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"If you don't like the news, go out and make some of your own."
— Wes Nisker, Radio Commentator

Politics, Profits & Pot

Hi everyone, Fiscal Friday is back! After a brief hiatus, I'm back behind the lens. I recently relocated to Washington State to work in a budding industry. Recreational cannabis is not only political, it's fiscally responsible. So today I'm talking everything from terpenes and taxes to indicas and the IRS.

In 2012 Washington State voters approved i502 and legalized recreational cannabis. Today the state sells over $1.3 million in pot… PER DAY. According to the LCB (soon to be renamed Liquor and Cannabis Board) Washington State has sold over $223 million worth of legal weed since sales started July 1, 2014, this equates to $55.8 million in tax revenue.

Excise tax revenue generated from i502 benefits government interests, not schools or roads as promised. At first glance, payments to the state seem acceptable, but with all legislation, the devil is in the details. These are quarterly payments to the state, and the numbers are appalling.

Here's i502's payment priorities, broken down in millennial terms:

1. $500,000 a year to the department of social and health services (DSHS) to design and administer a Washington state healthy youth survey.

2. $200,000 a year to DSHS to contract with the Washington state institute for public policy to conduct cost-benefit evaluations of the aforementioned survey. (Side note: how much money is the state wasting if they have to spend $200k to conduct a cost benefit analysis?)

3. $20,000 a year to the University of Washington to create education materials about marijuana use.

4. No more than $5 million to the state liquor control board to administer i502.

Funds remaining after dispersing numbers 1 through 5 go to the following:

5. 15 percent to DSHS for anti-substance abuse programs.

6. 10 percent to the department of health for a marijuana public health hotline, grants to local health departments and media-based education campaigns

7. Six-tenths of one percent to the University of Washington and four-tenths of one percent to Washington State University to study the effects of marijuana. (Did more Huskies lobby for this one?)

8. Fifty percent to the state basic health trust plan.

9. Five percent to the Washington state health care authority to provide dental care services, migrant health services and maternity health services.

10. Three-tenths of one percent to the office of the superintendent of public instruction to fund grants to build bridges.

11. The remainder to the general fund.

Did I miss something? All I see is overpriced state surveys and education materials. Roads, schools and community parks are nowhere to be seen in this legislation.

Now you know where the money is going, so get this… Current law requires a 25 percent excise tax on each level of the system: production to processor, processor to retailer, and retailer to consumer. Washington’s proposed HB 2136 merges this into one 37 percent excise tax. Some businesses are paying three taxes, and high taxes equals expensive weed.

Where’s the IRS in this mess? Smoking business growth too. 50 years ago the Supreme Court ruled everyone has to pay taxes - even those who do so illegally. In 1982, Congressed added 280E to the tax code, saying those who sell Schedule I or II drugs cannot deduct all their business expenses. “Costs of product” are deducible. (pop up soil, fertilizer” “Costs of selling” are not. (pop up advertising, rent, salaries)

According to the National Cannabis Industry Association, 280E results in some businesses paying more than 70 percent of profits in taxes to the Fed.

Can we please end the IRS?

A few other fiscal facts… The DEA’s Pot Eradication Program costs taxpayers $18 million annually. About 750k people are arrested annually for marijuana offenses. (That’s a waste of police resources.) And Economist Stephen Eaton estimates legalized cannabis could bring in $45 to $100 billion annually. (Hello jobs!)

Can we please end the drug war?

This is Bess Byers, signing off. Like my message? Light one up, subscribe to my YouTube channel and remember, it’s your generation and you’re empowered!

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Leaving a generation almost $20 trillion in debt is unacceptable and unpatriotic.

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