US (AK): Cannabis businesses plead for tax relief, mention illicit market

In an unusual offseason hearing, a committee of the Alaska Legislature considered a proposal on Friday that could lower the state tax on cannabis sold in the state. House Bill 119, considered Friday by the House Labor and Commerce Committee, would shift the state’s cannabis tax system from a tax per ounce to a sales tax. The state’s cannabis industry says the change is desperately needed to help cannabis businesses compete with the state’s black market.

“This is a very desperate situation that we’re in,” said Lacy Wilcox, legislative liaison for the Alaska Marijuana Industry Association, a trade group. Since the state legalized the recreational sale of cannabis in 2014, it’s been taxed at $50 per ounce, a figure established by the ballot measure that made Alaska the third state to legalize cannabis use recreationally.

Other states have since legalized recreational sales, but at lower tax rates. When local taxes are added to the mix, Alaska taxes cannabis more heavily than any other state, the Tax Policy Center of the Brookings Institution concluded in 2022. That’s created a financial windfall for the state: In fiscal year 2021, the state collected more than $30 million in cannabis tax revenue.

But industry experts say not all is green with the state’s cannabis industry. In fiscal year 2022, tax revenue fell to less than $29 million, the first time since legalization that cannabis tax revenue fell on a year-over-year basis.


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