Moody’s Investors Service says legalized recreational marijuana sales in the state of Washington could fall well short of projections in their first year.

Moody’s predicts slow sales because of an estimated 44 percent effective tax rate on sales, competition from medicinal marijuana and a slow start to licensing retail stores, according to a Moody’s media release on Monday.

The resulting shortfall in tax revenues is not a problem for state credit quality, however, because tax revenues from recreational marijuana were always budgeted to be a minimal source of state funding. And no tax revenues were included in the 2013-15 budget.

Washington has implemented a three-tier excise tax (of 25 percent) at the production, wholesale and retail levels, explains Moody’s in the report, “Tax Revenues from Legalized Marijuana Will Be Minimal in Washington State.”

The excise tax is in addition to the consumers’ state and local sales taxes, and to the state business and occupation tax all businesses in Washington pay. In all, Moody’s estimates an effective tax rate of 44 percent at the retail level.

By comparison, Colorado, the only other state where the sale of recreational marijuana is legal, has a 15 percent excise tax only on the wholesale level and a 12.9 percent tax on retail sales.

Currently, Washington State exempts medical marijuana from the additional excise taxes so it is only subject to the 9.6 percent sales tax.

“The tax structure in Washington State is likely to be a major deterrent for consumers who do not see the value in obtaining the product from a storefront as opposed to a medical dispensary,” says Moody’s analyst Andrea Unsworth.

Purchases from a medicinal dispensary require a recommendation from a licensed marijuana doctor. Many patients report that obtaining this annually renewed recommendation is fairly easy.

Also putting a damper on recreational sales is the state had only licensed 24 retail stores for marijuana by the day the first stores opened, on July 8, significantly less than the state had projected.

In June, the state’s economic and forecast council confirmed its original estimate of $51.2 million in total revenues ($22.9 million from fees and $28.3 million from taxes) from recreational marijuana in the upcoming 2015-17 biennial budget and $138.5 million in 2017-19, less than 3 percent of total budgeted revenues.

Falling short of these projections is unlikely to be material to the credit quality of the state, says Moody’s.