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Inside Olympia — Capital Gains Tax, Cannabis

This week on Inside Olympia, in-depth interviews on a legal battle over the capital gains tax, and cannabis policy in Washington state.

First: Is it an income tax, or is it an excise tax? The lawsuit challenging the constitutionality of the new capital gains tax approved by the 2021 Legislature is making its way through the state’s courts.

Earlier this year, Douglas County Superior Court Judge Brian Huber sided with the plaintiffs, ruling the tax is unconstitutional. But the WA State Attorney General’s Office appealed the case directly to the State Supreme Court, which is likely to ultimately decide the case.

This week on Inside Olympia, host Austin Jenkins sits down with two University of Washington law professors who have different perspectives on the case. Constitutional Law Professor Hugh Spitzer thinks the state’s highest court will find that the capital gains tax is an excise tax, as labeled by the Legislature. Tax Law Professor Scott Schumacher disagrees, saying the way the tax is structured and collected makes it an income tax.

Both professors agree that the WA Supreme Court could dig deeper, and reconsider the court’s 1933 “Culliton” decision that classified income as property. Because property must be taxed at a uniform rate, a proposed graduated income tax was ruled unconstitutional.

Plus: Pot shop robberies have become an epidemic in Washington, and recently turned deadly. A major reason for that: cannabis is legal in our state, but is still illegal at the federal level, making it difficult for cannabis shops to bank with federally chartered financial institutions. Many of them operate cash only — which makes them a target for thieves.

Washington Liquor and Cannabis Board Chair David Postman discusses this crisis, the effort to lobby the U.S. Senate to pass cannabis banking laws, and what can be done at the state level.

The 2022 legislative session saw a battle over synthetic cannabinoids, whether and how these should be regulated. It’s likely to be an issue when the Legislature convenes again in 2023.

And, there’s an effort to bring equity to the cannabis industry. Those issues and more as we discuss the state of the state cannabis industry.

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