The Legislature adjourned early Friday without a new budget deal for Washington, but not without moving a crucial recreational marijuana bill one step closer to passage.

The measure, House Bill 2136, proposes a number of huge changes for the industry. Perhaps the biggest one is a shake up of the three-tiered tax structure that’s become public enemy number one for everyone in the recreational marijuana business.

Many pot shop owners and marijuana growers have struggled to make money under the current tax system. Without a change, some anticipate closing their doors in the near future.

The bill passed 59-38 with support from Vancouver Democrats Jim Moeller and Sharon Wylie and Felida Republican Brandon Vick. Sen. Ann Rivers, R-La Center, said she hopes to pass the bill through the Senate on Saturday, the last day of the Legislature’s second special session.

Today, the industry is taxed 25 percent three times over down the supply chain — from grower to processor, then processor to retailer and finally from the store shelf to the consumer. Add state and local sales taxes and business and occupation taxes to the equation, and the effective tax rate on marijuana in Washington is more like 44 percent, according to The Tax Foundation.

Much of the debate in Olympia this spring and summer has swirled around how to reform that tax structure. Finally, it looks like the House and the Senate have settled on a new 37 percent excise tax for retailers only.

Altogether, that means the 25 percent excise tax on growers and processors will end, and the price of marijuana in stores should drop. That’s good news for Clark County pot shop owners, who will soon face new competition in Portland.

Rivers lauded the House for moving the bill along, but she said the divisive 59-38 vote indicates lawmakers still have lots of work to do before the industry will function as a well-oiled machine.

“What that tells me is that this bill is not perfect,” Rivers said, “and I’m OK with that, because I believe we will be revisiting this for many years to come to make adjustments.”

Aside from changing the tax structure, the bill would open nearly $2 million in funding for the University of Washington and Washington State University to research the effects of marijuana. It would also share pot tax revenue with cities and counties instead of funneling all of it back to the state.

– Justin Runquist