Alaska lawmakers failed to pass a marijuana tax reform bill this session to the displeasure of some in the marijuana industry who are concerned the industry is beginning to spiral due to high prices as the result of burdensome taxation.
After passing the Alaska House with strong bipartisan support, the marijuana tax bill by Rep. Jesse Sumner, R-Wasilla, stalled in the Senate on the final day of session.
Some in the marijuana industry say they would like to see changes to the bill if it is revived next session.
The bill that stalled in the Senate would take the current $50 per ounce tax imposed on cultivators who sell their marijuana to a retail marijuana store and reduce it to $12.50 per ounce before phasing into a 7% state-wide sales tax in January of 2025.
Senate President Sen. Gary Stevens, R-Kodiak, said the Senate just ran out of time to hear the bill, and the process was complicated by the House attaching the marijuana tax bill to his youth vaping BIll.
“We have not seen it in the Senate; we have not had a chance to really look at it and see what that bill would do,” Stevens said.
Good Cannabis co-founder and general manager Trevor Haynes, who is also Vice president of the Alaska Marijuana Industry Association, said he was hopeful the bill would pass and worries about what the immediate future may be for some.
“I don’t necessarily think that we’re in danger of going out of business but that downward trend is putting pressure on everyone — whether you’re going out of business or now you’re in just survival mode,” Haynes said.
But if the bill is brought back next session, Haynes said he would be in favor of a lower sales tax of 3%.
“That’s where we started with this bill; that’s what the industry was advocating for,” he said.
Sumner and House lawmakers voted in favor of a 7% sales tax because, at that rate, the state could stabilize and grow an industry that currently generates less than $30 million in revenue.
In favor of reducing the tax rate on cultivators, Tufted Puffin Marijuana dispensary owner Randy Wells said he would like the sales tax taken out of any future bill, as many cities across Alaska already have their own individual sales tax.
He said adding a statewide sales tax would only further exasperate unfair competition. As an example, he pointed to the marijuana market in Seward and how not everyone is subject to the 7% sales tax.
“The nearest competitor [of Tufted Puffin] is located just outside of the City of Seward but still close enough so they’re in the borough, so their sales tax is only 3%,” Wells said, “even though their customer base is the exact same customer base that our downtown store has. So we already have an unfair price adjustment between two retail stores right there.”
Sumner’s staff said the representative is interested in submitting a new marijuana tax reform bill next session. However, they did not discuss whether a lower sales tax would be included in a revised bill.
