Washington state marijuana sales drop $120M this year

(The Center Square) – Cannabis sales in Washington state haven’t exactly gone to pot, but they did slow down this year for the first time since the state began legal adult-use marijuana sales in 2014.

The Evergreen State’s retail marijuana sales slipped 8% from 2021 to 2022, a loss of about $120 million in revenue, according to a recent report from cannabis data firm Headset.

While many attributed the decline in legal weed sales to the lingering impact of the COVID-19 pandemic, Aaron Smith, co-founder and chief executive officer of the National Cannabis Industry Association, pointed to another factor.

“This is not isolated to Washington state’s cannabis industry,” he told The Center Square via email. “We’re seeing similar trends across the country.”

He continued, “I believe the primary factor at play is inflationary pressure driving more consumers to procure cannabis in the underground, unregulated market. Heavy taxes and regulatory burdens on our industry make it very difficult to compete with underground cannabis providers who pay no taxes at all and have no need to follow the state’s rules and regulations for producing and selling cannabis.”

Washington’s 37% excise tax on adult-use cannabis, which the consumer pays at the time of purchase, is the highest in the nation.

“The best thing the state could do now to advance the will of Washington voters, who overwhelmingly prefer regulated markets to illicit ones, is to reduce the tax burden on the legal industry to allow us to better compete with the underground market,” Smith said.

Taxes aren’t the only concern for those in the legal cannabis industry. Safety remains a major concern given the deadly spate of robberies targeting pot shops in Washington that drew media scrutiny earlier this year.

Meanwhile, banking reform for marijuana retailers, seen by many as a good start to improving safety in the industry, remains in limbo in Washington, D.C.

The bipartisan marijuana banking bill known as the Secure and Faire Enforcement (SAFE) Banking Act that would allow marijuana dispensaries to use credit cards, debit cards, and other banking services instead of being cash only, passed the House but stalled in the Senate.

The legislation is in jeopardy as the lame-duck Congress looks to wrap up its work this week.

In 2012, Washington voters approved Initiative 502, which legalized the possession, distribution, and sales of marijuana. It required the State Liquor Control Board to regulate and tax the retail sale of marijuana.

Legislation in 2015 changed the tax rate from a 25% wholesale and retail tax to the current 37% rate and changed the board’s name to the Washington State Liquor and Cannabis Board.

Retail sales began July 2014, with Washington becoming the second state, after Colorado, to permit retail sales of recreational marijuana.

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