JUNEAU— A bill that would reduce the excise tax for marijuana growers and impose a sales tax for consumers advanced from the House Labor and Commerce committee to the House Finance committee Friday afternoon.
House Bill 119 would reduce the excise tax marijuana cultivation facilities pay per ounce from $50 per ounce to $12.50 per ounce.
Excise taxes vary across the nation, from 10% in Rhode Island to 37% in Washington, according to the Tax Foundation.
The bill would also impose a 6% sales tax for consumers at retail marijuana stores. Retail marijuana stores would be required to disclose the total value of marijuana sold per month.
Cody Price, staff to the House Majority, estimates that the retail price would decrease by approximately 10% and as a result, demand would increase by 17.2%.
Joan Wilson, Director of Alcohol and Marijuana Control Office, said that marijuana licensees create significant economic benefit to the state, with approximately $29.5 million in excise taxes in 2023.
Wilson said that many cultivators have to choose between paying their taxes and paying their employees, and some make a choice not to pay their taxes.
According to Wilson, 12 current businesses are delinquent on their taxes, from $750 to $110,000. She said that since 2020, 29 cultivators have gone out of business, owing approximately $3 million in uncollected taxes.
“Undoubtedly, reduced tax burden will help a greater portion of marijuana licensees,” Wilson said.
According to Wilson, There are currently 478 licensed marijuana business across the state — 248 of which are held by cultivators, according to Wilson.
Mike Emers, owner of Rosie Creek Farm, told the News-Miner that he fully supports HB 119.
“It’s probably going to save my business,” Emers said of the potential decrease in the excise tax.
Emers said that he pays between 20% and 50% of his profit to state excise taxes, and that he has very little money left over to keep the lights on.
“It’s just killing the industry and it’s killing cultivators,” Emers said.
Emers used to employ five full-time employees year round. Today, he employs one full-time employee and two part-time employees.
The state also does not place a cap on the number of licenses for cultivation facilities and retail stores. According to Emers, retail prices naturally decrease as more businesses enter the market.
One issue Emers has with the excise tax, is that the tax remains the same while the cost per ounce changes based on the market.
Daniel Peters, owner of GoodSinse, told the News-Miner that he thinks the excise tax is currently too much and he is interested in reducing the tax.
“I think it’s beneficial,” he said.
He added that a decreased excise tax would help new marijuana cultivators start up and stay in business.
Lacy Wilcox spoke on behalf of Top Hat Cannabis and Concentrates in support of HB 119.
THC offers full-time employment to 10 people with retirement and health benefits.
“In order for us to find success and remain a job provider we do need reform,” Wilcox said.
Ryan Tunseth, president of the Alaska Marijuana Industry Association, said he supports the bill to protect Alaska cannabis industry, protecting Alaska jobs, and reducing or eliminating illicit or black market sales.
AMIA supports a 3% sales tax at marijuana retail stores instead of a 6% sales tax, according to Tunseth.
“There are many cultivators who are struggling dearly, and we want to do anything we can to try to keep those jobs and keep those businesses in business,” Tunseth said.
Thomas Azzarella, executive director of the Alaska Afterschool Network within the Alaska Children’s Trust, voiced his concerns.
25% of excise taxes collected on marijuana products are currently deposited into a Marijuana Education and Treatment Fund, which supports afterschool programs to build protective factors related to substance misuse and delivers trauma-engaged prevention activities to improve behavioral health issues.
Azzarella encouraged the committee to look at how the change in taxation structure would impact programs made possible by the Marijuana Education and Treatment Fund.
The bill has received numerous letters of support from marijuana growers and retailers across the state.
Rep. Ashley Carrick (D-Fairbanks) said “I think it’s incredibly valuable to support Alaska’s emerging industries and current industries and the case has been made extremely well for how this benefits Alaskans in the future and how it benefits Alaskan businesses.”
The bill was advanced to the House Finance committee Friday afternoon.
The House Labor and Commerce committee is made up of Rep. Jesse Sumner (R-Wasilla), Rep. Justin Ruffridge (R-Soldtona), Rep. Mike Prax (R-North Pole), Rep. Dan Saddler (R-Eagle River), Rep. Stanley Wright (R-Anchorage), Rep. Ashley Carrick (D-Fairbanks) and Rep. Zack Fields (D-Anchorage).
