In 2012, Washington passed Initiative 502, which legalized marijuana for use by adults age 21 or older. While we all know the first part of the initiative—it’s legal to buy weed!—what many don’t know much about is the second part of the initiative, which designates how the state uses tax revenue from cannabis sales.
At a rate of 37 percent, the money raised through the cannabis excise tax is sizable. Last year, cannabis taxes and license fees brought the state $367 million dollars. For reference, liquor taxes and license fees during this same time period raised $209 million dollars; tobacco raised $0.7 million.So, where did all this money go? The answer is multifold.
The bulk of cannabis tax money raised during the 2018 fiscal year—nearly $200 million dollars of it—went to the state’s general fund. Although a large majority of the general fund comes from retail sales tax, revenue from controlled substances does make a dent, helping fund public education as well as debt services and higher education. For instance, during 2017–2019, the state anticipates it will spend a little more than half of the general fund on public schools.
The next greatest use of cannabis tax revenue in 2018—$117 million—funneled into the state’s basic health fund, which supports health care services, notably for low-income people who lack coverage. The third largest chunk went to cities and counties, which receive different amounts of funding based on their population.
More than $36 million went toward an education and prevention fund. Money from this fund helps create and distribute information about cannabis, including health and safety risks associated with cannabis use. The education and prevention fund also supports substance abuse programs, mental health services, and programs that aim to reduce and prevent cannabis use among minors.
Some of the year’s tax money also went toward research.This fund, though relatively small ($1.1 million), provides money for a variety of research initiatives. One such initiative is called the Healthy Youth Survey, which collects information about the health of Washington adolescents. This information helps inform and shape policy decisions regarding public health and safety. Some of the money also supports the University of Washington and Washington State University in their research on the effects of cannabis use.
Finally, more than $20 million went into a miscellaneous fund that supports things like the Health Care Authority,which funds community health centers; and Building Bridges programs, which help prevent middle and high school students from dropping out.
Overall, the money raised through cannabis tax and licensing fees has vastly exceeded early estimates. In 2017, state experts projected the cannabis tax would raise around $120 million in revenue. In reality, that year produced $315 million. In 2018, the projection was $160 million—more than $360 was raised.In 2019, experts project $194 million in revenue, a figure that, based on the past trends, will likely turn out to be a gross underestimation.
The next time you visit your local dispensary, remember you’re also putting dollars into public schools, health care services, and scientific research. I’d call that a win-win.
