Marijuana tax revenue for FY18 exceeds state’s predictions by $2M

Marijuana tax revenue for fiscal year 2018 exceeded the Alaska Department of Revenue’s predictions by almost $2 million.

Final numbers for FY18, which ended June 30,

The state collected a grand total of more than $11 million from marijuana cultivators for the fiscal year. For comparison, the total amount of marijuana taxes collected in FY17 was just $1.7 million.

“We absolutely are exceeding our predictions and additionally we are seeing a very steady increase in tax revenue collection each month,” said Kelly Mazzei, excise tax supervisor with DOR.

Marijuana taxes collected for the month of June were the highest ever, at over $1.2 million. But the Department of Revenue predicts that July will be another record-breaking month to usher in the new fiscal year.

“I don’t believe the market has saturated and we haven’t seen exactly what capacity the state is going to operate in as far as cultivation and retail stores and the other facilities,” said Mazzei. “So we could continue to collect an unknown amount of money in taxes.”

Half of the money collected from marijuana taxes is allocated to what’s called the “Recidivism Reduction Fund” which helps pay for several programs aimed at lowering recidivism rates in Alaska. That includes the Department of Correction’s substance abuse treatment program and community residential centers, as well the Department of Public Safety's council on domestic violence and sexual assault.

Starting sometime next year, another 25 percent of marijuana tax revenue will go towards marijuana education and awareness under Senate Bill 104, which Governor Walker signed into law this week. Any tax revenue left over will remain in the general fund to pay for other state services.

Meanwhile, the Department of Revenue has proposed changing regulations to add a third tax rate to the state’s marijuana cultivation tax system. Under current regulations, all bud and flower is taxed at $50 an ounce, while the rest of the marijuana plant is taxed at $15 an ounce. DOR’s proposed regulations would add a third tax category for immature or abnormal buds, which would be taxed at $25 an ounce.

“We understand now with feedback that there is some lower quality bud, maybe some that’s failed a test result for mold so it could go to a product manufacturer, but it won’t go to a retail store. So therefore we don’t believe cultivators should be paying $50 an ounce if they’re not getting that price at market,” said Mazzei.

The proposal is currently out for public comment until August 10.