Five years ago, when Alaska’s first legal cannabis shops started opening, there was a lot of money to be made. “We had three fabulous, great years,” said Sue Nowland, whose Alaska Fireweed was among the first cannabis stores to open its doors in Anchorage. Unfortunately, those days are over.
Cannabis businesses across the state are confronting a daunting set of issues that owners and advocates say are making it nearly impossible to survive. Some Alaskans who poured their life savings or retirement accounts into starting companies are scrambling to find someone to buy them out. Some operations are failing, others are in the red and behind on taxes owed to the state. The most salient problems, according to people within the industry, are the flat excise tax structure placed on cultivators, an over-saturation of retailers, and the rigidity to which licenses are tied to real estate.
Alaska is unique in how it taxes cannabis relative to other states. Instead of charging at the point of sale, like a tax on groceries collected at the cash register, growers pay the state a flat rate of $800 per pound on cannabis buds. 'Trim', the plant leaves and byproduct manufactured into edible and concentrated products, is taxed at $240 a pound. The problem with the flat-tax structure, growers say, is that, unlike any other agricultural product, they are responsible for the same amount of money regardless of whether the crop turns out highly potent or ends up an impotent bust.
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