SEATTLE - The Seattle City Council moved to close a tax loophole that benefits the pot growing business Monday, but it left the loophole alone for all other farmers.
Councilmember Nick Licata said that Medical Marijuana Dispensaries are already paying a business tax, giving the city more than $100,000 a year. And he believes marijuana farmers should be treated the same way. He won a unanimous council vote to change the law so that marijuana farmers will no longer be treated the same as the growers of fruits and vegetables. Marijuana farmers will no longer be able to take the agricultural exemption from the Business and Occupation tax.
“All of these advocates in the marijuana business, growing business agree that they want to pay taxes,” Licata said.
All Seattle businesses are subject to a B&O tax of .215 percent. On a million dollars of revenue, that’s $2,150. All farmers were completely exempt, but now pot farmers must pay.
Todd Arkley is an accountant serving many in the emerging marijuana businesses. He was the only person to oppose the tax before the council vote. “I don't think it is fair,” Arkley said.
Marijuana growers will already pay a 25 percent excise tax, and Arkley said they cannot take advantage of federal business tax deductions because pot is still illegal under federal law.
“Obviously, the city wants these companies to succeed and let's make sure that we give them a fair tax burden,” he said.
But City Attorney Pete Holmes said marijuana isn’t your traditional crop. “It is a new industry that is promising to be a good strong commercial industry and it's appropriate that it should bear its tax burden as well," Holmes said.
Holmes said the additional money will likely be needed for law enforcement activities related to legal marijuana. And because it's applied at sale, the city will get the money no matter where the marijuana is grown.