Tax Marijuana By THC Content? That’s What Alaska Regulator Suggests

By Becky Bohrer

JUNEAU, Alaska (AP) — An Alaska official floated the idea of taxing the state’s legal cannabis industry based on the ingredient that produces a high at a meeting Wednesday, June 13, 2018, with industry representatives and regulators.

Erika McConnell, director of the Alcohol and Marijuana Control Office, mentioned the idea of a tax based on THC content, saying she had heard about the concept at a conference and asked members of the Marijuana Control Board for their thoughts.

Board member Brandon Emmett, who works in the cannabis industry, said he had not explored the idea but said anything is probably better than the current tax. But Loren Jones, who has the board’s public health seat, said the idea bothered him. Discussion on the concept essentially ended there.

Industry representatives have sought changes to the existing tax, which is $50 an ounce for any part of the cannabis plant’s bud and flower and $15 an ounce for the rest of the plant. Growers pay the tax, which is imposed when marijuana is sold or transferred from a grow facility to a retail shop or product manufacturing facility.

Cultivators say the tax is squeezing their profit margins, and some say it keeps prices artificially high.

The tax was included in Ballot Measure 2, the 2014 initiative that legalized marijuana in Alaska. But Emmett, who was part of the legalization campaign, said the tax is not working.

“We need something that works for the people and for the state,” he said.

Board chairman Mark Springer said he would prefer leaving tax policy issues to the state Department of Revenue.

State Tax Division Director Ken Alper said that if the industry can reach consensus on what changes it wants as part of a major tax change, the division will work with it on that.

To address an industry concern, the division is working on draft regulations that could create a special definition for something like an immature bud that is different than a bud for smoking, and could allow for a different tax rate.

But Alper noted that the Department of Revenue has limited authority. The Legislature ultimately would have a say on any tax overhaul.