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The Haines Borough’s Finance Committee has decided to do away with an excise tax on local marijuana cultivators due to concerns that it would make their prices less competitive. Now the committee is considering a new method for taxing marijuana sales within the borough.
Municipal taxes on marijuana differ across Alaska. However, sales taxes appear to be more common. There are local excise taxes on marijuana in Petersburg, Wrangell, Kodiak, and Houston. Local sales taxes on marijuana are in place in Ketchikan, Juneau, Soldotna, Anchorage, the Mat-Su Borough, and Fairbanks.
At the moment, an excise tax of 5 dollars per ounce to be paid by local marijuana cultivators is written in Haines Borough code.
Finance Committee chair Tom Morphet said this makes local cultivators less competitive with grow operations outside of the borough because the price of this tax is added to their fee when selling to retailers.
“So the assembly found that was kind of punitive because people who produce marijuana that sold it here that weren’t from Haines weren’t paying for it,” Morphet said. “That sent us down the trail of how we wanted to modify our excise tax. Did we want it to apply to all producers? Or did we want to instead maybe change it to put the burden on consumers.”
The Finance Committee is looking at ditching the excise tax for a special sales tax on marijuana. It would be an additional percentage tacked on to the 5.5 percent sales tax that residents already pay when buying any product in town.
According to Morphet, a special sales tax has several advantages over an excise tax. He says it’s easy to understand and administer, and as the value of marijuana increases tax revenue will as well.
Jason Adams is the owner of Winter Greens, the only marijuana dispensary currently operating in the Haines Borough. He agrees that a sales tax would be much easier to keep track of than an excise tax.
“On my end, a sales tax is collected right at the register and paid every month to the borough,” Adams said. “Whereas if it was pushed on the growers then the producers of cannabis would have to come in and pay the tax or to have me hold those taxes add them up and make sure that they’re all correct as I turn them in, and all that processing work would be done gratis if I had to do it. A sales tax is the best way to go about it.”
When asked if he thinks it is fair that the borough is considering a special tax for marijuana that doesn’t apply to other products, Adams said he feels singled out at the moment but eventually taxes on his product will be as normal as any other tax.
Assemblyman Morphet expressed interest in attaching an equal tax on alcohol if the special sales tax on marijuana moves forward.
“That has not been vetted publicly. It’s something that I think I would support at least as a trial balloon to see what people thought. I don’t know that we should discriminate between narcotics,” Morphet said.
A special sales tax on marijuana would have to be approved by voters. Funds from the tax may be designated for a specific use, but the Finance Committee has yet to determine what that use may be.
