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Feds: Washington Medical Marijuana Dispensaries Owe Back Taxes

marijuana taxes tax

(via dailyfinance.com)

A tax battle has been brewing for a while now in Washington State. Medical marijuana dispensary owners maintain that they don’t have to pay taxes because they don’t sell medical marijuana. The federal government disagrees, and considers transactions at medical marijuana dispensaries to be sales. The feds are going after dispensaries in Washington State for enormous sums of money. Per King 5:

At Viskovich’s shop, medical marijuana patients donate money to support growers who donate their plants. However, the Department of Revenue considers those donations a business transaction, and recently sent Viskovich a notice.

“For over $1 million in back-taxes,” she said.

Viskovich’s dispensary is one of an estimated 117 in the state with delinquent sales tax payments. That’s about a quarter of the state’s 443 registered dispensaries, adding up to about $9.5 million. The DOR admits, however, that their calculations of who owes what are rough estimates.

The tax battle in Washington highlights the need for an official regulated system in Washington. When medical marijuana dispensaries operate without a licensing system and clear rules, it leaves the dispensaries open to attacks by law enforcement and government officials, and at the same time the State misses out on revenue. Dispensaries are not going away in Washington State, so why wouldn’t the State just bring them on board, like Oregon did?


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Johnny Green


  1. The 502 industry wants medical gone….but they can’t really say that without looking like the greedy bastards they really are, so they say they want them licensed a regulated. But they certainly don’t want them be successful! The whole idea is to AVOID any competition, not enable it. So what better way to do that than setting up marijuana stores that can’t sell marijuana, right?

  2. To answer the question: it was a total abrogation of Gubernatorial leadership. One phone call coupled with a lack of leadership caused the incredible confusion and disharmony one finds in Washington today.

  3. Our former Governor had a solid bill ready to sign on her desk. She then acted like her hair was on fire when she “allegedly” received a call tellingly her that she and her staff would be arrested if she signed it. It was a paper tiger threat. There has never been an acting American Governor arrested by the justice Department.

  4. I moved to Seattle from Anchorage 17 years ago when marijuana was still legal there. Washington’s medical law had just begun. I was unaware at the time that the law enforcement lobby was about to start a stealth war to undermine and destroy medical marijuana in Washington at it’s conception Why no one tried to rein these thugs in is hard to fathom.

  5. An edible and concentrate only dispensary bill being introduced in Olympia? Heard about this one? I just read about it. It was apparently written by a 502 recreational industry group. No conflict of interest there.

  6. What do you think about a bill I read that’s being introduced in Olympia requiring medical dispensaries to only sell edibles and concentrates? No flowers, no bud’s, no plants. After reading this I hope the legislature punts again this year. Sen. Kohl-Welles bill is a disaster too. again, no legislative action is better than this. Nevada is smart in opening medical dispensaries state-wide to entice seniors to move there. I’m driving down next week to check it out for myself. I’ll let you know what I find down there.

  7. I hope you’re right about the tribes. I do wonder how the Humboldt /Emerald Triangle grower’s feel about the California’s tribes contracting with a Kansas company to grow their cannabis ? That seems pretty strange. I’ve been reading many positive things about Nevada’s new medical dispensaries opening statewide. Of particular interest is older retiree’s are being welcomed with open arms (Imagine that?). Nevada, it appears is taking surprisingly progressive stance regarding medical marijuana dispensaries and patients. I can’t imagine what being welcomed would feel like after two years of living in the midst of the 502 vs medical dispensary war. I read about a dispensary bill being introduced in Olympia that would allow only edibles and concentrates to be sold in Seattle medical dispensaries. The dispensaries would then have to submit to the same nanny-state over-regulation 502’s face. This hair-brained scheme comes from as yet another recreational industry trade group, the same people who seem to be in the drivers seat re-writing Washington’s cannabis laws, primarily to protect their precious 502 investments. No conflict of interest there at all. And then there’s Sen Kohl-Welles bill which in essence guts and destroys Washington’s medical marijuana law and dispensaries.

  8. LET’S BE CLEAR….this is NOT about taxes. The state won’t end up with shit for taxes. The poultry amount of money they take in will go to running the LCB and policing the system. This is about the law enforcement lobby in Washington getting their final attempt to end medical….which has been a 17 year terrorism campaign against patients. If we win this year, and get an independent investigation into their illegal activities….they’re through.

    But this has nothing to do with taxes….no matter what they tell stupid legislators that are not in the loop.

  9. tryingtocalmdown on

    Steve, good write up. But you know as well as I do, notwithstanding legislators’ incredulousness over DOR’s typical nazi/commie like tactics, that the state wants money and wants to bring the med mj system under the LCB. Inslee will do nothing to stop the DOR and likely nor will Carlyle or Andy Hill. The best you can hope for is at least some knowable regs for med mj but it’s going to get taxed one way or another.

  10. The “800LB Gorilla” is not California….it’s the Indian Nations. THEY will be the first “open market” in America. They will be the certain end to 502 because they don’t have to deal with the LCB or the crazy taxes. The press is ignoring this rather obvious fly in the 502 ointment.

  11. Legalization is being abused by the local government. Cannabis legislation has to be written more airtight.

  12. Thanks for all the clarification here and your text above. I hope this all gets worked out though, because there are other states coming up behind you that are watching this, like New Mexico.

  13. I live in Washington but feel like I went to sleep and woke up in Louisiana ( where I have a close friend serving time for having a joint in his pocket). When did this state decide to become so proactively punitive toward it’s medical patients? What a mess

  14. Nice to get correct information the sad thing is that state officials are using lies and trickery to steal from people

  15. Hey feds Marijuana is illegal in your eyes so by default of your own dumb laws you dshould not reap taxes only the states should benefit from the taxes.

  16. I’m just tickled pink they cannot do a damn thing about what happens on Native American lands. It’s my hope that sales on tribal lands will become a game -changer and all of this quibbling over taxes will have been for naught.

  17. damn son. but no law to tax you can’t make one up without approval and you damn sure can’t tax donations. Good luck Oregon

  18. Yes, you are so right Steve. I’d eat glass before I walk into a 502 rec.store (actually I’d move ). Why don’t they go after the 800LB Gorilla California? (although I’m glad they haven’t)

  19. A system for licensing and regulation was passed by the Legislature here. The law enforcement lobby told the Governor which sections of that law they wanted her to veto….specifically the section on licensing and regulation….and she did just that. They didn’t WANT us to have legal status….so they could use it against us. Which is what they are doing now.

  20. EXCUSE ME? I know it’s hard for you who live in Oregon to actually follow what’s going on in Washington. It’s hard enough if you live here, but this headline is wildly inaccurate. The Feds have NOTHING to do with this story.

    This is about the Washington State Dept. of Revenue EXTORTING money from dispensary owners over a law that does NOT EXIST. They are being sued over that, and while some have chose to pay, rather than take the risk, passing that cost on to their patients, the State DOR will lose this legal battle.

    When I testified before the State House Finance Committee on this issue, and presented them with the proof that medical cannabis is tax exempt under state law, the Representative’s on the committee then grilled the idiot for the DOR. They pointed out that it seemed clear that medical cannabis was exempt under state law and asked him what statute the DOR was using to try to tax it…..since under the State Constitution only the legislature can establish a tax….and there was no tax code for medical cannabis.

    When he responded that the State Dept. of Revenue was taxing it under the state statute on “personal property” the whole committee was incredulous.

    It’s bad enough that the local news stations screw up these stories and get their information from the governors office, I would hope that those in the cannabis community that are writing stories about what’s happening here in Washington would at least ATTEMPT to do more the regurgitate the same propaganda being put out by those trying to end medical in Washington State.

    Especially because it’s these very same people who will be coming after medical in Oregon now…..because you wouldn’t listen to the warnings.

    By the way, almost all of these collectives DO have licenses. The only license they DON’T have is the one that is not even available to them. To say that they are “unlicensed” is totally incorrect. To say that they pay “no taxes” is also incorrect. In fact, I can’t find much in this story that IS correct. This is like reading a frigging Russ Belville blog.

    Disclosure: Stephanie Viskovich is my cousin…which also means that I know a lot about this particular story.

    Steve Sarich
    Cannabis Action Coalition

  21. Native Americans are exempt from taxes sold on their lands. Why not medical dispensaries providing medicine to sick patients? Greedy Americans and their nanny-state over-regulation causes more problems including human suffering than any medical dispensary. Washington’s dispensary system has worked well without anyone being harmed for almost two decades until legalization arrived. This is yet another attempt by rec. store owners and their lobbyist’/lawyer’s to eliminate medical dispensaries whom they view as competitor’s. But the dispensaries are more resilient than they think. It’s my hope that Washington’s Coastal tribes wipe all of the 502 rec stores out with low prices and good quality products. “Said California’s they place ya outta be so they loaded up the truck and they moved to…………”

  22. “The tax battle in Washington highlights the need for an official regulated system in Washington.”

    I agree, Johnny… and will add that there must be a better way of beating taxes that accepting money over the counter as donations. This doesn’t seem real smart.

  23. Its critical to remove Marijuana from Schedule 1 immediately. Its a “wonder drug” — especially for Cancer patients.

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