Marijuana tax revenues hit new record, more growth expected

Economists are determining how much money recreational marijuana could generate or cost the...
Economists are determining how much money recreational marijuana could generate or cost the state if it were to be approved by voters. (Pixabay)(WJHG)
Published: Jan. 3, 2020 at 8:01 PM AKST
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Monthly revenues from state marijuana taxes broke the $2 million barrier for the first time in October, according to

Alaska Marijuana Industry Association Executive Director Cary Carrigan points to businesses offering wide ranges of products, or multi-level businesses that cultivate cannabis and sell retail products at the main drivers of the industry’s growth.

“The smart business model was always the intent to diversify,” Carrigan said. “And I think that’s what we’re seeing here.

This comes just under a year after several cultivation businesses went

around November 2018.

“The cultivators are still bearing the weight of this whole structure of taxation,” said Alaska Marijuana Industry Association Executive Director Cary Carrigan. “But we’re really trying to move that forward and change that.”

But while November 2018 was a rough month for cultivators, the industry, and tax revenues, have seen a steady growth since then.

“Last year we basically skirted that $2 million mark,” said Alaska Department of Revenue Excise Tax Manager Kelly Mazzei. “In fact we got to 1.9, 1.9, 1.8, but never hit that $2 million.

State law says that money from marijuana taxes will be deposited in three locations:

  • 50% Goes into the Recidivism Reduction Fund, which the legislature can appropriate to the departments of Corrections, Public Safety, and Health and Social Services.
  • 25% goes to the Marijuana Education and Treatment Fund through DHSS, which works to prevent youth marijuana use and help prevent adverse health effects from its use.
  • The final 25% is put into the state’s general fund.

But while reported revenues from taxes may be over $2 million for October, Mazzei said that may not actually match how much money the state actually receives.

“What we reported on the website comes directly from tax returns that were filed, so that doesn’t necessarily prove that the taxpayer paid that amount they owed in full that month,” she said.

The actual amount the state receives ebbs and flows based on a number of factors such as taxpayer payment plans. The Dept. of revenue reported receiving $1.8 million in taxes following the $2 million in revenues reported from October 2019.

Carrigan expects the numbers to keep going up, though.

“I think it’s just a drop in the bucket,” he said. “I think the $2 million that we’re getting now, since we’ve jumped the barrier, I think will just keep growing.”

The Department of Revenue predicts something similar. In their

fiscal year 2020 is expected to see a roughly 5% increase in marijuana tax revenues, followed by a 17% increase in fiscal year 2021, to a total of $27.2 million for the whole year.

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