                                                                                             Filed
                                                                                       Washington State
                                                                                       Court of Appeals
                                                                                        Division Two

                                                                                       March 27, 2018




    IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

                                        DIVISION II
 GREEN COLLAR CLUB, RAINIER                                        No. 50437-5-II
 XPRESS, individually, and TRIPLE C
 COLLECTIVE, LLC,

                               Appellants,

        v.

 STATE OF WASHINGTON, DEPARTMENT                              PUBLISHED OPINION
 OF REVENUE,

                               Respondent.

       JOHANSON, J. — Rainier Xpress (RX), Green Collar Club (GCC), and Triple C Collective,

LLC (TCC) (collectively “Taxpayers”) appeal the superior court’s order denying their summary

judgment motion and the order granting summary judgment to the Department of Revenue (DOR).

At issue is whether the Taxpayers engaged in taxable retail sales of medical marijuana between

2011 and 2014. First, the Taxpayers argue that GCC and TCC were not engaged in “retail sales.”

Second, the Taxpayers argue that the transactions were exempt from sales tax under either the

prescription drug or medicine of botanical origin exemptions. We hold that as a matter of law, the

Taxpayers engaged in retail sales that were not tax exempt. Accordingly, we affirm.
No. 50437-5-II


                                              FACTS

                       I. BACKGROUND: COMMUNITY GARDEN OPERATIONS

       The Taxpayers are businesses involved with community gardens established under former

RCW 69.51A.085 (2011). Former RCW 69.51A.085(1) provided that “[q]ualifying patients may

create and participate in collective gardens for the purpose of producing, processing, transporting,

and delivering cannabis for medical use subject to” enumerated conditions.1 RX admits that it sold

products containing medical marijuana to collective garden members. GCC and TCC deny

involvement with such sales.

       GCC’s and TCC’s community garden formation agreements provided that “members” of

the collective garden would acquire and supply resources to produce, process, and share medical

marijuana. The agreements also provided that the members would establish a “management entity

which will direct and oversee the day to day operations of the Collective Garden for the benefit of

its members.” Clerk’s Papers (CP) at 83, 288. A maximum of 10 members who were qualified to

obtain medical marijuana under ch. 69.51A RCW could participate in a collective garden at any

one time. And each garden’s formation agreement provided that the garden would have 3

“permanent” members and 7 memberships reserved for nonpermanent members.

       GCC and TCC submitted substantively identical declarations describing the nature of their

medical marijuana business operations. The declarations assert that GCC and TCC provide




1
  In 2015, the legislature enacted comprehensive reform concerning the regulation of medical
marijuana in Washington. LAWS OF 2015, ch. 70. This case concerns the law as it existed prior to
the 2015 enactment. References to statutes in this opinion refer to the statutes as they existed prior
to the 2015 enactment and, where appropriate, to current statutes that are substantively identical
to the prior statutes for the purposes of this case.

                                                  2
No. 50437-5-II


“management services” to community gardens pursuant to “management agreements.” CP at 77,

282. Under the management agreements, GCC and TCC staffed each garden’s “meeting place”

during “regular hours,” controlled access to the facility so only members could obtain medical

marijuana, maintained membership applications and resignations, verified and confirmed that

members were authorized to obtain medical marijuana, maintained records, and produced reports

of the management company’s expenditures made on behalf of the garden. CP at 77, 282. The

offices that GCC and TCC operated were locations where “the participating patient members

access” the medical marijuana and “make the ongoing contributions necessary to keep a supply of

medicine for the participating patient members.” CP at 78, 283.

       To obtain medical marijuana at the collective gardens’ meeting places, patients authorized

to obtain medical marijuana approached an attendant at a window and furnished valid

documentation. GCC and TCC management company employees and garden members staffed the

window. Once staff confirmed the valid documentation, the prospective member signed a

membership agreement and completed a membership application. Members of the collective

garden could select from various marijuana products and then make “an appropriate contribution

to the garden” for the marijuana selections. CP at 80, 285.

       GCC and TCC provided “menus” containing descriptions of marijuana products and

associated prices for specific amounts of each product. Most people contributed money in

exchange for the medical marijuana products. Other types of contributions included assisting

members in making selections, contributing hardware, and providing labor at the grow site or

processing facility. GCC and TCC declared gross income of tens of thousands of dollars per month

for medical marijuana sales during the relevant taxing period on their excise tax returns.


                                                 3
No. 50437-5-II


       After selecting their medical marijuana and making their “contribution,” nonpermanent

members were required to “formally resign their membership.” CP at 79, 284. Any person seeking

medical marijuana at the collective gardens, whether new or returning, needed to complete this

process each time so that others could become nonpermanent members and obtain marijuana.

                                    II. PROCEDURAL FACTS

       The DOR notified the Taxpayers that medical marijuana sales are subject to sales tax. The

Taxpayers paid the taxes for transactions that occurred between 2011 and 2014. Then they

requested refunds. The DOR denied the refund requests.

       The Taxpayers then filed actions for tax refunds under RCW 82.32.180. The superior court

consolidated the three refund actions. The Taxpayers and the DOR filed cross motions for

summary judgment. The superior court granted summary judgment to the DOR and denied

summary judgment to the Taxpayers. The Taxpayers appeal.

                                          ANALYSIS

                                 I. STATUTORY BACKGROUND

                     A. MEDICAL MARIJUANA AND COLLECTIVE GARDENS

       In 1998, Washington voters approved Initiative 692 (I-692), which was later codified at ch.

69.51A RCW. LAWS OF 1999, ch. 2 (I-692, approved November 3, 1998). Under this chapter,

“qualifying patients” could possess medical marijuana and have an affirmative defense against

criminal offenses for marijuana production, possession, and use if they meet specific statutory

conditions. Former RCW 69.51A.040 (2011); State v. Reis, 183 Wn.2d 197, 204-05, 351 P.3d 127

(2015). A person was a “qualifying patient” if a Washington licensed health care professional

diagnosed a patient with a terminal or debilitating medical condition, advised the patient of the


                                                4
No. 50437-5-II


benefits and risks of marijuana, and provided “[v]alid documentation” indicating that “in the health

care professional’s professional opinion, the patient may benefit from the medical use of

marijuana.” Former RCW 69.51A.010(4)(a)-(e), (7)(a) (2010).2 To assert the affirmative defense,

a qualifying patient who is not registered with the department of health must present the patient’s

“valid documentation” to any law enforcement official questioning the asserted medical use or

possession of marijuana. Former RCW 69.51A.043.

       Health care professionals who comply with enumerated conditions do not commit a crime

under state law when they advise patients about the risks and benefits of medical use of marijuana,

state that the patient may benefit from it, or provide them with valid documentation to obtain

medical marijuana. Former RCW 69.51A.030 (2011).

       Qualifying patients may participate in “collective gardens” to pool resources and grow

medical marijuana for their own use. Former RCW 69.51A.085(1); Cannabis Action Coal. v. City

of Kent, 183 Wn.2d 219, 221-22, 351 P.3d 151 (2015). No more than 10 qualifying patients may

participate in a single collective garden at one time. Former RCW 69.51A.085(1)(a).

                                  B. CONTROLLED SUBSTANCES

       State and federal law provide comprehensive statutory schemes to control the manufacture,

distribution, and use of controlled substances. Uniform Controlled Substances Act, 21 U.S.C. §§




2
  The legislature has amended the definition of “valid documentation” several times since 1998,
and the most recent term used for this documentation is “authorization.” RCW 69.51A.010(1)(a).
The statutory term during the relevant time period is “valid documentation.” Former RCW
69.51A.010(7). The parties use the terms “authorization” and “valid documentation”
interchangeably.

                                                 5
No. 50437-5-II


801-904 (2012); ch. 69.50 RCW. Individuals who violate these laws are subject to penalties. 21

U.S.C. §§ 841-865; RCW 69.50.401-.465.

       Both bodies of law place controlled substances in numerical schedules I to V. 21 U.S.C.

§§ 811-812; RCW 69.50.203-.212. Substances on schedule I are illegal under all circumstances

except for research, and they have no accepted medical use. 21 U.S.C. § 812(b)(1)(B)-(C), §§

841-865 (establishing offenses and penalties); § 823(a)(1) (providing an exception for approved

research); RCW 69.50.203; RCW 69.50.401-.465.

       Both federal and state statutes list marijuana as a schedule I controlled substance. RCW

69.50.204(c)(22); 21 C.F.R. § 1308.11(d)(23); 21 U.S.C. § 812(c), sched. I, cl. (c)(10); Seeley v.

State, 132 Wn.2d 776, 782-83, 940 P.2d 604 (1997). Under federal law, as a schedule I drug,

marijuana cannot be lawfully prescribed. 21 U.S.C. §§ 822-23; former RCW 69.50.308 (2013);

Seeley, 132 Wn.2d at 782-83. In Washington, controlled substances may be prescribed only under

specific statutory conditions, and schedule I drugs are not prescribed under the relevant statute.

See former RCW 69.50.308.

       Medical professionals who prescribe controlled substances must be registered with the

Drug Enforcement Administration, and a registration to prescribe controlled substances can be

obtained only for substances on schedules II to IV. 21 C.F.R. § 1301.11; 21 C.F.R. § 1301.13.

Pharmacies and pharmacists are required to distribute drugs approved by federal law for

distribution by pharmacies, subject to narrow exceptions. WAC 246-869-010; WAC 246-863-

095. Physicians who prescribe marijuana in violation of federal law may have their registration to

prescribe controlled substances revoked. Conant v. Walters, 309 F.3d 629, 632 (9th Cir. 2002).

But under the First Amendment of the United States Constitution, doctors may discuss the


                                                6
No. 50437-5-II


advantages and risks of marijuana use and recommend the use of marijuana in the context of the

doctor-patient relationship. Conant, 309 F.3d at 636-39.

                                      II. PRINCIPLES OF LAW

       We review a summary judgment order de novo, and we perform the same inquiry as the

superior court. Sheehan v. Cent. Puget Sound Reg’l Transit Auth., 155 Wn.2d 790, 796-97, 123

P.3d 88 (2005). We consider all the evidence submitted to the superior court and all reasonable

inferences from the evidence in the light most favorable to the nonmoving party. Keck v. Collins,

184 Wn.2d 358, 370, 357 P.3d 1080 (2015). The moving party is entitled to summary judgment

if it shows that pleadings, affidavits, depositions, and admissions on file demonstrate the absence

of any genuine issues of material fact and that the moving party is entitled to judgment as a matter

of law. Sheehan, 155 Wn.2d at 797; CR 56(c).

       “Taxes are presumed to be just and legal, and the burden is on the taxpayer to prove that

the tax is incorrect.” AOL, LLC v. Dep’t of Revenue, 149 Wn. App. 533, 554, 205 P.3d 159 (2009)

(citing Ford Motor Co. v. City of Seattle, Exec. Servs. Dep’t, 160 Wn.2d 32, 41, 156 P.3d 185

(2007)). The taxpayer seeking a refund has the burden of proving that the DOR incorrectly

assessed the tax and it is entitled to a refund. RCW 82.32.180; Wash. Imaging Servs., LLC v. Dep’t

of Revenue, 171 Wn.2d 548, 555, 252 P.3d 885 (2011).




                                                 7
No. 50437-5-II


                                III. MEDICAL MARIJUANA “SALES”

       The parties disagree whether GCC and TCC were engaged in “retail sales” of medical

marijuana subject to retail sales tax.3 We hold that the superior court did not err when it found as

a matter of law that GCC and TCC were engaged in “retail sales.”

                                      A. PRINCIPLES OF LAW

       Courts focus on the substance of a transaction to determine how it is classified for tax

purposes, rather than relying on the characterization of transactions provided in taxpayers’

contracts with third parties. First Am. Title Ins. Co. v. Dep’t of Revenue, 144 Wn.2d 300, 303-05,

27 P.3d 604 (2001); Wash. Imaging Servs., 171 Wn.2d at 556-57. The Taxpayers have the burden

to show that they were not subject to retail sales tax and instead are entitled to a refund. RCW

82.32.180; AOL, 149 Wn. App. at 554 (citing Ford Motor Co., 160 Wn.2d at 41).

       There is a 6.5 percent tax “on each retail sale in this state of: (a) Tangible personal property,

unless the sale is specifically excluded from the RCW 82.04.050 definition of retail sale.” RCW

82.08.020(1)(a). A “retail sale” is “every sale of tangible personal property . . . to all persons

irrespective of the nature of their business.” RCW 82.04.050(1)(a). A “sale” includes “any

transfer of the ownership of, title to, or possession of property for a valuable consideration.”

Former RCW 82.04.040(1) (2004).

                                          B. RETAIL SALES

       The Taxpayers argue that GCC and TCC were “separate entities” that merely provided

services to the collective gardens and did not engage in retail sales. Reply Br. of Appellant at 4.



3
  Appellants agree that RX sold products containing medical marijuana to patients and thus
engaged in “sales” that are subject to sales tax unless an exemption applies.

                                                  8
No. 50437-5-II


The DOR argues that GCC’s and TCC’s declarations and interrogatories show that they were

engaged in retail sales of medical marijuana. We agree with the DOR that because GCC and TCC

accepted valuable consideration in exchange for medical marijuana, they engaged in retail sales as

a matter of law.

       To support their assertion that GCC and TCC were merely “management companies” that

provided “services” to the collective gardens, the Taxpayers cite their formation agreements,

management agreements, and interrogatories. Reply Br. of Appellant at 4. The Taxpayers are

correct that their formation agreements provide that the collective garden members will establish

a “management entity which will direct and oversee the day to day operations of the Collective

Garden for the benefit of its members.” CP at 83, 288. In addition, GCC’s and TCC’s formation

and management agreements stated that they would provide “management services” to the

collective gardens, and the interrogatories assert that GCC and TCC provided services and did not

engage in retail sales. CP at 77, 282.

       But the formation and management agreements do not define whether GCC and TCC

engaged in taxable conduct; rather, we examine the substance of their actual conduct to determine

whether they engaged in taxable retail sales. See First Am. Title Ins. Co., 144 Wn.2d at 303-05;

Wash. Imaging Servs., 171 Wn.2d at 556-57.

       The DOR points to facts in the declarations, formation agreements, management

agreements, and interrogatories that support that GCC and TCC engaged in retail sales of medical

marijuana. Wash. Court of Appeals oral argument, Rainer Xpress v. Dep’t of Revenue, No. 50437-

5-II (Jan. 9, 2018), at 18 min., 12 sec. through 20 min., 22 sec. (on file with court). To obtain

medical marijuana at the collective gardens’ meeting places, authorized patients approached an


                                                9
No. 50437-5-II


attendant at a window, which was staffed by “either” GCC and TCC employees or garden member

volunteers, and furnished valid documentation required to obtain medical marijuana. Once staff

or volunteers verified the documentation, the prospective member signed a membership agreement

and completed a membership application, selected from various medical marijuana products, and

made “an appropriate contribution to the garden.” CP at 80, 285. Most patients contributed money

in exchange for their medical marijuana products based on “menus” containing descriptions of

marijuana products and associated prices for specific amounts of each product. Upon leaving the

store, the patient resigned his or her membership. These undisputed facts show that the transaction

had the characteristics of commercial retail sales. GCC and TCC also declared gross income of

tens of thousands of dollars per month for medical marijuana sales during the relevant taxing

period on their excise tax returns.

        Based on these undisputed facts, GCC and TCC managed and staffed facilities where

individuals made monetary “contributions” for medical marijuana based on specific prices. The

Taxpayers staffed the front desk and managed daily operations at the meeting places. They

received monetary contributions in exchange for medical marijuana. The transfer of medical

marijuana to members in exchange for money or other valuable consideration is a sale of personal

property, which constitutes a “retail sale.” Former RCW 82.04.040(1); RCW 82.04.050(1)(a). As

such, the undisputed facts establish that GCC and TCC engaged in retail sales of marijuana.

Former RCW 82.04.040(1); RCW 82.04.050(1)(a). Of course, we do not hold that under a

different set of facts, all collective garden transactions are taxable.




                                                  10
No. 50437-5-II


                                  C. ALTERNATIVE ARGUMENT

       GCC and TCC make the “alternative” argument that, at a minimum, a genuine issue of

material fact existed regarding whether they engaged in taxable retail “sales” of medical marijuana.

This argument fails.

       We do not consider claims unsupported by legal authority, citation to the record, or

argument. RAP 10.3(a)(6); Cowiche Canyon Conservancy v. Bosley, 118 Wn.2d 801, 809, 828

P.2d 549 (1992). And passing treatment of an issue or lack of reasoned argument is insufficient

to merit judicial consideration. Holland v. City of Tacoma, 90 Wn. App. 533, 538, 954 P.2d 290

(1998); see RAP 10.3(a)(6).

       The Taxpayers’ argument that there is a genuine issue of material fact regarding whether

GCC and TCC engaged in “sales” consists of a single sentence in the opening and reply briefs.

They fail to provide any explanation or record citations to support that there is a genuine issue of

material fact. They do not state which material facts are disputed. Thus, we decline to review this

claim. RAP 10.3(a)(6); Cowiche Canyon Conservancy, 118 Wn.2d at 809.

                                 IV. RETAIL SALES EXEMPTIONS

       The Taxpayers argue that if they were engaged in medical marijuana retail sales, they were

exempt from retail sales tax as a matter of law under exemptions for prescription drugs and

medicines of botanical origin. This argument fails.

                                      A. PRINCIPLES OF LAW

       Statutory interpretation is a question of law we review de novo. HomeStreet, Inc. v. Dep’t

of Revenue, 166 Wn.2d 444, 451, 210 P.3d 297 (2009). “The primary objective of any statutory

construction inquiry is ‘to ascertain and carry out the intent of the Legislature.’” HomeStreet, 166


                                                11
No. 50437-5-II


Wn.2d at 451 (quoting Rozner v. City of Bellevue, 116 Wn.2d 342, 347, 804 P.2d 24 (1991)).

When interpreting statutes, we “‘avoid . . . creat[ing] conflicts between different provisions so that

we achieve a harmonious statutory scheme.’” Am. Legion Post #149 v. Dep’t of Health, 164 Wn.2d

570, 585, 192 P.3d 306 (2008) (quoting Echo Bay Cmty. Ass’n v. Dep’t of Nat. Res., 139 Wn. App.

321, 327, 160 P.3d 1083 (2007)).

       To determine legislative intent, we begin with the statute’s plain language, considering the

plain and ordinary meaning of the statutory language. Homestreet, 166 Wn.2d at 451. In

determining plain meaning, the court considers all the legislature has said in the statute and related

statutes that disclose legislative intent. Thorpe v. Inslee, 188 Wn.2d 282, 289, 393 P.3d 1231

(2017). The court also considers the ordinary meaning of the words, basic rules of grammar, and

the statutory context. In re Forfeiture of One 1970 Chevrolet Chevelle, 166 Wn.2d 834, 838-39,

215 P.3d 166 (2009). “To determine the plain meaning of an undefined term, we may look to the

dictionary.” HomeStreet, 166 Wn.2d at 451. “If the plain language is subject to only one

interpretation, our inquiry ends because plain language does not require construction.”

HomeStreet, 166 Wn.2d at 451.

       Tax exemptions must be narrowly construed. HomeStreet, 166 Wn.2d at 455. The party

asserting the exemption has the burden to show it qualifies. Activate, Inc. v. Dep’t of Revenue,

150 Wn. App. 807, 813, 209 P.3d 524 (2009). In the case of doubt or ambiguity, tax exemption

statutes should be construed strictly, though fairly and in keeping with the ordinary meaning of

their language, against the taxpayer. Group Health Co-op. of Puget Sound, Inc. v. Wash. State Tax

Comm’n, 72 Wn.2d 422, 429, 433 P.2d 201 (1967).




                                                 12
No. 50437-5-II


                               B. PRESCRIPTION DRUG EXEMPTION

       The parties dispute whether sales of medical marijuana satisfy the prescription drug retail

sales tax exemption under former RCW 82.08.0281 (2004).4 We agree with the DOR that the

Taxpayers’ medical marijuana sales are not exempt from retail sales tax.

1.     PRINCIPLES OF LAW

       Under former RCW 82.08.0281(1), retail sales taxes “shall not apply to sales of drugs for

human use dispensed or to be dispensed to patients, pursuant to a prescription.” (Emphasis added.)

Former RCW 82.08.0281 provides definitions for the terms “drugs” and “prescription”:

              (4) The definitions in this subsection apply throughout this section. . . .
              (a) “Prescription” means an order, formula, or recipe issued . . . by a duly
       licensed practitioner authorized by the laws of this state to prescribe.
              (b) “Drug” means a . . . substance . . . :
              ....
              (ii) Intended for use in the diagnosis, cure, mitigation, treatment, or
       prevention of disease; or
              (iii) Intended to affect the structure or any function of the body.

2.     VALID DOCUMENTATION IS NOT AN “ORDER”

       The parties dispute whether, as a matter of law, valid documentation for medical marijuana

is a “prescription” within the meaning of former RCW 82.08.0281(4)(a), such that medical

marijuana is a drug for human use dispensed pursuant to a prescription and thus eligible for the

tax exemption. In connection with this argument, the parties dispute whether valid documentation

is an “order” within the plain meaning of former RCW 82.08.0281(4)(a).




4
  Under the current statutory scheme, the legislature explicitly exempts medical marijuana sales
from retail sales tax but collects a 37 percent excise tax on the selling price of medical marijuana.
RCW 82.08.9997; RCW 69.50.535. During the relevant taxing period, medical marijuana was not
explicitly exempted from retail sales tax.

                                                 13
No. 50437-5-II


          A prescription is “an order, formula, or recipe issued . . . by a duly licensed practitioner

authorized by the laws of this state to prescribe.” Former RCW 82.08.0281(4)(a). To determine

whether valid documentation for medical marijuana satisfies this definition, we begin by

considering the plain and ordinary meaning of the statutory language. Homestreet, 166 Wn.2d at

451. We may turn to dictionary definitions to determine whether valid documentation is an

“order.” And where a technical term is used in its technical sense in a statute, the court applies a

technical definition. Tingey v. Haisch, 159 Wn.2d 652, 658, 152 P.3d 1020 (2007).

          “Order” ordinarily means “to give orders to: command . . . require or direct something to

be done.”       WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY 1588 (2002).                      “Valid

documentation” is not a “command” in the ordinary sense because it merely documents that a

patient may benefit from medical marijuana and is not a directive for a patient to use that substance

or for any entity to dispense the substance. Former RCW 69.51A.010(7)(a).

          Furthermore, the prescription drugs exemption from retail sales tax exempts those drugs

that are “dispensed to patients . . . pursuant to a prescription” issued by a “duly licensed

practitioner.” Former RCW 82.08.0281(1), (4)(a). As such, the word “order” used within the

“prescription” definition describes a licensed medical professional’s “order.” In this context, the

word “order” is best understood by examining its technical medical meaning. Tingey, 159 Wn.2d

at 658.

          An “order,” as defined by Taber’s Cyclopedic Medical Dictionary 1678 (22d ed. 2013),

means “[i]nstructions from a health care provider specifying patient treatment and care. A




                                                  14
No. 50437-5-II


directive mandating the delivery of specific patient care services.” 5 “Valid documentation” for

medical marijuana does not specify patient treatment or care, or mandate delivery of specific

services, so it is not an “order” in the technical sense. Valid documentation merely includes a

permissive and equivocal statement that a patient may benefit from medical use of marijuana.

Former RCW 69.51A.010(7)(a).

       According to the Taxpayers, valid documentation is “identical to any other prescription in

both form and function” because both documents authorize possession of controlled substances.

Br. of Appellant at 21. The valid documentation may contain “many” of the same characteristics,

including the date, a medical practitioner’s name, registration number, and signature, the patient’s

identifying information, the drug’s name and quantity, and the duration the drug is to be taken. Br.

of Appellant at 21. The Taxpayers identify examples of valid documentation that allegedly contain

information such as dosage and duration, and these examples could arguably support that the valid

documentation specifies treatment and care.

       But the examples that the Taxpayers point to merely state the number of plants that the

patient may have and the expiration of the valid documentation—they do not actually provide

“instructions . . . specifying patient treatment and care,” including the appropriate dosage to use at

one time or frequency and duration of use. Tabor’s, supra. Furthermore, the Taxpayers fail to

address other examples in the record of valid documentation that lack even the general information

about the number of plants a patient may have or the expiration of the valid documentation.



5
 The Taxpayers argue that the technical definition of “order” is inapplicable because the definition
of prescription was passed as part of a tax statute and is not intended to regulate medical
professionals. But they fail to provide authority to support that we cannot use a technical medical
definition when interpreting a tax exemption related to a particular field.

                                                 15
No. 50437-5-II


       Valid documentation is not an “order,” and thus the superior court did not err when it

concluded that valid documentation does not qualify as a “prescription” under former RCW

82.08.0281(4)(a). As such, medical marijuana is not a drug for human use dispensed or to be

dispensed to patients pursuant to a prescription, and it does not qualify for the tax exemption under

former RCW 82.08.0281(1).6

                             C. NATUROPATHIC MEDICINE EXCEPTION

       The parties dispute whether, as a matter of law, the tax exemption for medicines used in

treatment by naturopaths applies to medical marijuana. We agree with the DOR that, as a matter

of law, a retail sale of medical marijuana does not qualify for the “naturopathic medicine”

exemption.

       Under RCW 82.08.0283(1)(b), retail sales tax does not apply to “[m]edicines of mineral,

animal, and botanical origin prescribed, administered, dispensed, or used in the treatment of an

individual by a person licensed under chapter 18.36A RCW [the chapter governing naturopathy].”

       The Taxpayers assert that medical marijuana is a “‘Medicine[] . . . prescribed,

administered, dispensed, or used in the treatment of an individual’” by a naturopath. Br. of

Appellant at 25 (quoting RCW 82.08.0283). To qualify for medical marijuana, a person must be

diagnosed with a terminal or debilitating condition, which includes conditions “unrelieved by

standard medical treatments or medications.” Former RCW 69.51A.010(6)(b) (2010). According

to the Taxpayers, when a naturopath provides valid documentation for a patient to obtain medical

marijuana, the naturopath determines that the patient may benefit from the medical use of



6
 Accordingly, we do not reach the remaining issues regarding the applicability of the prescription
drug exemption.

                                                 16
No. 50437-5-II


marijuana, which the Taxpayers assert is “a non-standard medication,” because such patients have

been unresponsive to standard medications. Br. of Appellant at 26 (emphasis added). Thus, the

Taxpayers argue that medical marijuana is a “‘medicine[]’” “‘used in the treatment of an

individual’” by a naturopath. Br. of Appellant at 26 (quoting RCW 82.08.0283).

       This argument is unpersuasive. As the DOR asserts, naturopaths are not authorized to

prescribe, administer, dispense, or use medical marijuana in their practice.7 RCW 18.36A.040,

.020(10). Under the statutes defining “naturopathic medicine” and the naturopathic scope of

practice, schedule I drugs are not included in the enumerated treatments that naturopaths can

utilize. RCW 18.36A.040, .020(10). In fact, “naturopathic medicines” provides that “[c]ontrolled

substances are limited to codeine and testosterone products that are contained in Schedules III, IV,

and V in chapter 69.50 RCW.” RCW 18.36A.020(10). Marijuana, as a schedule I controlled

substance, is not a “naturopathic medicine” and thus does not qualify as a “medicine[] . . . used in

the treatment of an individual by a [naturopath.]” RCW 82.08.0283(1)(b).

       The Taxpayers argue that the definitions under ch. 18.36A RCW are not related to the tax

exemption for medicines of botanical origin. However, as stated above, the tax exemption

explicitly states that medicines utilized only “in the treatment of an individual by a person licensed

under chapter 18.36A RCW” are tax exempt. RCW 82.08.0283(1)(b). Thus, ch. 18.36 RCW is

explicitly incorporated, and we may properly refer to its provisions.

       Medical marijuana is not a naturopathic medicine because it is not a “[m]edicine[] of

mineral, animal, and botanical origin prescribed, administered, dispensed, or used in the treatment



7
  Even the Taxpayers acknowledge that licensed naturopaths do not “use” medical marijuana
“directly” in the course of patient treatment and provide only valid documentation to patients and
advise them consistently with ch. 69.51A RCW.
                                                 17
No. 50437-5-II


of an individual by a person licensed under chapter 18.36A RCW.” RCW 82.08.0283(1)(b). As

such, the superior court did not err when it concluded as a matter of law that medical marijuana

does not qualify for the naturopathic tax exemption. See RCW 82.08.0283(1)(b).

       We affirm.



                                                   JOHANSON, J.
 We concur:



BJORGEN, C.J.




SUTTON, J.




                                              18
