Alaska Considers Transitioning from Per-Ounce to Sales Tax for Cannabis

Alaska Considers Transitioning from Per-Ounce to Sales Tax for Cannabis

Alaska lawmakers are exploring a significant change to the state’s cannabis tax structure. The proposed shift would replace the existing per-ounce tax system with a sales tax, marking a potentially pivotal moment for the state’s cannabis industry. Under current regulations established in 2014, Alaska imposes a $50-per-ounce tax on cannabis.

According to a report from the Tax Policy Center of the Brookings Institution in 2022, Alaska’s tax scheme, when combined with local taxes, subjects cannabis to higher tax rates compared to other states. In fiscal year 2021, the state collected over $30 million in cannabis taxes. However, in fiscal year 2022, Alaska experienced a drop in cannabis tax revenue to just under $29 million, marking the first year-over-year decline in these revenues.

Governor Mike Dunleavy, a Republican, took notice of these fluctuations and convened a task force to assess the progress of Alaska’s adult-use cannabis industry. One of the recommendations that emerged from this task force’s report was the implementation of a new tax system.

Originally, the proposal called for transitioning from the $50-per-ounce tax collected by cultivators to a 3% sales tax collected by retailers. However, this initial plan was later amended to introduce a 10% sales tax. As it stands, the bill has not been acted upon by the Labor and Commerce Committee, led by Representative Jesse Sumner (R). The committee is expected to consider potential amendments to the proposal in upcoming meetings scheduled for October or November.

This potential tax overhaul marks a critical moment for Alaska’s cannabis industry as it adapts to changing market dynamics and strives for a balanced taxation system that can support the sector’s growth and stability.

Stay tuned for more updates on this evolving legislative development as Alaska navigates its way through the changing landscape of cannabis taxation.

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