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The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
"Affiliated" means related in any way by virtue of any form or amount of common ownership, control, operation, or management.
"Board" means the liquor and cannabis board.
"Business" means any trade, occupation, activity, or enterprise engaged in selling or distributing kratom products in this state.
"Distributor" means any person:
Engaged in the business of selling kratom products in this state who brings, or causes to be brought, into this state from outside the state any kratom products for sale;
Who makes, manufactures, fabricates, or stores kratom products in this state for sale in this state;
Engaged in the business of selling kratom products outside this state who ships or transports kratom products to retailers or consumers in this state; or
Engaged in the business of selling kratom products in this state who handles for sale any kratom products that are within this state but upon which tax has not been imposed.
"Kratom" means any part of the leaf of the plant Mitragyna speciosa.
"Kratom product" means any food, beverage, ingredient, dietary supplement, or any other product, regardless of form, that is intended for human consumption and contains kratom or any alkaloid extract thereof, whether derived from kratom or synthetically including, but not limited to, mitragynine, 7-hydroxymitragynine, or any other compounds of the kratom plant.
"Person" means any individual, receiver, administrator, executor, assignee, trustee in bankruptcy, trust, estate, firm, copartnership, joint venture, club, company, joint stock company, business trust, municipal corporation, the state and its departments and institutions, political subdivision of the state of Washington, corporation, limited liability company, association, society, any group of individuals acting as a unit, whether mutual, cooperative, fraternal, nonprofit, or otherwise. "Person" excludes any person immune from state taxation, including the United States or its instrumentalities, and federally recognized Indian tribes and enrolled tribal members, conducting business within Indian country.
"Place of business" means any place where kratom products are sold or where kratom products are manufactured, stored, or kept for the purpose of sale, including any vessel, vehicle, airplane, or train.
"Retail outlet" means each place of business from which kratom products are sold to consumers.
"Retailer" means any person engaged in the business of selling kratom products to ultimate consumers.
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"Sale" means any transfer, exchange, or barter, in any manner or by any means whatsoever, for consideration, and includes and means all sales made by any person.
"Sale" includes a gift by a person engaged in the business of selling kratom products, for advertising, promoting, or as a means of evading the provisions of this chapter.
"Taxable sales price" means:
In the case of a taxpayer that is not affiliated with the manufacturer, distributor, or other person from whom the taxpayer purchased kratom products, the actual price for which the taxpayer purchased the kratom products;
In the case of a taxpayer that purchases kratom products from an affiliated manufacturer, affiliated distributor, or other affiliated person, and that sells those kratom products to unaffiliated distributors, unaffiliated retailers, or ultimate consumers, the actual price for which that taxpayer sells those kratom products to unaffiliated distributors, unaffiliated retailers, or ultimate consumers;
In the case of a taxpayer that sells kratom products only to affiliated distributors or affiliated retailers, the price, determined as nearly as possible according to the actual price, that other distributors sell similar kratom products of like quality and character to unaffiliated distributors, unaffiliated retailers, or ultimate consumers;
In the case of a taxpayer that is a manufacturer selling kratom products directly to ultimate consumers, the actual price for which the taxpayer sells those kratom products to ultimate consumers;
In the case of a taxpayer that has acquired kratom products under a sale as defined in subsection (11)(b) of this section, the price, determined as nearly as possible according to the actual price, that the taxpayer or other distributors sell the same kratom products or similar kratom products of like quality and character to unaffiliated distributors, unaffiliated retailers, or ultimate consumers; or
In any case where (a) through (e) of this subsection do not apply, the price, determined as nearly as possible according to the actual price, that the taxpayer or other distributors sell the same kratom products or similar kratom products of like quality and character to unaffiliated distributors, unaffiliated retailers, or ultimate consumers.
"Taxpayer" means a person liable for the tax imposed by this chapter.
"Unaffiliated distributor" means a distributor that is not affiliated with the manufacturer, distributor, or other person from whom the distributor has purchased kratom products.
"Unaffiliated retailer" means a retailer that is not affiliated with the manufacturer, distributor, or other person from whom the retailer has purchased kratom products.
There is levied and collected a tax upon the sale, use, consumption, handling, possession, or distribution of all kratom products in this state at a rate of 95 percent of the taxable sales price.
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Taxes under this section must be imposed at the time the distributor: (i) Brings, or causes to be brought, into this state from outside the state kratom products for sale; (ii) makes, manufactures, fabricates, or stores kratom products in this state for sale in this state; (iii) ships or transports kratom products to retailers in this state, to be sold by those retailers; or (iv) handles for sale any kratom products that are within this state but upon which tax has not been imposed.
The tax imposed under this section must be separately itemized on the sales receipt provided to the buyer.
The moneys collected under this section must be deposited into the youth harmful substance prevention account created in section 3 of this act.
The youth harmful substance prevention account is created in the state treasury. All receipts from the tax on kratom products in section 2 of this act must be deposited in the account. Moneys in the account may only be spent after appropriation.
Appropriations from the account may only be used to fund programs and activities that prevent and reduce youth access to harmful substances including, but not limited to, tobacco, vapor products, cannabis, and kratom.
It is the intent and purpose of this chapter to levy a tax on all kratom products sold, used, consumed, handled, possessed, or distributed within this state. It is the further intent and purpose of this chapter to impose the tax only once on all kratom products in this state. Nothing in this chapter exempts any person taxable under any other law or under any other tax imposed under this title.
The licenses issuable by the board under this chapter are as follows:
A kratom distributor's license; and
A kratom retailer's license.
Application for the licenses must be made through the business licensing system under chapter 19.02 RCW. The board may adopt rules regarding the regulation of the licenses. The board may refuse to issue any license under this chapter if the board has reasonable cause to believe that the applicant has willfully withheld information requested for the purpose of determining the eligibility of the applicant to receive a license, or if the board has reasonable cause to believe that information submitted in the application is false or misleading or is not made in good faith. In addition, for the purpose of reviewing an application for a distributor's license or retailer's license and for considering the denial, suspension, or revocation of any such license, the board may consider criminal conduct of the applicant, including an administrative violation history record with the board and a criminal history record information check within the previous five years, in any state, tribal, or federal jurisdiction in the United States, its territories, or possessions, and the provisions of RCW 9.95.240 and chapter 9.96A RCW do not apply to such cases. The board may, in its discretion, issue or refuse to issue the distributor's license or retailer's license, subject to section 20 of this act.
No person may qualify for a distributor's license or a retailer's license under this section without first undergoing a criminal background check. The background check must be performed by the board and must disclose any criminal conduct within the previous five years in any state, tribal, or federal jurisdiction in the United States, its territories, or possessions. If the applicant or licensee also has a license issued under chapter 66.24, 70.345, 82.24, or 82.26 RCW, the background check done under the authority of chapter 66.24, 70.345, 82.24, or 82.26 RCW satisfies the requirements of this section.
Each license issued under this chapter expires on the business license expiration date. The license must be continued annually if the licensee has paid the required fee and complied with all the provisions of this chapter and the rules of the board adopted pursuant to this chapter.
Each license and any other evidence of the license required under this chapter must be exhibited in each place of business for which it is issued and in the manner required for the display of a business license.
The board may adopt rules regarding the regulation of the licenses and licensees.
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No person may engage in or conduct business as a distributor or retailer in this state without a valid license issued under this chapter. Any person who sells kratom products to ultimate consumers must obtain a retailer's license under this chapter. Any person who meets the definition of distributor under this chapter must obtain a distributor's license under this chapter.
A violation of this subsection (1) is punishable as a class C felony according to chapter 9A.20 RCW.
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No person engaged in or conducting business as a distributor or retailer in this state may:
Refuse to allow the department or the board, on demand, to make a full inspection of any place of business where any of the kratom products taxed under this chapter are sold, stored, or handled, or otherwise hinder or prevent such inspection;
Make, use, or present or exhibit to the department or the board any invoice for any of the kratom products taxed under this chapter that bears an untrue date or falsely states the nature or quantity of the goods invoiced; or
Fail to produce on demand of the department or the board all invoices of all the kratom products taxed under this chapter within five years prior to such demand unless the person can show by satisfactory proof that the nonproduction of the invoices was due to causes beyond the person's control.
No person, other than a licensed distributor or retailer, may transport kratom products for sale in this state for which the taxes imposed under this chapter have not been paid unless:
Notice of the transportation has been given as required under section 16 of this act;
The person transporting the kratom products actually possesses invoices or delivery tickets showing the true name and address of the consignor or seller, the true name and address of the consignee or purchaser, and the quantity and brands of kratom products being transported; and
The kratom products are consigned to or purchased by a person in this state who is licensed under this chapter.
A violation of this subsection (2) is a gross misdemeanor.
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Any person licensed under this chapter as a distributor, and any person licensed under this chapter as a retailer, may not operate in any other capacity unless the additional appropriate license is first secured.
A violation of this subsection (3) is a misdemeanor.
The penalties provided in this section are in addition to any other penalties provided by law for violating the provisions of this chapter or the rules adopted under this chapter.
A fee of $150 must accompany each kratom product distributor's license application or license renewal application. If a distributor sells or intends to sell kratom products at two or more places of business, whether established or temporary, a separate license with a license fee of $100 is required for each additional place of business.
A fee of $175 must accompany each kratom product retailer's license application or license renewal application. A separate license is required for each separate location at which the retailer operates.
A manufacturer or distributor that sells, offers for sale, or distributes kratom products must label the kratom product with: (1) Information clearly identifying the product as a kratom product; (2) a list of all ingredients used in the manufacturing of the kratom product; and (3) the amount of mitragynine and 7-hydroxymitragynine contained in the kratom product.
Every distributor must keep at each place of business complete and accurate records for that place of business, including itemized invoices, of kratom products held, purchased, manufactured, brought in or caused to be brought in from outside the state, or shipped or transported to retailers in this state, and of all sales of kratom products made.
These records must show the names and addresses of purchasers, the inventory of all kratom products, and other pertinent papers and documents relating to the purchase, sale, or disposition of kratom products. All invoices and other records required by this section to be kept must be preserved for a period of five years from the date of the invoices or other documents or the date of the entries appearing in the records.
At any time during usual business hours the department, board, or its duly authorized agents or employees may enter any place of business of a distributor, without a search warrant, and inspect the premises, the records required to be kept under this chapter, and the kratom products contained therein, to determine whether or not all the provisions of this chapter are being fully complied with. If the department, board, or any of its agents or employees are denied free access or are hindered or interfered with in making such examination, the registration certificate issued under RCW 82.32.030 of the distributor at such premises are subject to revocation by the department, and any licenses issued under this chapter or chapter 82.24, 82.26, or 70.345 RCW are subject to suspension or revocation by the board.
Every retailer must procure itemized invoices of all kratom products purchased. The invoices must show the seller's name and address, the date of purchase, and all prices and discounts.
The retailer must keep at each retail outlet copies of complete, accurate, and legible invoices for that retail outlet or place of business. All invoices required to be kept under this section must be preserved for five years from the date of purchase.
At any time during usual business hours the department, board, or its duly authorized agents or employees may enter any retail outlet without a search warrant, and inspect the premises for invoices required to be kept under this section and the kratom products contained in the retail outlet, to determine whether or not all the provisions of this chapter are being fully complied with. If the department, board, or any of its agents or employees are denied free access or are hindered or interfered with in making the inspection, the registration certificate issued under RCW 82.32.030 of the retailer at the premises is subject to revocation, and any licenses issued under this chapter or chapter 82.24, 82.26, or 70.345 RCW are subject to suspension or revocation by the department.
Every person required to be licensed under this chapter who sells kratom products to persons other than the ultimate consumer must render with each sale itemized invoices showing the seller's name and address, the purchaser's name and address, the date of sale, and all prices. The person must preserve legible copies of all such invoices for five years from the date of sale.
All of the provisions contained in chapter 82.32 RCW not inconsistent with the provisions of this chapter have full force and application with respect to taxes imposed under the provisions of this chapter.
The department must authorize, as duly authorized agents, enforcement officers of the board to enforce provisions of this chapter. These officers are not employees of the department.
The department may by rule establish the invoice detail required under section 10 of this act for a distributor and for those invoices required to be provided to retailers under section 11 of this act.
If a retailer fails to keep invoices as required under section 10 of this act, the retailer is liable for the tax owed on any uninvoiced kratom products but not penalties and interest, except as provided in subsection (3) of this section.
If the department finds that the nonpayment of tax by the retailer was willful or if in the case of a second or plural nonpayment of tax by the retailer, penalties and interest must be assessed in accordance with chapter 82.32 RCW.
No person other than (a) a licensed distributor in the distributor's own vehicle, a manufacturer's representative authorized to sell or distribute kratom products in this state under section 19 of this act, or a licensed retailer in the retailer's own vehicle, or (b) a person who has given notice to the board in advance of the commencement of transportation may transport or cause to be transported in this state kratom products for sale.
When transporting kratom products for sale, the person must have in the person's actual possession, or cause to have in the actual possession of those persons transporting such kratom products on his or her behalf, invoices or delivery tickets for the kratom products, which must show the true name and address of the consignor or seller, the true name and address of the consignee or purchaser, and the quantity and brands of the tobacco products being transported.
In any case where the department or the board, or any peace officer of the state, has knowledge or reasonable grounds to believe that any vehicle is transporting kratom products in violation of this section, the department, the board, or peace officer, may stop the vehicle and inspect it for contraband kratom products.
No person engaged in or conducting business as a distributor or retailer in this state may:
Make, use, or present or exhibit to the department any invoice for any of the kratom products taxed under this chapter that bears an untrue date or falsely states the nature or quantity of the goods invoiced; or
Fail to produce on demand of the department all invoices of all the kratom products taxed under this chapter within five years prior to such demand unless the person can show by satisfactory proof that the nonproduction of the invoices was due to causes beyond the person's control.
A retailer that obtains kratom products from an unlicensed distributor or any other person that is not licensed under this chapter must be licensed both as a retailer and a distributor under this chapter and is liable for the tax imposed under section 2 of this act with respect to the kratom products acquired from the unlicensed person that are held for sale, handling, or distribution in this state. For the purposes of this subsection, "person" includes both persons defined in section 1 of this act and any person immune from state taxation, such as the United States or its instrumentalities, and federally recognized Indian tribes and enrolled tribal members, conducting business within Indian country.
Every distributor licensed under this chapter must sell kratom products to retailers located in Washington only if the retailer has a current retailer's license under this chapter.
A manufacturer that has manufacturer's representatives who sell or distribute the manufacturer's kratom products in this state must provide the board a list of the names and addresses of all such representatives and must ensure that the list provided to the board is kept current. A manufacturer's representative may not distribute or sell kratom products in this state unless the manufacturer that hired the representative has a valid distributor's license issued under this chapter and that manufacturer provides the board a current list of all of its manufacturer's representatives as required by this section. A manufacturer's representative must carry a copy of the distributor's license of the manufacturer that hired the representative at all times when selling or distributing the manufacturer's kratom products.
The board must enforce this chapter. The board may adopt, amend, and repeal rules necessary to enforce this chapter.
The department may adopt, amend, and repeal rules necessary to administer this chapter. The board may revoke or suspend the distributor's or retailer's license of any distributor or retailer of kratom products in the state upon sufficient cause showing a violation of this chapter or upon the failure of the licensee to comply with any of the rules adopted under it.
A license may not be suspended or revoked except upon notice to the licensee and after a hearing as prescribed by the board. The board, upon finding that the licensee has failed to comply with any provision of this chapter or of any rule adopted under it, must, in the case of the first offense, suspend the license or licenses of the licensee for a period of not less than 30 consecutive business days, and in the case of a second or further offense, suspend the license or licenses for a period of not less than 90 consecutive business days but not more than 12 months, and in the event the board finds the licensee has been guilty of willful and persistent violations, it may revoke the license or licenses.
Any person whose license or licenses have been revoked under this section may reapply to the board at the expiration of one year of the license or licenses. The license or licenses may be approved by the board if it appears to the satisfaction of the board that the licensee will comply with the provisions of this chapter and the rules adopted under it.
Any determination and order by the board, and any order of suspension or revocation by the board of the license or licenses issued under this chapter, or refusal to reinstate a license or licenses after revocation is reviewable by an appeal to the superior court of Thurston county. The superior court must review the order or ruling of the board and may hear the matter de novo, having due regard to the provisions of this chapter and the duties imposed upon the board.
If the board makes an initial decision to deny a license or renewal, or suspend or revoke a license, the applicant may request a hearing subject to the applicable provisions under Title 34 RCW.
Any kratom products in the possession of a person selling kratom products in this state acting as a distributor or retailer and who is not licensed as required under this chapter may be seized without a warrant by any agent of the department, agent of the board, or law enforcement officer of this state. Any kratom products seized under this subsection are deemed forfeited.
Any kratom products in the possession of a person who is not a licensed distributor, manufacturer's representative, or retailer and who transports kratom products for sale without having provided notice to the board required under section 16 of this act, or without invoices or delivery tickets showing the true name and address of the consignor or seller, the true name and address of the consignee or purchaser, and the quantity and brands of kratom products being transported may be seized and are subject to forfeiture.
All conveyances, including aircraft, vehicles, or vessels that are used, or intended for use to transport, or in any manner to facilitate the transportation, for the purpose of sale or receipt of kratom products under subsection (2) of this section, may be seized and are subject to forfeiture except:
A conveyance used by any person as a common or contract carrier having in actual possession invoices or delivery tickets showing the true name and address of the consignor or seller, the true name of the consignee or purchaser, and the quantity and brands of the kratom products transported, unless it appears that the owner or other person in charge of the conveyance is a consenting party or privy to a violation of this chapter;
A conveyance subject to forfeiture under this section by reason of any act or omission of which the owner establishes to have been committed or omitted without the owner's knowledge or consent; or
A conveyance encumbered by a bona fide security interest if the secured party neither had knowledge of nor consented to the act or omission.
Property subject to forfeiture under subsections (2) and (3) of this section may be seized by any agent of the department, the board, or law enforcement officer of this state upon process issued by any superior court or district court having jurisdiction over the property. Seizure without process may be made if:
The seizure is incident to an arrest or a search warrant or an inspection under an administrative inspection warrant; or
The department, board, or law enforcement officer has probable cause to believe that the property was used or is intended to be used in violation of this chapter and exigent circumstances exist making procurement of a search warrant impracticable.
This section does not require the seizure of kratom products if the department's agent, board's agent, or law enforcement officer reasonably believes that the kratom products are possessed for personal consumption by the person in possession of the kratom products.
Any kratom products seized by a law enforcement officer must be turned over to the board as soon as practicable.
This section does not apply to a motor carrier or freight forwarder as defined in 49 U.S.C. Sec. 13102 or an air carrier as defined in 49 U.S.C. Sec. 40102.
In all cases of seizure of any kratom products made subject to forfeiture under this chapter, the department or board must proceed as provided in RCW 82.24.135.
When kratom products are forfeited under this chapter, the department or board may:
Retain the property for official use or upon application by any law enforcement agency of this state, another state, or the District of Columbia, or of the United States for the exclusive use of enforcing this chapter or the laws of any other state or the District of Columbia or of the United States; or
Sell the kratom products at public auction to the highest bidder after due advertisement. Before delivering any of the goods to the successful bidder, the department or board must require the purchaser to pay the proper amount of any tax due. The proceeds of the sale must be first applied to the payment of all proper expenses of any investigation leading to the seizure and of the proceedings for forfeiture and sale, including expenses of seizure, maintenance of custody, advertising, and court costs. The balance of the proceeds and all money must be deposited in the general fund of the state. Proper expenses of investigation include costs incurred by any law enforcement agency or any federal, state, or local agency.
The department or the board may return any property seized under the provisions of this chapter when it is shown that there was no intention to violate the provisions of this chapter. When any property is returned under this section, the department or the board may return the property to the parties from whom they were seized if and when such parties have paid the proper amount of tax due under this chapter.
When the department or the board has good reason to believe that any of the kratom products taxed under this chapter are being kept, sold, offered for sale, or given away in violation of the provisions of this chapter, it may make affidavit of facts describing the place or thing to be searched, before any judge of any court in this state, and the judge must issue a search warrant directed to the sheriff, any deputy, police officer, or duly authorized agent of the department or the board commanding him or her diligently to search any building, room in a building, place, or vehicle as may be designated in the affidavit and search warrant, and to seize the kratom products and hold them until disposed of by law.
Where kratom products upon which the tax imposed by this chapter has been reported and paid are shipped or transported outside this state by the distributor to a person engaged in the business of selling kratom products, to be sold by that person, or are returned to the manufacturer by the distributor or destroyed by the distributor, or are sold by the distributor to the United States or any of its agencies or instrumentalities, or are sold by the distributor to any Indian tribal organization, credit of such tax may be made to the distributor in accordance with rules prescribed by the department.
Credit allowed under this section must be determined based on the tax rate in effect for the period for which the tax imposed by this chapter, for which a credit is sought, was paid.
For purposes of this section, the following definitions apply:
"Indian distributor" means a federally recognized Indian tribe or tribal entity that would otherwise meet the definition of distributor in section 1 of this act, if federally recognized Indian tribes and tribal entities were not excluded from the definition of person in section 1 of this act.
"Indian retailer" means a federally recognized Indian tribe or tribal entity that would otherwise meet the definition of retailer in section 1 of this act, if federally recognized Indian tribes and tribal entities were not excluded from the definition of person in section 1 of this act.
"Indian tribal organization" means a federally recognized Indian tribe, or tribal entity, and includes an Indian distributor or retailer that is owned by an Indian who is an enrolled tribal member conducting business under tribal license or similar tribal approval within Indian country.
Preexisting inventories of kratom products are subject to the tax imposed under this chapter. Any additional tax liability arising from the tax in section 2 of this act must be paid, along with reports and returns as determined by the department, on or before February 25, 2027.
The department must notify the taxpayer of the amount of tax due under this chapter on preexisting inventories, which is subject to applicable penalties under RCW 82.32.090 (2) through (7) if not paid by the due date. Interest must be calculated at the rate as computed under RCW 82.32.050(2) from the date the tax became due until the date of payment.
If upon examination of any returns or from other information obtained by the department it appears that a tax or penalty has been paid less than that properly due, the department must assess against the taxpayer such additional amount found to be due. The department must notify the taxpayer of the additional amount due, including any applicable penalties and interest. The taxpayer must pay the additional amount within 30 days from the date of the notice, or within such further time as the department may provide.
Taxes may not be collected under this chapter from consumers with respect to any kratom products acquired before January 1, 2027.
For purposes of this section, "preexisting inventory" means an inventory of kratom products located in this state as of the moment that this act takes effect and held by a distributor for sale, handling, or distribution in this state.
If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.
Sections 1 through 25 and 28 of this act constitute a new chapter in Title 82 RCW.
This act takes effect January 1, 2027.