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Cannabis Sales Outpace All Projections In Washington

April 2, 2019

Washington State began selling recreational marijuana legally in July 2014. In the nearly five years since then, sales have boomed, outpacing all projections. The Washington State Liquor and Cannabis Control Board reports that for fiscal year 2018, ended June 30, 2018, marijuana sales in the state totaled $967 million.

Washington has some of the country’s highest cannabis excise taxes, at 37%. In the last fiscal year, cannabis excise taxes in Washington brought in $357.8 million, up from $314.8 million in fiscal 2017. Excise taxes and licensing fee revenue increased 11% in 2018 over 2017. The state expects those numbers to continue rising. The majority of Washington’s sales come from cannabis flower, followed by extracts for inhalation, and liquid or solid edibles.

“No one knew what would be generated, but for the most part, what we’ve brought in has exceeded every forecast we expected,” says Brian Smith, communications director for the Washington State Liquor and Cannabis Control Board. “We’re starting to see sales plateau some, but that’s to be expected.”

Washington has 486 active stores selling marijuana. The state’s system allows for private businesses to receive state-issued licenses to sell cannabis products, and the Liquor and Cannabis Control Board acts as the enforcement agency. The board conducts regular compliance checks to make sure stores are selling what they’re legally allowed to sell, and that they’re selling only to adults. Overall, Washington state law allows for roughly 550 marijuana stores to be open, but Smith says the number may never get that high because each jurisdiction in the state is allowed to ban cannabis stores.

“The Western side of the state is much more open to marijuana growth,” Smith explains. “The Eastern side is more rural and there are larger swaths of counties that ban it.” He adds that a lot of people in the state have adapted to the new marijuana regulations and are embracing it more than they did five years ago when it went legal.

Washington’s cannabis laws have created three business tiers: producers, processors, and retailers. While one person can hold producer and processor licenses simultaneously, they cannot hold either of those licenses and also run a retail store. Cannabis retail stores may only sell marijuana products and affiliated paraphernalia, and on-premise consumption isn’t allowed. Beverage alcohol stores in the state cannot also sell marijuana products in the same retail space.

Regarding the impact on alcohol sales, The Distilled Spirits Council recently released a report showing ongoing growth for spirits in Washington state since cannabis legalization. The council examined alcohol tax receipts and shipment data in Washington from 2014-2017 and found that spirits sales increased more than 5% during that time. However, they also found that beer sales declined by about 2% and wine sales slipped by about 3% in Washington over the same four-year period.

“Our latest estimate, forecast through 2023, shows marijuana growth every year and about $50 to $70 million extra over five years,” Smith says. “The industry is very young, but it’s starting to mature, so there will be many policy considerations ahead. There are a lot of entrepreneurs in this with a lot of new ideas, but there are also a lot of roadblocks since marijuana is still illegal federally.”—Laura Pelner

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