State House panel eyes bill to tax marijuana trademarks

By RACHEL LA CORTE, Associated Press Published: Mar 22, 2013 at 10:42 AM PDT
State House panel eyes bill to tax marijuana trademarks
OLYMPIA, Wash. (AP) - A House committee held a public hearing Friday on a measure that would tax marijuana brand names and trademarks likely to be introduced in the state of Washington when the sale of recreational marijuana starts at the end of the year.

The bill heard by the House Finance Committee calls for a tax of $3.60 per $1,000 of assessed value of "all trademarks, trade names, brand names, patents and copyrights related to marijuana."

It does not say how those values would be determined and instead says the Department of Revenue can adopt rules for determining those amounts.

In November, voters approved Initiative 502, which allows adults over age 21 to have up to an ounce of pot. The state is due to start issuing licenses to marijuana growers, processors and retail stores, with the marijuana taxed 25 percent at each stage.

Democratic Rep. Jeff Morris of Mount Vernon, the sponsor of the trademark bill, told the committee that Washington, along with Colorado, which also passed a legalization measure in the fall, could benefit as the new industry moves to register brand names or trade names.

"I think that this reflects the uniqueness of the situation," Morris said. "What was the value of Marlboro as a trade name back when it was filed as a trade name or brand name?"

Under the bill, revenue from the tax would go into a special fund for agricultural research tied to health benefits.

During Friday's hearing, Morris specifically cited research being done at Washington State University on creating plasma from wheat and making gluten-free wheat.

"It's that type of research that I'm hoping this money would target," he said.

Chris Mulick, director of state relations for WSU, testified that the university has concerns about the bill.

He said WSU currently receives $21 million a year to support agriculture research, and there are concerns that if the measure passes, the tax on brand names would supplant state funding.

Mulick also noted concerns surrounding the state's efforts to persuade the federal government not to sue to block the law from taking effect. The U.S. Justice Department still has not announced its intentions.

"This is a resource that at this time remains highly uncertain," Mulick said.

Morris said the tax is not meant to replace state funding of research.

A fiscal note done by the state Office of Financial Management says the amount of potential revenue from the tax is unknown for several reasons, including the difficulty estimating a value for a an industry that doesn't yet exist, as well as uncertainty caused by the illegality of marijuana under federal law.

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The measure is House Bill 1976.