wa-law.org > bill > 2025-26 > SB 5403 > Original Bill
As of 2024, Washington's cannabis industry generated $3,770,000,000 in excise taxes, providing vital funds for health care, education, human services, and to local governments.
Due to the federal legal landscape, all cannabis produced within Washington must stay within the state's borders, which can cause downward pressure on prices that threaten the ability for small and independent producers to stay in business.
The legislature intends to ensure a sustainable business ecosystem in the cannabis industry by allowing limited opportunities for the suppliers of cannabis retail licensees to better support themselves. The legislature does not intend to supplant or replace cannabis retail licensees by providing these limited opportunities.
Cannabis producers licensed under RCW 69.50.325 may sell cannabis flower directly to consumers only if sales are:
Limited to cannabis flower produced and processed by the licensee at the licensee's licensed location; and
In compliance with the limits of RCW 69.50.360.
Cannabis processors licensed under RCW 69.50.325 may sell cannabis flower directly to consumers only if sales are:
Limited to cannabis flower produced within the licensed business entity; and
In compliance with the limits of RCW 69.50.360.
The board may adopt rules on security and operational requirements for direct to consumer sales under this section, but any requirements adopted by rule may not be more stringent than those imposed on a cannabis retailer licensee.
The board may adopt rules to implement this section.
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There shall be a cannabis producer's license regulated by the board and subject to annual renewal. The licensee is authorized to produce:
Cannabis for sale at wholesale to cannabis processors and other cannabis producers;
Immature plants or clones and seeds for sale to cooperatives as described under RCW 69.51A.250;
Immature plants or clones and seeds for sale to qualifying patients and designated providers as provided under RCW 69.51A.310; and
Cannabis flower for retail sale directly to consumers, subject to section 2 of this act.
The production, possession, delivery, distribution, and sale of cannabis in accordance with the provisions of this chapter and the rules adopted to implement and enforce it, by a validly licensed cannabis producer, shall not be a criminal or civil offense under Washington state law.
Every cannabis producer's license shall be issued in the name of the applicant, shall specify the location at which the cannabis producer intends to operate, which must be within the state of Washington, and the holder thereof shall not allow any other person to use the license.
The application fee for a cannabis producer's license is $250. The annual fee for issuance and renewal of a cannabis producer's license is $1,381. A separate license shall be required for each location at which a cannabis producer intends to produce cannabis.
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There shall be a cannabis processor's license regulated by the board and subject to annual renewal. The licensee may:
Process, package, and label cannabis concentrates, useable cannabis, and cannabis-infused products for sale at wholesale to cannabis processors and cannabis retailers; and
Conduct retail sales directly to a consumer, subject to the provisions of section 2 of this act.
The processing, packaging, possession, delivery, distribution, and sale of cannabis, useable cannabis, cannabis-infused products, and cannabis concentrates in accordance with the provisions of this chapter and chapter 69.51A RCW and the rules adopted to implement and enforce these chapters, by a validly licensed cannabis processor, shall not be a criminal or civil offense under Washington state law.
Every cannabis processor's license shall be issued in the name of the applicant, shall specify the location at which the licensee intends to operate, which must be within the state of Washington, and the holder thereof shall not allow any other person to use the license.
The application fee for a cannabis processor's license is $250. The annual fee for issuance and renewal of a cannabis processor's license is $1,381. A separate license shall be required for each location at which a cannabis processor intends to process cannabis.
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There shall be a cannabis retailer's license to sell cannabis concentrates, useable cannabis, and cannabis-infused products at retail in retail outlets, regulated by the board and subject to annual renewal. The possession, delivery, distribution, and sale of cannabis concentrates, useable cannabis, and cannabis-infused products in accordance with the provisions of this chapter and the rules adopted to implement and enforce it, by a validly licensed cannabis retailer, shall not be a criminal or civil offense under Washington state law. Every cannabis retailer's license shall be issued in the name of the applicant, shall specify the location of the retail outlet the licensee intends to operate, which must be within the state of Washington, and the holder thereof shall not allow any other person to use the license. The application fee for a cannabis retailer's license is $250. The annual fee for issuance and renewal of a cannabis retailer's license is $1,381. A separate license shall be required for each location at which a cannabis retailer intends to sell cannabis concentrates, useable cannabis, and cannabis-infused products.
An individual retail licensee and all other persons or entities with a financial or other ownership interest in the business operating under the license are limited, in the aggregate, to holding a collective total of not more than five retail cannabis licenses.
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A cannabis retailer's license is subject to forfeiture in accordance with rules adopted by the board pursuant to this section.
The board shall adopt rules to establish a license forfeiture process for a licensed cannabis retailer that is not fully operational and open to the public within a specified period from the date of license issuance, as established by the board, subject to the following restrictions:
(A) No cannabis retailer's license may be subject to forfeiture within the first nine months of license issuance; and
(B) The board must require license forfeiture on or before 24 calendar months of license issuance if a cannabis retailer is not fully operational and open to the public, unless the board determines that circumstances out of the licensee's control are preventing the licensee from becoming fully operational and that, in the board's discretion, the circumstances warrant extending the forfeiture period beyond 24 calendar months.
iii. The board has discretion in adopting rules under this subsection (3)(c).
iv. This subsection (3)(c) applies to cannabis retailer's licenses issued before and after July 23, 2017. However, no license of a cannabis retailer that otherwise meets the conditions for license forfeiture established pursuant to this subsection (3)(c) may be subject to forfeiture within the first nine calendar months of July 23, 2017.
v. The board may not require license forfeiture if the licensee has been incapable of opening a fully operational retail cannabis business due to actions by the city, town, or county with jurisdiction over the licensee that include any of the following:
(A) The adoption of a ban or moratorium that prohibits the opening of a retail cannabis business; or
(B) The adoption of an ordinance or regulation related to zoning, business licensing, land use, or other regulatory measure that has the effect of preventing a licensee from receiving an occupancy permit from the jurisdiction or which otherwise prevents a licensed cannabis retailer from becoming operational.
d. The board may issue cannabis retailer licenses pursuant to this chapter and RCW 69.50.335.
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There is levied and collected a cannabis excise tax equal to 37 percent of the selling price on each retail sale in this state of cannabis concentrates, useable cannabis, and cannabis-infused products. This tax is separate and in addition to general state and local sales and use taxes that apply to retail sales of tangible personal property, and is not part of the total retail price to which general state and local sales and use taxes apply. The tax must be separately itemized from the state and local retail sales tax on the sales receipt provided to the buyer.
The tax levied in this section must be reflected in the price list or quoted shelf price in the licensed cannabis retail store and in any advertising that includes prices for all useable cannabis, cannabis concentrates, or cannabis-infused products.
The tax levied in this section must be reflected in the price list, quoted shelf price, or in any advertising that includes prices for all cannabis flower sold directly to consumers under section 2 of this act.
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Until June 30, 2029, the tax levied by subsection (1) of this section does not apply to sales by a cannabis retailer with a medical cannabis endorsement to qualifying patients or designated providers who have been issued a recognition card, of cannabis concentrates, useable cannabis, or cannabis-infused products, identified by the department as a compliant cannabis product in chapter 246-70 WAC and tested to the standards in WAC 246-70-040.
Each seller making exempt sales under this subsection (2) must maintain information establishing eligibility for the exemption in the form and manner required by the board.
The board must provide a separate tax reporting line on the excise tax form for exemption amounts claimed under this subsection (2).
All revenues collected from the cannabis excise tax imposed under this section must be deposited each day in the dedicated cannabis account.
The tax imposed in this section must be paid by the buyer to the seller. Each seller must collect from the buyer the full amount of the tax payable on each taxable sale. The tax collected as required by this section is deemed to be held in trust by the seller until paid to the board. If any seller fails to collect the tax imposed in this section or, having collected the tax, fails to pay it as prescribed by the board, whether such failure is the result of the seller's own acts or the result of acts or conditions beyond the seller's control, the seller is, nevertheless, personally liable to the state for the amount of the tax.
The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.
"Retail sale" has the same meaning as in RCW 82.08.010.
"Selling price" has the same meaning as in RCW 82.08.010, except that when product is sold under circumstances where the total amount of consideration paid for the product is not indicative of its true value, "selling price" means the true value of the product sold.
"Product" means cannabis, cannabis concentrates, useable cannabis, and cannabis-infused products.
"True value" means market value based on sales at comparable locations in this state of the same or similar product of like quality and character sold under comparable conditions of sale to comparable purchasers. However, in the absence of such sales of the same or similar product, true value means the value of the product sold as determined by all of the seller's direct and indirect costs attributable to the product.
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The board must regularly review the tax level established under this section and make recommendations, in consultation with the department of revenue, to the legislature as appropriate regarding adjustments that would further the goal of discouraging use while undercutting illegal market prices.
The board must report, in compliance with RCW 43.01.036, to the appropriate committees of the legislature every two years. The report at a minimum must include the following:
The specific recommendations required under (a) of this subsection;
A comparison of gross sales and tax collections prior to and after any cannabis tax change;
The increase or decrease in the volume of legal cannabis sold prior to and after any cannabis tax change;
Increases or decreases in the number of licensed cannabis producers, processors, and retailers;
The number of illegal and noncompliant cannabis outlets the board requires to be closed;
Gross cannabis sales and tax collections in Oregon; and
The total amount of reported sales and use taxes exempted for qualifying patients. The department of revenue must provide the data of exempt amounts to the board.
The board is not required to report to the legislature as required in (b) of this subsection after January 1, 2025.
The legislature does not intend and does not authorize any person or entity to engage in activities or to conspire to engage in activities that would constitute per se violations of state and federal antitrust laws including, but not limited to, agreements among retailers as to the selling price of any goods sold.