In the state of Washington, sales of medical cannabis are retail sales. As such, the selling price is subject to retail sales tax. In addition, the seller is subject to the business and occupation (B&O) tax under the retailing classification. This is true even if it is sold by a medical cannabis dispensary.
Sales of medical cannabis are not eligible for the retail sales tax exemption provided for prescription drugs. RCW 82.08.0281 provides an exemption from retail sales tax for certain drugs, but only when prescribed as authorized by the laws of this state. However, cannabis is a Schedule I controlled substance and cannot be prescribed under either federal or state law in Washington.
Chapter 69.51A RCW addresses medical cannabis, but does not authorize the prescription of medical cannabis. This chapter specifically avoids authorization of a prescription by referring to “valid documentation”, which does not equate with a prescription as defined in RCW 82.08.0281(4)(a), or as provided in RCW 69.50.308 (Prescriptions). Chapter 69.51A provides that it is only intended to protect qualifying patients, designated providers, and physicians from liability, prosecution, or criminal guilt when cannabis is possessed, used, provided or authorized.
See our Special Notice - Sales of Medical Cannabis Remain Subject to Sales Tax (pdf)