Washington’s Legal Cannabis Market

Washington’s Legal Cannabis Market

The State of Washington’s total 2016 cannabis market sales are expected to reach $1.2 billion, with 2017 sales forecast to climb to $1.5 billion. With a compound annual growth rate of 15% anticipated from 2016 to 2020, total 2020 market sales are projected to reach $2 billion.

Currently, Washington’s market is the nation’s third largest by sales, behind California and Colorado, and is forecast to surpass Colorado and become the second largest market by 2020.

As Washington’s total cannabis market is expected to experience strong growth over the next several years, such growth will be entirely driven by the adult use market, with the medical market expected to decline to a nominal percent of the total market share. The decline in medical market activity will result from the state’s decision to fold its medical program into its adult use program, and the closing of all stand-alone, medical-only dispensaries.

Through the unified market, patients will remain able to purchase medical cannabis in the state. Yet in a significant departure from most medical markets, all medical sales are subject to the state’s 37% cannabis excise tax. By levying that tax on patients, the state essentially eliminated a key benefit of participating in the medical market relative to the adult use market.

Though the medical program has been folded into the adult use market, medical cannabis sales will not be subject to the state’s 8% sales tax. Despite such changes — between the higher possession and cultivation limits permitted for registered cannabis patients, and the exemption from paying the 8% excise tax — some patients will keep purchasing through the medical system, though at levels far lower than seen before the changes took effect in 2016.