The top two retail marijuana chains in Seattle have joined forces and put their six retail outlets on the market for $50 million. Depending on whether you see marijuana legalization flourishing or floundering under the incoming Trump administration likely will color your opinion on whether that’s a good deal.
Retail sales of marijuana totaled $696 million in Washington state in 2016, triple the 2015 total and more than 20 times the 2014 total. Total marijuana sales topped $1 billion in the state last year, including $362 million in processor sales and $51 million in producer sales. The state collected $256 million in excise taxes in 2016, essentially double the $129 million collected in 2015 and 16 times the $16 million collected in 2014.
There are 364 retailers operating in the state, and the six stores for sale in Seattle are two of the top three retail chains in the city: Main Street Marijuana and Uncle Ike’s. Main Street Marijuana was the top retailer in Seattle in the month of December, based on $528,822 paid in excise taxes. Uncle Ike’s ranked third in tax payments with $361,610.
Main Street Marijuana’s 2016 total retail sales reached $34.9 million, and Uncle Ike’s, the number two retailer for the full year, posted retail sales of $30.5 million.
The excise tax rate in Washington is 37% and they are paid to the state’s liquor and cannabis board. Total sales for Main Street Marijuana were around $1.43 million for the month and total sales for Uncle Ike’s about $977,000. Retailers also pay business and occupation taxes on gross receipts and must collect and send the state a sales tax payment on retail transactions.
Ramsey Hamide, owner of Main Street Marijuana, told Marijuana Business Daily:
The store downtown, our tax return might say we made $12 million. But the reality is, after we pay the federal taxes and after you pay all the associated expenses, maybe the owners made $4 million or $3 million. I think it’s a fair valuation, but marijuana businesses are hard to value.
Aside from how the Trump administration, particularly Jeff Sessions, who is highly likely to be the next attorney general, are going to treat legalized marijuana sales by states, a buyer with $50 million to invest is going to have to find a partner because the state prohibits any single individual or company from holding more than three licenses. The owners say they are willing to entertain the sale of a single shop, but they would prefer to sell the whole bunch and move on.