Pot taxes might not go toward health care; State plan was to benefit, but it’s ending Dec. 31

By GENE JOHNSON, The Associated Press

One selling point of Washington’s new legal marijuana law was that a huge chunk of pot-related tax revenue would be devoted to health coverage for low-income residents.

But it’s not clear the money will go to health care after all.

Under the federal Affordable Care Act, a would-be recipient of the pot taxes — Washington’s Basic Health Plan — is being eliminated. The plan, which provided low-cost health insurance to the working poor, is being absorbed by Medicaid and will end Dec. 31, according to the state Health Care Authority.

As a result, lawmakers must take action if they want to rededicate the money that Initiative 502, the legal-pot law passed by voters last year, intended for the Basic Health Plan. At least some of the money, which could amount to tens of millions of dollars a year, might wind up going toward local law enforcement costs or other uses.

“It would be my hope that in the spirit of the initiative, the Legislature would dedicate that money into health care,” said retired state Rep. Mary Lou Dickerson, a sponsor of I-502. “In particular, mental health is a huge issue and hasn’t been properly funded.”

The state has yet to see any tax revenue from the sale of legal pot to adults over 21. The Liquor Control Board is due to begin accepting applications Nov. 18 from people seeking licenses to grow, process and sell pot for recreational reasons, with pot stores expected to open around the middle of 2014.

I-502 taxes pot highly — 25 percent on at least two stages and up to three, plus sales taxes. It specifies that once the money starts rolling in, every three months the state will pay $175,000 to the Department of Social and Health Services to support Washington’s “healthy youth” survey and a cost-benefit analysis of the legal marijuana law. About $5,000 goes to the University of Washington to publish online information about marijuana, and up to $1.25 million goes to the Liquor Control Board for I-502 administrative costs.

Of the money that’s left, half was dedicated to the Basic Health Plan. That could be a lot, based on projections that legal marijuana could bring in tens or hundreds of millions of dollars a year.

The legal marijuana law did not carve out a share of tax revenue for cities and counties, which face some of the costs of its implementation, and some would like to see the Legislature remedy that. Candice Bock, a lobbyist for the Association of Washington Cities, said that for the legal marijuana law to work, the state must crack down on the black market, and that increases police costs.

“There is a real need to address those local impacts,” Bock said.

State Rep. Christopher Hurst, an Enumclaw Democrat who leads the House committee that oversees cannabis, and Republican Sen. Ann Rivers of La Center said they’d like to see some of the legal pot revenue redirected to cities to help cover local costs, such as for police and zoning.

Lawmakers also might want to reshuffle some of the other spending priorities laid out in I-502, Hurst said.

“There’s a lot of different ideas out there about where the money should go,” Hurst said.

It requires a two-thirds vote for lawmakers to amend an initiative in the first two years after passage. Because the upcoming legislative session is short, and because of the difficulty of mustering a two-thirds vote, lawmakers might not act until the following session, after pot revenue materializes, he said.

The federal money that helped Washington launch its health exchange eventually will run out, and Rivers suggested that after local law enforcement and costs associated with educating the public about drug abuse are paid for, the pot money could go toward health care.

Seattle City Attorney Pete Holmes, another sponsor of I-502, said he’d like to see the money go toward health care as voters intended. But having to figure out how to spend money is better than the alternative, he said: “It’s a good problem to have.”