02/22/2025 01:00 PM House STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB75 | |
| HB30 | |
| HB91 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 30 | TELECONFERENCED | |
| += | HB 75 | TELECONFERENCED | |
| += | HB 91 | TELECONFERENCED | |
| *+ | HB 87 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE STATE AFFAIRS STANDING COMMITTEE
February 22, 2025
1:01 p.m.
MEMBERS PRESENT
Representative Ashley Carrick, Chair
Representative Andi Story, Vice Chair
Representative Rebecca Himschoot
Representative Ky Holland
Representative Sarah Vance
Representative Kevin McCabe
Representative Elexie Moore
MEMBERS ABSENT
All members present.
COMMITTEE CALENDAR
HOUSE BILL NO. 75
"An Act relating to national criminal history record checks for
certain employees of the Department of Revenue; relating to
allowable absences for eligibility for a permanent fund
dividend; relating to the confidentiality of certain information
provided on a permanent fund dividend application; relating to
electronic notice of debt collection executed on a permanent
fund dividend; and providing for an effective date."
- HEARD & HELD
HOUSE BILL NO. 30
"An Act establishing the office of entrepreneurship; relating to
new businesses in the state; relating to reports concerning
procurements by agencies; and relating to initial business
license fees for new businesses in the state."
- HEARD & HELD
HOUSE BILL NO. 91
"An Act relating to the lawful operation of retail marijuana
stores; relating to marijuana cultivation; relating to the
registration of marijuana establishments; relating to marijuana
taxes; relating to the duties of the Department of Revenue; and
providing for an effective date."
- HEARD & HELD
HOUSE BILL NO. 87
"An Act establishing the month of March as Women's History
Month."
- BILL HEARING CANCELED
PREVIOUS COMMITTEE ACTION
BILL: HB 75
SHORT TITLE: PERM FUND; EMPLOYMENT; ELIGIBILITY
SPONSOR(s): REPRESENTATIVE(s) BYNUM
01/31/25 (H) READ THE FIRST TIME - REFERRALS
01/31/25 (H) STA, L&C
02/18/25 (H) STA AT 3:15 PM GRUENBERG 120
02/18/25 (H) Heard & Held
02/18/25 (H) MINUTE(STA)
02/22/25 (H) STA AT 1:00 PM GRUENBERG 120
BILL: HB 30
SHORT TITLE: OFFICE OF ENTREPRENEURSHIP
SPONSOR(s): REPRESENTATIVE(s) HOLLAND
01/22/25 (H) PREFILE RELEASED 1/10/25
01/22/25 (H) READ THE FIRST TIME - REFERRALS
01/22/25 (H) STA, L&C
02/22/25 (H) STA AT 1:00 PM GRUENBERG 120
BILL: HB 91
SHORT TITLE: MARIJUANA: TAX/RETAIL STORES/REGISTRATION
SPONSOR(s): REPRESENTATIVE(s) CARRICK
02/10/25 (H) READ THE FIRST TIME - REFERRALS
02/10/25 (H) STA, FIN
02/18/25 (H) STA AT 3:15 PM GRUENBERG 120
02/18/25 (H) Scheduled but Not Heard
02/22/25 (H) STA AT 1:00 PM GRUENBERG 120
WITNESS REGISTER
REPRESENATIVE JEREMY BYNUM
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As prime sponsor, gave an overview of HB
75.
SYLVAN ROBB, Director
Division of Corporations, Business & Professional Licensing
Department of Commerce, Community & Economic Development
Juneau, Alaska
POSITION STATEMENT: Answered questions pertaining to HB 30.
JASON GRILL, Chief Government Affairs Officer
Right to Start
Kansas City, Kansas
POSITION STATEMENT: Gave invited testimony in support of HB 30.
JARED REYNOLDS, Director
Center for Economic Development
University of Alaska
Anchorage, Alaska
POSITION STATEMENT: Gave an invited testimony regarding
entrepreneurship in Alaska.
REPRESENTATIVE ASHLEY CARRICK
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As prime sponsor, gave an introduction of
HB 91.
STUART RELAY, Staff
Representative Ashley Carrick
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: On behalf of Representative Carrick, prime
sponsor, offered a PowerPoint presentation regarding HB 91.
GEORGE PIERCE, representing self
Kasilof, Alaska
POSITION STATEMENT: Testified in support of HB 91.
LACY WILCOX, Vice President
Alaska Marijuana Industry Association
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 91.
ACTION NARRATIVE
1:01:55 PM
CHAIR ASHLEY CARRICK called the House State Affairs Standing
Committee meeting to order at 1:01 p.m. Representatives
Carrick, Story, McCabe, Moore, Vance, and Holland were present
at the call to order. Representative Himschoot arrived as the
meeting was in progress.
HB 75-PERM FUND; EMPLOYMENT; ELIGIBILITY
1:02:37 PM
CHAIR ASHLEY CARRICK announced that the first order of business
would be HOUSE BILL NO. 75, "An Act relating to national
criminal history record checks for certain employees of the
Department of Revenue; relating to allowable absences for
eligibility for a permanent fund dividend; relating to the
confidentiality of certain information provided on a permanent
fund dividend application; relating to electronic notice of debt
collection executed on a permanent fund dividend; and providing
for an effective date."
1:03:28 PM
REPRESENATIVE BYNUM, Alaska State Legislator, as prime sponsor,
gave a quick overview of HB 75 and its intentions. He said that
there are several provisions within the proposed bill,
specifically around the permanent fund dividend (PFD). He said
these include fingerprint background checks for employees;
allowable absence changes to allow Merchant Mariners access to
United States Coast Guard approved vocational programs;
clarification for the portions of school breaks and holidays;
clarifications for absences allowed as voluntary absences;
provisions to make PFD application material confidential; and an
opt-in or opt-out option for levy notices to be electronic. He
said the effective date would be January 2026.
1:06:10 PM
CHAIR CARRICK opened public testimony on HB 75. After
ascertaining that there was no one wo wished to testify, she
closed public testimony.
1:06:43 PM
REPRESENATIVE BYNUM told committee members that he would provide
written responses to questions from the previous committee
hearing [2/18/25] and noted that some of the information is
difficult to obtain.
1:07:33 PM
CHAIR CARRICK after ascertaining that there were no additional
questions, set an amendment deadline and announced that HB 75
was held over.
1:07:58 PM
The committee took a brief at-ease at 1:08 p.m.
HB 30-OFFICE OF ENTREPRENEURSHIP
[Contains discussion of HB 34.]
1:08:16 PM
CHAIR CARRICK announced that the next order of business would be
HOUSE BILL NO. 30, "An Act establishing the office of
entrepreneurship; relating to new businesses in the state;
relating to reports concerning procurements by agencies; and
relating to initial business license fees for new businesses in
the state."
1:10:13 PM
REPRESENTATIVE HOLLAND, as prime sponsor, introduced HB 30. He
said this was something that he has been involved with for
almost 10 years, and in that time, he has been offering programs
across the state to help potential entrepreneurs learn about
opportunities to grow and expand a business. He said that he
wanted to make a brief introduction of the bill and allow some
testimonies that can describe both the bill and the business
start-up climate in Alaska. He explained that "many people
don't realize" that 89 percent of new job creation in the last
10 years have been from businesses less than five years old.
REPRESENTATIVE HOLLAND said that when talking about
entrepreneurship, it does not only involve discussions about
economic development, value, new wealth, and opportunities, but
also the day-to-day creation of jobs that communities need. He
noted that HB 30 works "side by side" with HB 34. He said HB 34
looks at the strategic view of the state's approach to economic
diversification and supporting emerging sectors, whereas HB 30
would look more specifically at entrepreneurs and aims to help
them create businesses and align the state's activities to
support them. He said that this is not an effort to try to
start something new since there is already a strong start-up
culture with limited programs available in the state. He said
what is missing is a cohesive strategy to tie it together. He
said there are many fragmented programs that are valuable and
discussed a few of them. He said HB 30 tries to accelerate what
impact start-ups have in the state. All start-up talks conclude
with one central theme, supporting new emerging economic
sectors. He discussed various economic development strategies
across various Alaska groups and reiterated that emerging
sectors need support. He asked, "Who is taking this action?"
He said that HB 30 would form the Office of Entrepreneurship and
create a structure within the Department of Commerce, Community
& Economic Development (DCCED) to provide a backbone to start-up
efforts. He said that he was open to any committee input and
improvements for the bill.
1:15:43 PM
REPRESENTATIVE HOLLAND said that everybody is struggling to
think about the future economy of Alaska and what it will look
like. The state has been stuck with 15 years of slow economic
growth and there have been jobs lost to out-of-state
opportunities. He opined that the focus should be on in-state
job growth and retaining talent. Alaska needs the
diversification and support of emerging sectors that will create
future jobs in Alaska. He said that this work is not just about
creating new business but supporting sectors that are already
here. He gave an example of a business called beadedstream inc,
which develops temperature sensors for use on Alaska's icy
roads. He said that the devices had additional applications to
dam infrastructure as well. He frequently sees entrepreneurs
solving problems in Alaska that have other global applications
as well. He said both Alaska problems and solutions are global.
REPRESENTATIVE HOLLAND said when looking at emerging sectors it
is important to look at "where the puck is going," and much like
hockey that involves skating to the puck, innovation does the
same thing. He said that HB 30 recognizes that innovation is
the heart and soul of the country's gross domestic product
(GDP). He said that two-thirds of the country's economic
miracle is from innovation. In Alaska, the proposed bill looks
at these emerging sectors and shows how to support them. He
also noted that committee members should have some information
from the Alaska Statewide Comprehensive Economic Development
Strategy, and it paints a picture of existing economic engines
but also where new sectors are emerging. It emphasizes a need
to support entrepreneurship and innovation. He said that the
Office of Entrepreneurship would focus on front-end work for
start-ups. He then discussed accessibility to capital and
support for businesses while they are in their building phase.
1:21:11 PM
REPRESENTATIVE HOLLAND said that the outcomes of this would be
businesses and jobs of the future. He said that start-ups
create roughly 5,000 jobs annually and consist of about 89
percent of net new jobs. He said that business development is
the key to the future and while current economic engines are
vital, he doubts that there will be considerable growth in these
sectors in the future. He welcomed questions from committee
members.
1:22:45 PM
REPRESENTATIVE MCCABE said that he was interested to know
whether HB 30 would support any corporations that form
subsidiaries.
REPRESENTATIVE HOLLAND responded that it is possible that the
Office of Entrepreneurship could provide some limited
assistance, but these types of cases were not typical. He said
there have been recent efforts within entrepreneurship to look
at corporate innovation and corporate entrepreneurship. Some
corporate entities are even creating internal accelerator
programs. He said that it is something he hasn't seen much in
Alaska, but it is a national trend. He emphasized that internal
corporate innovation is as important as external innovation.
REPRESENTATIVE MCCABE said he was specifically thinking of a
trucking company that hauls freight. He said they formed a new
division to haul ore from Manh Choh Kinross Mine to Fairbanks.
He asked if the proposed Office of Entrepreneurship would help
them through the regulatory processes.
REPRESENTATIVE HOLLAND responded that it would be hard for him
to imagine the proposed office being helpful to them. He said
the focus is on new business models. He said that he could
imagine that if there is something unique such as new technology
then it could aid. He clarified that things that could be
adjuncts to the business could utilize entrepreneurial help.
REPRESENTATIVE MCCABE said that what Representative Holland was
describing applies to Black Gold Trucking. He said that the
owner never hauled ore before and outfitted a trucking fleet
specifically for ore hauling purposes. He said it sounds to him
that it would be a perfect fit. He said a determination would
be needed to understand which business entities to support and
which ones the proposed Office of Entrepreneurship would not.
REPRESENTATIVE HOLLAND responded that entrepreneur offices in
his experience don't try to differentiate between whom they
support except for explicit targeting of early-stage new
businesses. Generally, start-ups are in reference to businesses
less than five years old and, given the discussion, Black Gold
Trucking could be a candidate for help.
1:27:16 PM
REPRESENTATIVE HIMSCHOOT asked if Offices of Entrepreneurship
like the one proposed in the bill exist in other states.
REPRESENTATIVE HOLLAND responded that other states have them,
and an upcoming testifier could help explain them. He said that
all states have a function like this. He said that when he
proposed the bill, he was initially surprised at the fiscal note
regarding the cost of standing up the office. He said part of
the reason for the fiscal note is that there is currently no
economic development budget. He said that HB 30 wouldn't just
add people to an office but would recreate an office that was
once created but shut down over time. He said that there is a
broader economic question of whether the state should fund
economic development. He talked about the fiscal note and
potentially amending sections of the bill to address any
concerns.
1:29:01 PM
CHAIR CARRICK recollected that in 2024, during the Thirty-Third
Alaska State Legislative, there may have been efforts to remove
licensing fees for new businesses. She asked for clarification
regarding the proposed licensing fee changes.
REPRESENTATIVE HOLLAND responded that it would be good to have
the department help with this, but the intent was to waive only
the initial licensing fee. He said the current system used for
managing the licensing process doesn't have the existing
functionality to keep track whether it's a new license or a
recreation of one. He said that there are complications with
this. He said that no-cost licensing fees were available during
the COVID-19 pandemic and subsequently there was an uptick in
license applications. He said that he was interested to see
data and understand whether this waiver helped generate new
businesses. He said there may be other ways to support emerging
businesses without changing pre-existing license fees.
CHAIR CARRICK asked what the current fees are for brand new
businesses and whether it could be considered a barrier to start
new businesses.
1:32:22 PM
SYLVAN ROBB, Director, Division of Corporations, Business &
Professional Licensing, Department of Commerce, Community &
Economic Development, responded that the current fee is $50 for
both new and pre-existing businesses. She said that veterans
and sole proprietors over 65 have reduced fees at $25. She said
that 90 percent of license purchases are online, and she could
not say whether cost is a barrier.
1:33:13 PM
REPRESENTATIVE MCCABE said that "farmers are small businesses,"
and the governor has an executive order (EO) to remove
Agriculture from the Department of Natural Resources and form a
separate department. He said part of the reason is to help
farmers grow their business. He asked how HB 30 would be any
different from a separate Department of Agriculture regarding
supporting a small farmer.
REPRESENTATIVE HOLLAND responded that there are significant
differences. He noted that he would expect the proposed
Department of Agriculture to have some business development
resources. He said that he hopes that the proposed Office of
Entrepreneurship would be an important adjunct to the Department
of Agriculture. He said the proposed office and its work would
support Agriculture Technology (AgTech) and other facets of the
farming industry.
REPRESENTATIVE MCCABE commented that he was happy to see support
for the governor's EO because the Department of Agriculture
would conduct business in different sectors.
1:36:07 PM
REPRESENTATIVE VANCE said that the state by statute already has
Alaska Regional Development Organizations (ARDORs). She said
that they do all the things Representative Holland had described
and more. She said the one on the Kenai Peninsula works with
multiple agencies to leverage grants to support business start-
ups. She asked whether this office would do anything that an
ARDOR cannot.
REPRESENTATIVE HOLLAND responded that the state's ARDORs are a
vital part of the economic landscape but have struggled with
both funding and support. He noted that each ARDOR also
completes a comprehensive regional economic development strategy
that rolls into statewide strategy. He said each ARDOR is also
calling for more support for innovation efforts. Speaking about
innovation, he said that the Juneau Economic Development Council
would be sponsoring an upcoming innovation summit in Juneau. He
said there is a lot of support with ARDORs but one would find
out that their efforts are limited. He said HB 30 would bring
together efforts from across the state and support ARDORs. He
noted that one of the key parts of this bill is to align the
purchasing and activities of the state to the work that could be
done by local businesses and start-ups. He said this is an area
in which ARDORs have limited functionality, and the proposed
bill would create opportunities needed by ARDORs.
REPRESENTATIVE VANCE said that she was failing to see how HB 30
would do more, observing that the bill provides only a few lines
of what it would do. She said most of the proposed bill
references an annual report and putting funds towards
procurement. She said that there is already legislation that
dictates that state-affiliated entities need to prioritize
locally sourced procurements. She said municipalities also have
requirements for procurements. She asked whether bolstering
economic development districts may be more efficient than
creating another area of government.
REPRESENTATIVE HOLLAND responded these are valid points, but he
has worked on this and knows that ARDORs need help. He said
that HB 30 would not do everything, but it would be a step in
the right direction. He said he wants to ensure that ARDORs see
the proposed office as something to support their objectives.
He said that the Office of Entrepreneurship would give a
platform to accelerate and build businesses.
1:42:56 PM
REPRESENTATIVE STORY asked whether Representative Holland had
considered making the proposed office part of the Alaska
Industrial Development and Export Authority (AIDEA), which she
said also focused on community development and had some
available resources.
REPRESENTATIVE HOLLAND responded that the original thought was
to make it part of the Office of the Governor. He said the
focus of the proposed Office of Entrepreneurship is to support
the highest level of policy making to understand the impact of
start-ups and emerging sectors. He said that after working on
the bill, it seemed more appropriate to pair the proposed office
with the Department of Commerce, Community & Economic
Development. He said this bill's focus is to align state
activities to support start-ups. He said that looking at other
models in the country, they tend to be more complex, and he was
trying to avoid complexity. He said the idea of moving it into
a separate entity like AIDEA was possible, but he believes that
keeping it closer to executive functions of the state may be
better.
1:45:44 PM
REPRESENTATIVE HIMSCHOOT asked Representative Holland where the
proposed Office of Entrepreneurship would be located.
REPRESENTATIVE HOLLAND responded that he had not given it a lot
of thought. He said it would make a lot of sense to pair it
with other state offices in Juneau, but Anchorage could be a
contender as well due to its economic horsepower. He said that
Fairbanks is also significant when it comes to entrepreneurship
programs. He said there are good reasons to put the office in
different locations.
REPRESENTATIVE HIMSCHOOT commented that when looking at emerging
sectors such as mariculture, marine services, or agriculture,
none of them would be located near Anchorage. She said a lot of
these emerging sectors would be all over the state.
REPRESENTATIVE HOLLAND noted that the emerging sector definition
includes healthcare technology, tourism work, outdoor
recreation, and others as well. He agreed that there is a
strong focus on mariculture in the coastal areas. He spoke
about previous pilot programs across the state and said that at
the end of the day, he hopes the entrepreneurship function would
function statewide.
1:49:15 PM
REPRESENTATIVE MOORE asked if Representative Holland could
estimate a return on investment (ROI) from passing this type of
legislation.
REPRESENTATIVE HOLLAND responded that it is an interesting
question. He said you can look at it by job creation and
analyzing DCCED data. He said if six jobs were created within
the Office of Entrepreneurship and it helps generate 5,000 jobs,
then there would be a ROI. He said a big challenge in the state
is a fiscal environment that creates "jobs with question marks."
He spoke about local economic impact, taxes, and in-state
structures that don't bring job value to the state. He said it
is a layered and tangled question but one could focus on job
creation and potential exports. He said the same dialogue
occurs when funding university systems.
1:51:36 PM
JASON GRILL, Chief Government Affairs Officer, Right to Start,
gave an invited testimony in support of HB 30. He began by
stating that new businesses create almost all net new jobs in
the economy and discussed the benefits. He said that government
processes and other barriers make it more difficult for start-
ups. He said survey data suggest that entrepreneurs feel left
out, and that government supports large businesses over them.
He said that 94 percent of voters across party lines say that it
is important to America's future that citizens can grow
businesses fairly. He iterated that 92 percent of voters said
that starting a business today is difficult. He said that the
proposed bill would expand opportunity for all, and
entrepreneurs deserve to have at least one person available at
the state level to support start-up operations. He said that
this is an impactful first step for enabling Alaska
entrepreneurs.
MR. GRILL said that in recent years Nevada, Missouri, Kansas,
Michigan, Colorado, Utah, and New Mexico have all created a
dedicated, official Office of Entrepreneurship in state
government. He said North Dakota, Washington, West Virgina,
Indiana, Vermont, and Hawaii were all currently looking at
similar legislation.
MR. GRILL said that Colorado recently had a great program, which
dropped new business fees to $1. He said it increased limited
liability company (LLC) filings by over 40 percent. He reported
that 155,000 LLCs were registered in the year that fees were
reduced. He said that the licensing fees, much like Alaska,
were $50. He explained that it costs more to make businesses
overseas. He said the HB 30 would focus on new and young
businesses rather than on small businesses.
MR. GRILL, speaking about staffing for other states Offices of
Entrepreneurship, said that Nevada had two full-time employees,
Missouri had one, and Indiana was looking to go bigger. Given
other states' approach, he felt that three personnel affiliated
with the Office of Entrepreneurship employees would be perfect.
He said that with regards to placement, most states have put an
Office of Entrepreneurship in their Department of Commerce or
Governor's Office.
1:59:22 PM
JARED REYNOLDS, Director, Center for Economic Development,
University of Alaska, said that the Center of Economic
Development is deeply embedded in Alaska's entrepreneurial
climate. He said that it has served multiple entrepreneurs, and
the center's primary focus has been on early-stage ideas. He
said the center works with multiple stakeholders including
ARDORs across the state.
MR. REYNOLDS said that entrepreneurs are essential to Alaska's
Economy and provide services to Alaskans. He said that business
creation, survival, growth, and scalability are all important.
He said that by some metrics, Alaska ranks third in the nation
for the number of individuals who start businesses. He said
that there is significant regional variation and there is
considerably less entrepreneurship in Northern and Western
communities. He remarked that business growth and scalability
is the biggest challenge for Alaska and discussed metrics
pertaining to scalability. He said that many businesses in
Alaska are born out of necessity rather than opportunity and
that there are a lot of key challenges that contribute to
Alaska's entrepreneurial opportunities.
2:04:56 PM
CHAIR CARRICK asked for a comparison between HB 30 and HB 34.
REPRESENTATIVE HOLLAND explained that HB 30 focuses on areas
before the business planning stage and said that Alaska does
this quite well already, especially considering the work of the
Alaska Small Business Development Center. He remarked that
ecosystem building, ideation, business modeling, and strategy
were the areas in which the state was particularly weak. He
said that HB 30 operates at the front end for businesses and
works directly with startups and their founders.
REPRESENTATIVE HOLLAND said that HB 34 and the innovation
council is a "different animal." He said HB 34 is a bill that
seeks to convene folks at a statewide and strategic level to
look at areas of differentiated economic opportunity. It seeks
to bring multiple stakeholders together to determine how
innovation is being guided across that state. He said at a
strategic level it would generate priorities, policies, and
legislative action that would support start-ups. He said the
difference between the two bills could be thought of as HB 30
being like microeconomics whereas HB 34 can be thought of as
macroeconomics.
2:08:20 PM
REPRESENTATIVE VANCE highlighted the section of the bill
pertaining to new state business development and asked how HB 30
would be carried out to ensure that 5 percent of revenue goes
into economic development. She said, for instance, that health
care was one industry of concern. She asked how this bill would
be carried out to address every level at which it impacts.
REPRESENTATIVE HOLLAND said the same questions were asked by
officials with DCCED because HB 30 seemed broad. He said the
model legislation for HB 30 had painfully specific directives
and he felt it was going "too far into the weeds." He offered
the bill from a general perspective and wanted to work on making
things more specific. He said the intent is specifically
looking at creating new opportunities for emerging businesses.
He gave an example of a couple of industries and how HB 30 could
be carried out. He said that he wanted to find a balance that
allows both flexibility and creativity.
REPRESENTATIVE VANCE said that using state agencies as a
definition is very specific because it goes to a committee
level. She said it is time-consuming and challenging to
determine implementation. If he was open to the proposed office
being a department then it may avoid management to a granular
level. She raised concerns regarding practicality.
REPRESENTATIVE HOLLAND said he agreed and welcomed any comments
and solutions.
2:13:18 PM
REPRESENTATIVE MCCABE asked if the totals of the fiscal notes
had been added up.
REPRESENTATIVE HOLLAND said he doesn't have the number off the
top of his head and is open to removing certain parts of the
bill to address the current fiscal note. He said that he
appreciated Mr. Grill's comment that other states' Offices of
Entrepreneurship had staffed three people and the current bill's
proposition of six may be too much. He said that he was not
going to step away from the fact that HB 30 would have a price
tag.
REPRESENTATIVE MCCABE said that he struggles with the idea of
spending almost $2 million on this. He said that the Matanuska-
Susitna Borough has repealed license fees and suggested that
this may be a better approach.
REPRESENTATIVE HOLLAND said that he appreciates the comments
but, in his experience, the lack of spending in this area is the
reason for lack of progress. He reiterated that it addresses
the businesses of the future.
REPRESENTATIVE MCCABE said that the reason there are no small
businesses in Alaska is because Alaska has not followed its
resource development protocols. He said that Alaska has stopped
development of these resources and now the state does not have
the people to support a small business. He said people are not
around with a decent resource job and said it sounds like "a
chicken and egg problem."
REPRESENTATIVE HOLLAND said that it would be good to get the
Alaska Small Business Development Center back in this
discussion. He said over 95 percent of the state economy is
already small businesses. He said that Representative McCabe's
opening clause was that Alaska didn't have small businesses, but
the state has many. He said that HB 30 hopes to accelerate what
is already there.
CHAIR CARRICK announced that HB 30 held over.
2:18:31 PM
The committee took an at-ease from 2:18 p.m. to 2:23 p.m.
[During the at-ease, Chair Carrick handed the gavel to Vice
Chair Story.]
HB 91-MARIJUANA: TAX/RETAIL STORES/REGISTRATION
[Contains discussion of SB 73.]
2:23:23 PM
VICE CHAIR STORY announced that the next order of business would
be HOUSE BILL NO. 91, "An Act relating to the lawful operation
of retail marijuana stores; relating to marijuana cultivation;
relating to the registration of marijuana establishments;
relating to marijuana taxes; relating to the duties of the
Department of Revenue; and providing for an effective date."
2:23:47 PM
CHAIR CARRICK, as prime sponsor, gave an introduction on HB 91.
She said that HB 91 is a revival of HB 119 from the Thirty-Third
Alaska State Legislature. She remarked that this bill comes at
the request of the industry and the Advisory Taskforce on
Recreational Marijuana. She said that after initial growth; the
cannabis industry has been met with stagnation, and it has
opened the door to black market sales. She remarked that in
2022, Governor Mike Dunleavy convened the Advisory Taskforce on
Recreational Marijuana and the number one suggestion was tax
reform. She said HB 91 addresses tax reform and policy changes
related to cannabis cultivation. She said that changes would
hopefully close the door to black market marijuana sales. She
said that she met with multiple industry stakeholders in an
attempt to come forward with the best compromise bill that
accounts for priorities and concerns while attempting to follow
recommendations of the taskforce and not sacrifice state
revenue.
2:26:41 PM
STUART RELAY, Staff, Representative Ashley Carrick, Alaska State
Legislature, on behalf of Representative Carrick, offered a
PowerPoint presentation regarding HB 91 [hard copy in committee
file]. He started with Slide 2 and reiterated information
regarding the Advisory Taskforce on Recreational Marijuana and
previous ballot initiatives. He said that the governors
previous Marijuana Advisory Taskforce recommendations were
included in HB 91, specifically recommendations 1, 10, and 11.
He said that recommendation 1 would provide immediate tax relief
with an excise tax cut from $50 an ounce to $12.50 an ounce, and
after a period, the excise tax would transition to a sales tax.
He said that recommendation 10 specifically allows for upstream
sales, which would allow retailers to sell marijuana products
back to producers. He said that recommendation 11 relates to
biannual licensing and currently only one-year licenses are in
place. He noted that liquor licenses are currently valid for
two years and this recommendation would bring both license types
into parity. He said that slide 4 refers to marijuana revenue
from the previous fiscal year. In total he said there was
$27,200,000 in revenue and spoke about the designation of these
tax-collected funds.
2:29:56 PM
REPRESENTATIVE VANCE remarked that a lot of the public was led
to believe that a large portion of marijuana tax revenue would
be designated for primary school education. She asked what
could be done to address this misconception and whether there
were any ideas regarding designating these funds for primary
schools.
2:30:46 PM
CHAIR CARRICK agreed that there was a public perception issue
regarding fund allocations and heard the same concern from
constituents. She clarified that $6,900,000 of marijuana tax
revenue is designated for the unrestricted general fund (UGF)
and she wasn't opposed to redirecting fund streams to address
this issue. She said it would require looking at currently
funded programs and what services they provide. She spoke about
the recidivism reduction fund and its funding stream from
marijuana tax revenue.
2:32:07 PM
MR. RELAY, presenting the next slide, discussed marijuana tax
reform and reiterated that HB 91 would provide excise tax relief
with a later transition to a 6 percent sales tax.
MR. RELAY reiterated that HB 91 would allow upstream sales of
marijuana products from retailers to producers. He said the
bill would also require a tracking number per crop. He said
currently tracking tags are required for individual plants above
18 inches. He said this section of the bill would require
tagging per crop opposed to tags per plant. He said that this
comes at the recommendation of marijuana growers due to the
cumbersome nature of tagging individual plants. He also
reiterated that HB 91 would allow biannual licensing much like
liquor licensing. He said that HB 91 would include quarterly
taxes as opposed to monthly taxes and this also was a
recommendation from industry members. Lastly, it would require
the Department of Revenue to establish tax collection facilities
in each judicial district. He said this would include
collection facilities in Fairbanks, Juneau, and Nome, with one
already established in Anchorage.
MR. RELAY presented the next slide and discussed differences
between various marijuana tax reform bills. He said SB 73
includes biannual licensing but not the other policy changes
included under HB 91. He said SB 73 also has an excise tax cut
and there were no other replacement revenue streams. He said
that it would have about a $14 million hit to state revenue
given excise tax changes.
2:36:21 PM
REPRESENTATIVE HOLLAND asked about the slide pertaining to
marijuana tax revenue and asked how revenue streams would change
if HB 91 were adopted. He mentioned cuts to programs from
excise tax changes and asked about the fiscal notes.
CHAIR CARRICK responded that a couple things were worth
consideration. The first is that the industry is currently on
the verge of collapse from excise taxes. She said the current
tax structure limits the legal market. Second is that it would
be difficult to predict what the sales tax revenue would look
like but given the recommendations from the Advisory Taskforce
on Recreational Marijuana and previous discussions on the bill,
there would likely be a minimal drop in revenue. She said that
excise tax changes would allow the industry to rebound and
thrive but there may be a drop in revenue overall. She remarked
that revenue losses would be greater if no changes are made.
2:38:51 PM
REPRESENTATIVE VANCE said that she was trying to understand the
fiscal notes. She asked whether changing the excise tax to a
sales tax would cause all funding streams to enter the general
fund.
MR. RELAY responded that currently the way HB 91 is written, it
would change no funding designations.
REPRESENTATIVE VANCE remarked that there was not a state sales
tax and inquired where it would be administered. She asked
whether it would go into the hands of the municipalities or
elsewhere.
MR. RELAY said the Department of Revenue could speak to this
question with greater specificity and said it was his
understanding that the businesses would pay the sales tax to the
Department of Revenue.
REPRESENTATIVE VANCE asked whether there were any other
instances in which the Department of Revenue collects a sales
tax. She said it seems unusual.
2:40:40 PM
CHAIR CARRICK responded that this would be a new process and
would have a cost associated with it. She noted two things that
were relevant to the discussion. The first is that there would
be a start-up cost for tax collection purposes. Second is if
there were no sales tax implementation and SB 73 were supported,
then there would be a $14 million loss in state revenue. As
bill sponsor, she said, her perspective is that HB 91 is
balancing two different pieces of a balancing act.
REPRESENTATIVE VANCE said that understanding the full impacts of
the "push and pull" was important for this industry.
2:42:20 PM
REPRESENTATIVE HIMSCHOOT said that she supported this bill
concept previously based on the recommendations of the Alcohol &
Marijuana Control Office (AMCO). She raised concerns about
communities with pre-existing sales taxes. She said that her
community has a pre-existing six percent sales tax, and it would
be doubled with the proposed tax change. She said that the
reduction of the excise tax would help the producers, but the
consumers would also be impacted. She said that there are
cannabis consumers who are not able to use insurance and price
points are important. She said the four judicial districts for
revenue collection would be a huge win since some owners need to
fly cash for depositing purposes. She asked if it would be up
to the Department of Revenue to determine where the tax
collection sites would be. She asked how this would be
determined.
CHAIR CARRICK said that the fiscal note from the Department of
Revenue specified where they would likely put these collection
facilities.
MR. RELAY added that a tax collection site already exists in
Anchorage but per fiscal note, ones would be put in Nome,
Fairbanks, and Juneau.
2:44:47 PM
VICE CHAIR STORY asked what the rationale for the sites would
be.
CHAIR CARRICK said that these were the recommendations from the
Department of Revenue, whose representatives could speak to the
rationale. She said it likely has to do with potential industry
development and site utilization.
CHAIR CARRICK, in response to Representative Himschoot's
previous question, said that people need to drive or fly monthly
to deposit cash. She said for Fairbanks this includes 14 hours
of driving just to deposit store revenue. She said this was a
recommendation from people working in the industry. She said
that the previous legislation was supported with a six percent
sales tax, and this is a starting point. She said that the tax
rate would be open to discussion. She acknowledged that
different communities would face different costs depending on
the tax structure.
2:46:57 PM
REPRESENTATIVE HIMSCHOOT asked how the 6 percent tax rate was
determined. She said in the first year it appears there will be
a $9 million hit.
CHAIR CARRICK said the initial tax rate recommended by the
governor's taskforce was 7 percent. She said that the previous
legislature talked about price points considerably and the 6
percent rate was the settling point. She reiterated that this
is the starting point for HB 91.
MR. RELAY clarified that the governor's taskforce recommended a
3 percent sales tax. He asked for additional clarification
regarding Representative Himschoot's question.
REPRESENTATIVE HIMSCHOOT said that there would be a $9 million
loss in the first year if the bill passed. She asked whether
any percentage would cause a permanent decrease in funding for
programs.
CHAIR CARRICK responded that it is a bit of a guessing game, but
economic modeling provided by the House Majority Council in the
previous legislature suggested that there would be stable but
slightly decreased revenue given this structure. She said that
it would ultimately be the balance and that many industry
members thought that 6 percent doesn't strike the balance, but
people also say a zero percent tax would, too. She talked about
potential losses to the state's general fund regarding the
different tax rates and said that a lot of it is speculative.
REPRESENTATIVE HIMSCHOOT said that she would like to see the
economic modeling and said that when an industry says what it
needs through a taskforce then that warrants attention. She
said there is also a free-market rule, and the economic modeling
could provide insights. She said that regulations regarding
where these businesses can operate are also a point of concern.
She said she would check in with her district to learn of any
insights.
CHAIR CARRICK said that she would not bring this legislation
forward unless she was interested in working with all aspects of
the marijuana industry in her own community. She said one of
the major differences with HB 91 and other legislation is that
it also implements the policy reforms. She said these policy
reforms are not included in SB 73. She said her intent with
this legislation is to try to provide relief wherever the state
can support the legal industry while continuing to support
itself. She said often with legislation the solution that
leaves everybody "a little happy" is often the best outcome.
2:52:18 PM
VICE CHAIR STORY remarked that Chair Carrick named a lot of
recipients for the revenue. She asked if a list could be
provided so the committee could know who would be impacted by
this.
2:52:45 PM
The committee took an at-ease from 2:52 p.m. to 2:54 p.m.
[During the at-ease, Vice Chair Story handed the gavel back to
Chair Carrick.]
2:54:28 PM
CHAIR CARRICK opened public testimony on HB 91.
2:54:33 PM
GEORGE PIERCE, representing self, testified in support of HB 91.
He said that the ma and pa shops shouldn't be run out of
business with taxes. He said people need to drive from Homer to
Anchorage for banking purposes. He reiterated that people are
being taxed out of business and the black market is cheaper. He
spoke about price differentials between black market purchases
and legal business purchases. He said that most people he sees
are older folks and reiterated that taxes were too high.
2:56:32 PM
LACY WILCOX, Vice President, Alaska Marijuana Industry
Association, testified in support of HB 91. She said that
having conversations like this is important to address the
economic challenges facing the industry. She believes that
without tax relief the regulated market would continue to be
replaced by black market sales. She said that the Alaska
Marijuana Industry Association supports many of the proposed
bill's provisions. However, her main objection to the bill is
the high tax rate imposed by a sales tax structure. She said
that the regulated industry faces sky high taxes and Alaska's
current tax structure was the highest in the nation. She said
many actors, including out of state actors, are undercutting the
market without following safety regulations. She recommended
replacing the sales tax system with an excise tax structure and
said that the previous tax proposal was 3 percent, and this bill
proposes a 6 percent sales tax. She talked about the issue of
whether current tax rates are not adjusted.
3:01:05 PM
CHAIR CARRICK, after ascertaining that there was no one else who
wished to testify, closed public testimony and announced that HB
91 was held over.
3:02:34 PM
ADJOURNMENT
There being no further business before the committee, the House
State Affairs Standing Committee meeting was adjourned at 3:02
p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 30 Sponsor Statement.pdf |
HSTA 2/22/2025 1:00:00 PM |
HB 30 |
| HB 30 Ver A.pdf |
HSTA 2/22/2025 1:00:00 PM |
HB 30 |
| HB 30 Sectional Analysis Ver A.pdf |
HSTA 2/22/2025 1:00:00 PM |
HB 30 |
| HB 30 Fiscal Note DOA-OPPM-2-14-25.pdf |
HSTA 2/22/2025 1:00:00 PM |
HB 30 |
| HB 30 Fiscal Note DCCED-CBPL-02-14-25.pdf |
HSTA 2/22/2025 1:00:00 PM |
HB 30 |
| HB 30 Fiscal Note DCCED-OOE-02-15-24.pdf |
HSTA 2/22/2025 1:00:00 PM |
HB 30 |
| HB 30 Presentation 2-22-25.pdf |
HSTA 2/22/2025 1:00:00 PM |
HB 30 |
| HB 30 Backup Emerging Sectors CEDS.pdf |
HSTA 2/22/2025 1:00:00 PM |
HB 30 |
| HB 30 Backup Policy Brief Office of Entrepreneurship.pdf |
HSTA 2/22/2025 1:00:00 PM |
HB 30 |