An overhaul of the state cannabis revenue account could mean millions in additional money for cities.

Since Washington voters legalized cannabis in 2012, the state has benefited from tens to hundreds of millions of dollars in additional tax revenues. However, cities have been stuck sharing a relatively small portion of those revenues with counties.

SB 5796, sponsored by Sens. Rebecca Saldaña (D–Seattle) and Derek Stanford (D–Bothell), overhauls the state cannabis revenue account to direct tens of millions of cannabis tax dollars into the proposed Community Reinvestment Account. Included in the overhaul is an annual increase to the amount of tax revenues shared with cities and counties – an increase from $20 million per year to $27.8 million per year, which is set as a permanent cap on those shared revenues. Until last year, cities and counties have struggled to get the Legislature to fully allocate the $20 million per year promised in a bill passed in 2015.

As a reminder, cities are only eligible to receive funds if they do not prohibit the siting of any state licensed cannabis producer, processor, or retailer. Based on the formula, cities receive a greater share if they have licensed marijuana retailers physically located within their jurisdiction.

The $7.8 million annual increase is a welcome change and will provide some additional dollars for many Washington cities. Nevertheless, it still highlights the disparity in cannabis revenue distribution. The State general fund is forecast to receive $392 million this biennium, more than 2.5 times what the state general fund received in the 2015-17 biennium. Cities have continually asked the state to share a more equitable portion of these revenues with both cities and counties.

The Community Reinvestment Account is a part of a larger movement to promote social equity in the cannabis industry. Individuals and communities of color saw greater impacts from the war on drugs that affected their ability to participate in the cannabis industry once it was legalized. The Community Reinvestment Account will provide funds for:

• Economic development to address wealth disparities, promote asset building such as home ownership, and expand access to financial resources such as grants and loans;
• Civil and criminal legal assistance to provide postconviction relief and case assistance, including the expungement of criminal records and vacation of criminal convictions;
• Community-based violence intervention and prevention services; and
• Reentry services to facilitate successful transition for incarcerated individuals.

SB 5786 passed out of the Senate Labor, Commerce, & Tribal Affairs Committee on January 26 and now awaits a hearing in the Senate Ways & Means Committee.