Citing black market competitive advantages, legal marijuana industry pushes for tax reform

Published: Jun. 13, 2018 at 3:25 PM AKDT
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Alaska marijuana growers are pushing for changes to the state's current marijuana tax scheme, saying competition with the black market is difficult, especially because the legal industry has such high expenses, including state taxes.

Alaska marijuana growers pay the state tax $50 per ounce of cannabis bud, or about $800 a pound, and $15 an ounce for other parts of the plant like the trimmings of leaves and stems used to make byproducts like hash and edibles.

The Marijuana Control Board met Wednesday morning in Anchorage to begin a series of meetings about the industry, including taxes.

The board didn't make any recommendations for changes.

"Our tax structure is built into the statute that was approved by the voters, and that can only be changed by the legislature," said Mark Springer, chairman Alaska Marijuana Control Board.

Some in the industry say it's difficult to compete with the black market, which has been lowering its prices as the legal industry prices have started dropping. Business owners say there is a lot of overhead for the legal industry like payroll, security, rent and taxes that doesn't exist for black market operations.

"Licensed cultivators are competing with people who aren't paying for cameras for security purposes, for the people who are working for them, they aren't paying unemployment taxes, they aren't paying all that stuff that goes along with being a business," said Carry Carrigan, executive director of the Alaska Marijuana Industry Alliance. "So that's a huge problem, and it's costing everybody."

Carrigan says he'd like to see a crackdown on illegal sales.

Asked why the tax structure that was decided on by voters should change, Carrigan says the industry didn't know some of the obstacles it would face.

"That was two years ago, too. We didn't know how the industry was going to develop, we didn't know what was going to be the cost of a pound, we didn't know how much it was going to cost to produce it," Carrigan said. "None of those things were known. The most important piece is that we can probably operate at this level if the black market was eliminated."