A Republican senator from Washington has introduced a bill that would allocate more cannabis revenue to local governments as an alternative to property tax increases. The bill, SB 5796, aims to address the fiscal challenges faced by many cities and counties in the state, especially amid the COVID-19 pandemic.
How SB 5796 Works
SB 5796, sponsored by Sen. John Braun, R-Centralia, would restructure the state cannabis revenue account and provide increased investments to various programs and services. The bill would also create a new local cannabis revenue account, which would distribute 5% of the state cannabis tax revenues to cities and counties, after meeting a list of other financial obligations.
According to the bill, cities and counties would be eligible to receive funds from the local cannabis revenue account if they do not prohibit the siting of any state-licensed cannabis producer, processor, or retailer within their jurisdiction. The funds would be allocated based on the number of cannabis retailers and the population of each city or county.
The bill would also require the state treasurer to transfer any excess funds from the local cannabis revenue account to the state general fund at the end of each fiscal year.
Why SB 5796 Matters
Sen. Braun said he introduced the bill because he felt that legalizing the sale of recreational cannabis needed a bipartisan approach. He said that his bill would offer a lower tax rate than the Democrats’ proposals and retain more revenue and control for local governments.
He also said that his bill would help local governments avoid raising property taxes, which he argued would hurt homeowners and businesses. He said that property taxes are already too high in Washington and that cannabis revenue could be a better source of funding for local services.
Sen. Braun’s bill has received support from both sides of the aisle, as well as from the Association of Washington Cities (AWC), which represents the interests of 281 cities and towns in the state. The AWC said that the bill would provide millions of additional dollars for local governments, which have been struggling to balance their budgets and maintain essential services during the pandemic.
The AWC also said that the bill would address the inequities in the current cannabis revenue distribution system, which favors the state over the local governments. The AWC said that local governments bear the costs and impacts of cannabis legalization, such as public safety, land use, zoning, and enforcement, but receive only a small share of the cannabis tax revenues.
What SB 5796 Faces
SB 5796 is not the only bill that seeks to reform the cannabis revenue system in Washington. Several other bills have been introduced in the 2022 legislative session, with different goals and approaches.
For example, HB 1827 would have created a community reinvestment account, which would have used cannabis revenue to address social and economic disparities, such as wealth gaps, asset building, financial literacy, and small business support. However, the bill failed to pass the Senate in time.
Another bill, HB 2022, would have expanded social equity cannabis licenses, which would have given priority to applicants who have been adversely affected by the war on drugs. The bill would have also allowed mobile cannabis licenses, which would have enabled licensees to operate in any city or county that permits cannabis business activity. However, the bill also failed to pass the Legislature.
SB 5796 has passed the Senate and is now awaiting action in the House. The bill has until April 11, 2022, to pass the House and be sent to the governor for approval. If enacted, the bill would take effect on July 1, 2022.