goods and ~1-5% left to actually run the business; the growers and processors are in a similar situation.

All cannabis businesses in Washington are set to fail under this unreasonable and compound tax structure; many will fail, some will survive; but none can exist under this tax structure for very long. 

WOW. This issue that James Lathrop brings up is no laughing matter. This is a major issue that could literally make or break an industry, and needs to be dealt with sooner or later. If not, it could have negative consequences – not just for our local industry – but for national legalization as well. High Above Seattle will continue to increase awareness of this issue into next year. What are your thoughts about this issue? Is this an issue that  is directly affecting you and your business? What are your ideas or solutions? 

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