Taxing the green: Will Alaska’s marijuana tax flip from growers to buyers?

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The Alaska House of Representatives passed legislation Friday that would revise the state’s tax structure on cannabis. If passed by the Senate, House Bill 119 will change the tax from $50 per ounce ($800 per pound) of product to a 7% sales tax. 

HB 119 passed the House 36-3; voting against the measure were Reps. Ben Carpenter, David Eastman, and CJ McCormick.

In 2014, voters in Alaska approved a ballot measure legalizing commercial growing and sales of cannabis, and accompanying tax structure.

Alaska is one of five states, including Colorado, Maine, Nevada, and New Jersey, that use use a weight-based cannabis tax, where growers have the responsibility for remitting taxes based on the weight of various parts of the plants. 

With the proposed sales tax, Alaska’s tax occurs at the point of sale, rather than on the growers, who now represent the largest agricultural sector in Alaska in the less than a decade that growing and selling marijuana has been legal. 

The top taxes for marijuana in the nation remain:

  • Washington: 37%
  • Virginia: 21%
  • Montana: 20%
  • Arizona: 16%
  • California and Colorado: 15%

The only other true statewide sales tax in Alaska is the 8 cents per gallon for highway fuel and 5 cents per gallon on marine fuel collected by the state.

HB 119, sponsored by the House Rules Committee, comes after a task force was convened by Gov. Mike Dunleavy to study and recommend a different tax structure, at the request of growers. The Alaska Marijuana Control Board also was in favor, by a vote of 4-to-1, of creating a different tax structure. The original version of the bill proposed a 3% tax, but that was worked up to 7% throughout the legislative journey.

“While a reduced tax structure will, in the short term, lower the state’s revenue stream, it will also help prevent the decline of the industry which would ultimately drive tax revenue downward. This change in tax structure will not only stabilize the industry while providing areas for Alaskan businesses to grow, but it will also allow the state to capture revenue from value-ad products which will increase the tax base,” the Rules Committee said in a statement at the time of introduction.

HB 119 has been sent to the Senate, where it has been referred to Senate Finance Committee only, but has not been scheduled for a hearing. The last day of session is May 15 and if the bill does not pass, it will die and sponsors will need to reintroduce it next year.

16 COMMENTS

  1. The legislature is far too busy pandering to their union donors, shafting homeschooler families and degrading women and girls, by forcing effeminate men into their sports, to pass a viable tax structure for an essential small business, completely Alaska owned industry.

    • Very true and also opens the door to other sale tax.
      It costs business owners money to collect a sales tax
      that the consumer will end up paying for.

  2. I think that there should be an abortion tax where the woman having the abortion pays a 30% tax to help fund future abortions.

    • I agree on the woman paying the tax but at a higher than 30% rate… but unfortunately tax payers will be paying the tax because abortions are part of “womens healthcare” which will soon be funded through medicaid and Obamacare.

    • I think he means it is “an Alaskan owned essential small business” that smokes a lot of their own product.

  3. Tent, meet camel. Thank you Rep. Eastman for being the last Republican with some actual backbone and principals.

    Huge part of the sales pitch on legalizing weed during the endless votes of the 2000s was the tax structure. “Legalize and tax it!”, etc. Now the potheads don’t want to keep up their end of the bargain, claiming poverty and naturally want a tax break (oops, ‘restructuring’).

    You can’t swing a stick without hitting a pot shop in Anchorage these days. “Hey, that place used to be a hobby shop that sold model airplanes. That place used to repair small engines.” Now its weed, weed, weed. Kinda sad. Get used to dealing with more encounters with homeless schizos in your daily life.

  4. Small businesses and individual self employment are essential for a healthy economy and social structure. Alaska’s economic structure is dysfunctionally unbalanced wherein private business is a miniscule percentage with manufacturing, mining and farming. Federal, State, local and so called tribal government, NGOs, welfare and grant based “jobs” dominate, followed by outside based corporate operations. I include welfare and government together as they produce nothing of value and foster an attitude of dependency, arrogance and entitlement in society.
    Cannabis does not make people lazy and stupid. Government jobs that produce nothing and have no consequences for failing to meet minimal standards make people lazy and public schools train people to be stupid, stifling a child’s intellectual development. Alcohol is the scourge and #1 destroyer of lives and families in Alaska. Yet it is accepted and encouraged. Rx drugs are next, with the rampant abuse immensely profiting large companies and prescribing doctors’ cash bonuses. Stupid people, the products of government schools indoctrinated to obey edicts and fear mongering, willingly compromise their own and their children’s health with covid shots for whom doctors were paid massive bonuses to administer. Lazy people who are selfish prioritize abusing alcohol over the needs of their families, children and grandchildren.

  5. They need to restrict, along with the taxes, Welfare payments and any other government paid benefits produced by OUR TAX PAYERS. People are walking all over Anchorage and the valley who we KNOW receive such payments.. and is buying their pot with it.

  6. There are no taxes being shifted from “growers to buyers.” All taxes of any kind are always paid by buyers (consumers). Every manufacturer or producer of anything is smart enough to include all taxes along in their sales prices. That even includes income taxes.

    • Oh they have been paying taxes all along, just at a rate of $50 per ounce of flower and $15 per ounce of trim or waste products.

      That makes the tax on 1 lb. of cannabis $800. All paid by the growers, thus built into the wholesale price that the shops pay to the growers. And then passed on to the consumer in higher prices at the point of sale

      Factor in that when those same growers file their income taxes, and yes they pay a state income tax as most are partnerships or corporations, they don’t get to deduct many of their expenses. They only get to claim the cost of goods sold. No office expenses, no business meals, no deduction for taxes paid, no admin costs, only those expenses directly related to the product being sold.

      So in the end, they have a higher effective tax rate to both the Feds and the State than almost any other tax paying entity.

      Do some skirt the laws or not pay their taxes, cough cough Cannabaska, but there are tax dodgers across every industry.

  7. The weed haters set up the tax structure . Ridiculous ! It like like MADD ( mothers against drunk driving ) set up the alcohol tax .

    It was real simple the people voted to legalize weed , wether we like it or not ! I think plenty of evidence that it make stupid lazy kids . Cell phones are making kids stupid and lazy as well , plenty of evidence .

    It’s all on parental control and managing our kids . Some kids have terrible parents .

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