July 21 High state and local taxes and a paucity of storefront licenses mean revenue from legalized marijuana sales in Washington state could be minimal this year, according to Moody's Investor Service.
Stores opened this month in Washington, where the second state in the nation to legalize recreational marijuana forecast it will collect $51.2 million in revenues during the upcoming 2015-17 biennial budget. But Moody's said on Monday that marketplace competition and supply challenges could mean lower than anticipated sales.
Washington's excise tax of 25 percent and sales taxes of 9.6 percent might deter consumers, the ratings agency warned. Colorado, the country's first state to legalize recreational marijuana, charges a 15 percent excise tax and 12.9 percent consumer sales tax.
"The state's recreational marijuana market has a burdensome tax structure for consumers," Moody's said, adding residents might prefer to purchase marijuana from a medical dispensary, which requires a recommendation from a licensed marijuana doctor.
"Many patients have reported that obtaining this annually renewable recommendation is fairly easy."
The availability of recreational marijuana might also be limited because Washington has issued only seven percent of the available licenses for retailers (24 of 334 licenses), largely due to a backlog of applications and the stringent requirements to pass a state inspection, Moody's reported.
Most of the revenues from recreational marijuana sales in Washington are slated to go toward enforcement, treatment programs and marijuana education and health services. About 19 percent of the collected revenues will be directed to the state's general fund.
Alaska and Oregon are considering measures for recreational sales. (Reporting By Robin Respaut. Editing by Andre Grenon)