Alaska eyes new tax tier for cannabis cultivators in face of black-market demand

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Alaska’s Department of Revenue is mulling a third tax tier for cannabis cultivators in an apparent bid to make the state’s legal marijuana prices more competitive with the black market.

That’s according to Ken Alper, director of the state’s tax division, who was speaking at Alaska’s Marijuana Control Board on Wednesday.

Here are the basics surrounding the situation:
  • The state’s current excise tax per wholesale ounce of cannabis bud or flower is $50, according to the Marijuana Business Factbook 2018.
  • That rate – equivalent to $800 a pound – is decimating profit margins and boosting black-market activity, Alaska’s legal cultivators argue.
  • A second tax tier – $15 per wholesale ounce – is levied on what’s commonly called trim.
  • Cultivators pay the taxes when cannabis is sold to retailers.
  • The current excise tax makes it difficult for cultivators to compete with the black market, said Brandon Emmett, vice chair of Alaska’s Marijuana Control Board and chief operating officer of Good Titrations, an Alaskan concentrates producer.

Alper didn’t offer details on what a third tax rate would look like, which would need legislative approval. However, he emphasized the need for caution regarding syntax used to define parts of the plant that would fall into a new tier.

“Anything is probably better than what we have now,” Emmett said during Wednesday’s meeting.

“Whether it’s a percentage of a retail sales tax, a THC potency tax or an amendment to the excise tax, we need something that meets Alaskans’ demand, and we need to make it no longer profitable for black-market operators to ship illegal product into our state.”

Alper also said if a consensus develops on a new tax tier, the state’s tax division would work with the industry to move it to the legislature.