SB 5650
In CommitteeSenate
Cannabis local excise tax
Authorizing a local excise tax on cannabis.
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 lets counties and cities impose a local 2% tax on cannabis sales, but only after voters approve it in an election. The tax can last up to 7 years and be renewed. Revenue is shared between local governments, with the state handling collection and keeping up to 1% for administrative costs.
- Allows counties to impose a local 2% excise tax on cannabis products (concentrates, useable cannabis, and infused products), subject to voter approval via ballot measure.
- If a county does not adopt the tax by July 1, 2027, cities within that county may instead impose the same tax, also requiring voter approval.
- Taxes can be imposed for up to 7 years at a time, and may be reimposed for additional 7-year periods with voter approval each time.
- Prohibits counties and cities from imposing the tax simultaneously in the same area; only one jurisdiction may collect it.
- Requires the Liquor and Cannabis Board to collect the tax and distribute proceeds: 15% to the county, and the rest to cities and the county based on where sales occurred.
- Allows the Liquor and Cannabis Board to deduct up to 1% of collected taxes to cover administrative costs.
Who is affected
- Cannabis consumers and retailers — Residents and businesses in counties or cities that choose to impose the tax may see higher prices on cannabis products, and local governments may gain new revenue for public services.
- County and city governments — Counties and cities gain the authority to collect up to 2% in additional taxes on cannabis sales, with revenue shared among local governments based on where sales occur.
- Washington State Liquor and Cannabis Board — The state agency responsible for licensing and regulating cannabis retailers must also collect and distribute this new local tax, adding administrative responsibilities.
- State and county treasurers — State and local treasurers must manage the flow of tax revenue, including distributing funds to affected jurisdictions and covering administrative costs.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (4)
The bill provides counties and cities with a new, voter-approved revenue stream to fund public services (e.g., schools, public safety, substance use treatment), with revenue allocation tied to where sales occur—supporting equitable distribution among jurisdictions.
Local GovernmentPeopleRef: Sec. 1(1)(a), (b); Sec. 1(3)(a), (b)Local governments can use tax revenue to expand substance use disorder treatment, harm reduction, and enforcement—targeting public safety outcomes in communities disproportionately impacted by cannabis prohibition.
Public SafetyPeopleRef: Sec. 1(1)(a), (b); Sec. 1(5)Voter approval requirement ensures democratic legitimacy and local control, reinforcing community input over taxation—though this also creates access barriers in jurisdictions where ballot measures fail.
Rights & LibertiesLean peopleRef: Sec. 1(1)(a), (b)Municipal revenue from cannabis taxes may support local economic development initiatives (e.g., small business incubators, infrastructure) that benefit small-scale cannabis operators and micro-enterprises.
Business & EmploymentLean peopleRef: Sec. 1(1)(a), (b)
Potential Concerns (4)
The tax increases prices for cannabis consumers by up to 2%, disproportionately affecting low-income users who spend a higher share of income on cannabis and may substitute toward unregulated or illicit markets due to price sensitivity.
FinancialPeopleRef: Sec. 1(1)(a), (b); Sec. 1(3)(a), (b)While counties and cities gain new revenue, the 15% upfront distribution to the county (even when a city collects the tax) and the state’s 1% administrative deduction reduce net local revenue, especially for smaller cities with lower sales volumes—limiting fiscal flexibility where it’s most needed.
Local GovernmentLean peopleRef: Sec. 1(3)(a), (b); Sec. 1(4)The prohibition on concurrent county and city taxation may reduce local government autonomy and create administrative complexity in overlapping jurisdictions, potentially discouraging adoption in areas where both levels would prefer to raise revenue.
Local GovernmentLean peopleRef: Sec. 1(1)(d)Retailers face increased compliance burden (e.g., separate reporting, potential contract negotiation with LCB) and may absorb some costs or pass them to consumers, especially small dispensaries with limited administrative capacity.
Business & EmploymentLean peopleRef: Sec. 1(4)
Who Is Most Affected
Low-income cannabis consumers face higher out-of-pocket costs, especially in jurisdictions where the tax is imposed; they may shift to illicit markets if prices rise significantly, undermining regulatory goals.
Smaller cities and towns with lower cannabis sales volumes receive proportionally less revenue under the distribution formula (e.g., 15% to county first), potentially widening fiscal disparities between urban and rural local governments.
Large retail chains benefit from stable, predictable local tax frameworks and may absorb or pass on compliance costs more easily than small operators, reinforcing market concentration.
The LCB gains administrative responsibility but also expanded authority; the 1% cap on administrative costs may be insufficient for initial implementation, straining state resources.
Counties with high cannabis sales (e.g., King, Snohomish) gain substantial new revenue, but the 15% upfront allocation to the county—even when a city collects the tax—may reduce incentives for city-level adoption.