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Washington Cities To Lobby For Cut Of Pot Tax Revenue

In the six months since Washington state’s retail marijuana stores opened, the state has raked in more than $12 million dollars in revenue from taxes.

That money goes to fund state agencies and programs largely aimed at public health and drug abuse prevention.

But now cities across Washington say they want their share of pot tax revenue and plan to push hard to get it at the state Legislature come January.

The city of Vancouver, Washington, already has two retail marijuana stores with another on the way. At some point, it’s possible the city could have as many as six.

“That’s what our future looks like,” said Vancouver Councilman Jack Burkman. “We’re going to have a number of these.”

He said increasing the prevalence of pot in the city is certain to have a cost.

“We don’t know what all those impacts are, but we believe there are going to be impacts on police, there’s going to be impacts on education,” he said.

In Washington, pot is taxed 25 percent at each level of sale: from grower to processor, then from processor to retailer and finally from retailer to the customer, who also pays sales tax.

The latest forecast shows Washington’s retail marijuana industry is projected to bring in nearly $700 million in revenue for the state by 2019.

Despite all the tax paid to the state, Burkman said the city only gets about 1 percent of the final sales tax. That’s no different from what it would get on most retail transactions.

“So for all this new business. For all the risks inherent and the unknowns in this what used to be illegal product, we can get a little bit of money, but not much and a huge amount goes to the state,” Burkman said. “Cities should get a portion of that revenue.”

In February, mayors from more than 100 Washington cities signed a letter to state lawmakers asking for a portion of the revenues from pot.

In the letter, mayors argued that the state needs to share its revenues since “the state is relying on local cities to enforce new marijuana laws.”

Alison Holcomb is the national director of the American Civil Liberties Union’s Campaign to End Mass Incarceration. She’s based in Seattle and wrote Initiative 502, which made recreational pot legal in the state.

“We’re really trying to implement a new way of dealing with marijuana use,” she said.

Holcomb said cities were intentionally left out.

The goal of the initiative, she said, was to fund health-related and drug-prevention programs that have suffered from a lack of state funding.

Under I-502, about 80 percent of the tax revenues from marijuana sales are for health-related programs, while 20 percent is earmarked for the state’s general fund.

“In Washington state there are zero state dollars that go to prevention programs,” she said. “We’re really reluctant to start splitting off revenues for roads and street lights and the kinds of things that city and county council people probably want to spend those revenue dollars on.”

Holcomb said the main cost for cities was criminal enforcement of marijuana laws.

In 2012, she said, there were more than 5,000 misdemeanor arrests in the state for marijuana possession. Last year, she said there were 120 arrests.

“So it’s hard to see what the increased law enforcement costs is,” Holcomb said. “It looks like it should be a decreased law enforcement cost.”

In Oregon, more than 70 cities have passed tax ordinances on retail pot transactions. That’s despite the fact that Oregon law specifically says that the state gets all tax revenues from marijuana.

In Colorado, local governments receive a portion of the revenues from taxes on retail marijuana.

Earlier this year Washington state’s attorney general said local governments are allowed to ban retail pots stores.

Mark Brown, a lobbyist who represents several southwest Washington cities, said it would be smart for state lawmakers to cut cities in on pot tax revenues.

“There’s already 42 cities in our state that have now already imposed mandatory bans. There are others that are still in moratoriums,” Brown said. “The bottom line is, I think having some of that state revenue available to these cities will be a little bit of an incentive for them to reconsider whether they want to ban it or not.”

Brown points out the more cities with retail operations, the more tax revenue there’s likely to be for the state.

“That assumes that the policy objective is to sell more marijuana,” said Rep. Reuven Carlyle, D-Seattle, who chairs the state House finance committee. “That doesn’t happen to be my policy objective. … I’m not in a hurry, personally as a legislator and as a parent to open marijuana stores on every single corner.”

In the upcoming session, lawmakers are going to need all the money they can find.

The state Legislature is currently in contempt of a court order from the Washington State Supreme Court over education funding.

Lawmakers will need to come up with at least $1.2 billion more for education over the next two years, as well as a plan to fully fund education by 2018.

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