HB 2433
In CommitteeHouse
Cannabis excise tax
Concerning the cannabis excise tax.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill replaces Washington’s existing 37% cannabis excise tax with a new tiered tax based on product type, weight, or THC content, effective June 30, 2026. It also extends the medical cannabis tax exemption through June 30, 2029, and tightens ownership limits for retail cannabis licenses.
- Replaces the previous 37% ad valorem cannabis excise tax with a new tiered tax based on product type, weight, or THC content.
- Sets specific tax rates: $2.75–$1.75 per gram for usable cannabis and prerolls (declining with larger quantities); $1–$0.50 per gram for trim; $0.01187 per mg of THC for concentrates; and $0.07427 or $0.04051 per mg of THC for solid/liquid edibles and topicals.
- Maintains a medical cannabis exemption for qualifying patients and designated providers until June 30, 2029, for compliant products.
- Requires retailers to separately itemize the excise tax on receipts and include it in shelf pricing and advertising.
- Imposes limits on how many retail licenses a single entity may hold (maximum of five) and restricts financial or operational control across more than five licenses.
- Requires the Washington state liquor and cannabis board to review tax levels and report to the legislature on tax impacts, including illegal market activity and cross-border sales.
Who is affected
- Cannabis retailers — Retail cannabis businesses must collect and remit the new tiered excise tax based on product type and weight or THC content, and must separately itemize the tax on receipts.
- Medical cannabis patients and designated providers — Medical patients and their designated providers may continue to purchase compliant medical cannabis tax-free until June 30, 2029, if they present a valid recognition card.
- Cannabis licensees (producers, processors, retailers) — Cannabis producers, processors, and retailers must comply with new licensing and operational requirements, including limits on how many retail licenses a single entity may control.
- State and local governments and consumers — State and local governments benefit from increased tax revenue deposited into the dedicated cannabis account, while consumers face higher prices due to the new tax structure.
Pro/Con Analysis
Potential Benefits (5)
Extending the medical cannabis tax exemption through June 30, 2029 directly reduces out-of-pocket costs for qualifying patients — many of whom are seniors, people with disabilities, or low-income individuals — making medically necessary cannabis more affordable and accessible.
HealthcarePeopleRef: Sec. 3(2)Requiring separate itemization of the excise tax on receipts and in shelf pricing improves price transparency, helping consumers compare products and budget more effectively — especially beneficial for low-income users who are price-sensitive.
FinancialPeopleRef: Sec. 3(1)(b)-(c)Mandating annual reporting on Oregon sales and illegal market activity allows policymakers to adjust tax policy to reduce illicit market activity — which is associated with violence, product safety risks, and loss of tax revenue — thereby improving public safety over time.
Public SafetyLean peopleRef: Sec. 3(6)(vi)-(vii)The five-license cap may help prevent monopolization and preserve opportunities for small and mid-sized operators — supporting local entrepreneurship and job creation in communities where large chains might otherwise dominate.
Business & EmploymentLean peopleRef: Sec. 4(3)(b)(i)The required biennial reporting on tax impacts, illegal market activity, and license trends improves data transparency for local governments, enabling better planning for enforcement, public health, and economic development responses.
Local GovernmentLean peopleRef: Sec. 3(6)(i)-(v)
Potential Concerns (5)
The new tiered tax replaces a flat 37% ad valorem tax with per-gram or per-mg THC rates, which disproportionately increases tax burden on lower-THC, lower-price products (e.g., trim, edibles) relative to their value — effectively raising effective tax rates on budget-conscious consumers who rely on cheaper products.
FinancialIndustryRef: Sec. 3(1)(a)(iii)-(v)The tiered structure creates a regressive tax effect: smaller-package purchases face higher per-gram rates than bulk purchases, penalizing low-income consumers who buy in smaller quantities due to limited cash flow or storage capacity.
FinancialIndustryRef: Sec. 3(1)(a)(i)-(ii)Concentrates and edibles are taxed per mg of THC rather than by value, which can result in higher effective tax rates on lower-cost or lower-THC products — for example, a $10 edible with 100mg THC pays $7.43 in tax (74% of price), while a $50 concentrate with 1,000mg pays $11.87 (24% of price).
FinancialIndustryRef: Sec. 3(1)(a)(iv)-(v)While the bill requires reporting on exempt amounts for medical patients, it does not offset the loss of tax revenue from the medical exemption — meaning general fund services (e.g., schools, roads) may face pressure as cannabis revenue becomes more volatile, indirectly affecting everyday residents.
FinancialLean industryRef: Sec. 3(6)(vii)The five-license cap and restrictions on financial/operational control may consolidate market power among larger license holders, limiting opportunities for small operators and potentially reducing competition and job growth in local retail markets.
Business & EmploymentLean industryRef: Sec. 4(3)(b)(i)-(ii)
Who Is Most Affected
Low- and moderate-income cannabis consumers — especially medical patients — benefit significantly from the medical exemption and price transparency, but are disproportionately harmed by the regressive per-gram tax structure that penalizes small purchases and low-THC products.
Medical patients and designated providers gain direct cost savings from the extended medical exemption, but may face administrative hurdles if the board’s reporting requirements increase documentation burdens.
Large, vertically integrated cannabis companies benefit from the ability to hold up to five licenses and coordinate operations across them, while smaller operators face tighter constraints — potentially accelerating market consolidation.
Small, independent retailers may benefit from the five-license cap limiting market concentration, but could be harmed by the regressive tax structure that reduces margins on smaller-volume, budget-friendly products they often rely on.
State and local governments gain stable, dedicated revenue from the new tax, but may face long-term budget pressures if the regressive structure drives consumers to the illicit market or if medical exemption revenue loss is not offset.