Let’s face it – Alaska is a vast state (larger than Texas, California and Montana combined), and despite the relatively sparse, far-flung population, they do things big. The state is home to robust oil, timber, mining and fishing industries, but that isn’t all: they can also claim substantial tax revenues from legal cannabis sales. And those numbers are expected to continue their upward trajectory.
The Alaska Department of Revenue – Tax Division revealed just how much legal weed brought into the state’s coffers from October 1-31, 2019, in figures released by the agency on January 17, 2020. In one month, the state collected over $2 million in cannabis taxes. The state is on track to claim almost $10 million in cannabis tax revenue in its 2020 Fiscal Year, which ends June 30. Alaska’s adult-use sales started in late 2016.
Alaska currently divvies the tax revenues into several buckets. Half of the funds are applied to the state’s Recidivism Reduction Fund, and the other half is split between the state’s general tax fund and the Alaska Department of Health and Human Services Marijuana Education and Treatment Fund.
While the tax burden is primarily carried by cannabis cultivators, as the market matures the Alaska Marijuana Control Board is considering changing the structure of the industry to distribute the tax burden more evenly. Right now, cannabis cultivators in the state pass part of their tax fees down the supply chain to wholesalers, retailers and customers.
The revenue upswing is a plus after several Alaska marijuana cultivators closed their doors in November 2018. Since then, the state has been working on addressing industry challenges that plague other states where marijuana is legal — the lack of banking access, resulting in a cash-only business model — and tourism fluctuations.
That might change if Alaska Marijuana Industry Association Executive Director Cary Carrigan has his way. In a January 3 interview with Anchorage NBC affiliate KTUU, Carrigan noted that “The cultivators are still bearing the weight of this whole structure of taxation. But we’re really trying to move that forward and change that.” Carrigan also noted that those cannabis businesses that both cultivate and sell retail products are the ones that are driving the industry’s growth, adding that stores that sell a wide range of products are also key industry players. In the KTUU interview, he said, “The smart business model was always the intent to diversity. And I think that’s what we’re seeing here.”
In another revenue-generating move, Alaska is fanning the cannabis flames with the lure of special onsite use endorsements for licensed retail businesses. Applications for state-issued marijuana onsite-consumption endorsement licenses were available as of April 11, 2019, but a search for onsite consumption licensees turned up nothing. A call to Alaska’s Alcohol and Marijuana Control office in Juneau on January 17 confirmed that no endorsements had been approved as of yet, although two applications are up for review in meetings on January 23 and 24.