Legislature(2023 - 2024)
03/19/2024 01:34 PM Senate FIN
| Audio | Topic |
|---|---|
| Start | |
| HB19 | |
| HB119 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
March 19, 2024
1:34 p.m.
1:34:43 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 1:34 p.m.
MEMBERS PRESENT
Representative Bryce Edgmon, Co-Chair
Representative Neal Foster, Co-Chair
Representative DeLena Johnson, Co-Chair
Representative Julie Coulombe
Representative Mike Cronk
Representative Alyse Galvin
Representative Sara Hannan
Representative Andy Josephson
Representative Dan Ortiz
Representative Will Stapp
Representative Frank Tomaszewski
MEMBERS ABSENT
None
ALSO PRESENT
Representative Louise Stutes, Sponsor; Donna Fox Page,
Staff, Representative Louise Stutes; Representative Jesse
Sumner, House Labor and Commerce Committee, Sponsor; Clark
Bickford, Staff, Representative Jesse Sumner; Cody Rice,
Staff, House Majority; James Cockrell, Commissioner,
Department of Public Safety.
PRESENT VIA TELECONFERENCE
Glenn Haight, Commissioner, Commercial Fisheries Entry
Commission, Department of Fish and Game; Tracy Welch,
Executive Director, United Fishermen of Alaska; Brandon
Emmett, Co-chair, Governor's Tax Task Force on Recreational
Marijuana and Hemp, Fairbanks; Joan Wilson, Director,
Alcohol and Marijuana Control Office, Department of
Commerce, Community and Economic Development; Jana Weltzin,
Co-Chair, Governor's Advisory Task Force on Marijuana,
Anchorage.
SUMMARY
HB 19 REGISTRATION OF BOATS: EXEMPTION
HB 19 was HEARD and HELD in committee for further
consideration.
HB 119 MARIJUANA TAX
HB 119 was HEARD and HELD in committee for
further consideration.
Co-Chair Foster reviewed the meeting agenda. He noted that
HB 19 had been heard one time the previous session.
HOUSE BILL NO. 19
"An Act relating to the registration of commercial
vessels; and providing for an effective date."
1:36:01 PM
REPRESENTATIVE LOUISE STUTES, SPONSOR, thanked the
committee for hearing the bill. She relayed that the bill
had last heard the bill on May 4, 2023. She read from
prepared remarks and explained the bill. The bill removed
the requirement for US Coast Guard documented vessels to
register with the Division of Motor Vehicles (DMV) every
three years. She explained that the database was updated in
real time and operators were required to register annually,
and required information included the name of the vessel
and the contact information of the owner. The department
had been very cooperative in not issuing citations to
vessels without two stickers. The department relayed that
if the bill did not pass, they would start citing vessels
without duplicate stickers. She corrected her statement
from the previous May related to the DMV and Commercial
Fisheries Entry Commission (CFEC) databases.
1:40:19 PM
DONNA FOX PAGE, STAFF, REPRESENTATIVE LOUISE STUTES,
provided a recap of the legislation. She thanked the
committee. She noted individuals online to answer
questions.
Co-Chair Foster moved to invited testimony.
GLENN HAIGHT, COMMISSIONER, COMMERCIAL FISHERIES ENTRY
COMMISSION, DEPARTMENT OF FISH AND GAME (via
teleconference), thanked the committee and was happy to
answer questions.
TRACY WELCH, EXECUTIVE DIRECTOR, UNITED FISHERMEN OF ALASKA
(via teleconference), provided details about the United
Fishermen of Alaska. The organization supported the bill.
Co-Chair Foster OPENED public testimony. He provided the
email address for testimony.
Co-Chair Foster CLOSED public testimony.
1:45:13 PM
Co-Chair Edgmon stated the bill needed to pass in the
current year and should have passed years earlier. He
stated it was a commonsense bill. He discussed the merits
of the bill. He stated the bill was about streamlining
government and doing the right thing.
Representative Hannan asked if the Department of
Administration was available to discuss an error in its
fiscal note.
Co-Chair Foster noted the Department of Administration was
not currently available.
Representative Hannan pointed out what she believed to be
an error in the DOA fiscal note. The bill only applied to
boats that were Coast Guard documented and CFEC registered.
Co-Chair Foster noted that Representative Stutes' office
would follow up.
Representative Hannan referenced both factors.
Representative Stutes thanked Representative Hannan for
bringing up the issue.
Representative Cronk supported the bill.
Co-Chair Foster set an amendment deadline for Monday, March
25 at 5:00 p.m.
Representative Stutes thanked the committee.
HB 19 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 119
"An Act relating to marijuana taxes; and providing for
an effective date."
1:49:13 PM
REPRESENTATIVE JESSE SUMNER, HOUSE LABOR AND COMMERCE
COMMITTEE, SPONSOR, provided an explanation of the
legislation.
1:51:57 PM
CLARK BICKFORD, STAFF, REPRESENTATIVE JESSE SUMNER,
explained that the bill would help prevent a potential
collapse to the market and help the cannabis market grow.
He noted that an unstable tax structure put incredible
pressure on the businesses. He remarked that the estimated
annual closure was between 15 to 20 businesses due to a tax
structure being too high. He listed individuals available
to testify. He asked to have Mr. Rice present on his model.
Representative Coulombe asked what AMCO stood for.
Representative Sumner answered the Alcohol and Marijuana
Control Board.
1:55:12 PM
CODY RICE, STAFF, HOUSE MAJORITY, provided a PowerPoint
presentation titled "Marijuana Taxes (HB 119)," dated March
19, 2024 (copy on file). He remarked that most of the
change was related to a change in product. He stated that a
change to a sales tax could provide potential for value
added businesses. He turned to slide 2 and reiterated that
24 states had legalized recreational marijuana as of
November. State taxes currently varied based on category of
plant product.
Mr. Rice turned to slide 3 showing marijuana taxes by type.
Mr. Rice turned to slide 4 showing the wholesale price of a
pound of "bud" in Colorado, which was less than the tax on
a pound alone in Alaska.
Mr. Rice turned back to a graph on slide 3.
Mr. Rice noted a strong declining trend in the collected
tax per ounce of marijuana.
Mr. Rice turned to the marijuana tax revenue forecast.
2:00:43 PM
Mr. Rice turned to the revenue forecast under status quo.
Mr. Rice turned to slide 9 showing a reduction in tax until
a sales tax could be incorporated, and remarked that the
tax could generate more revenue than status quo in the next
seven years.
Mr. Rice moved to slide 10, which showed the impact and
reach of the dark web black market.
Mr. Rice turned to slide 11 and discussed support for
legalization at an all-time high.
Mr. Rice provided a summary on slide 12.
Co-Chair Foster stated he would take a quick question from
Representative Tomaszewski and then move to three invited
testifiers.
Representative Tomaszewski asked about federal legalization
and potential consequences. He surmised that it was cost
prohibitive for Alaska to compete with Colorado's export
market.
Mr. Rice agreed, and turned back to slide 5.
Representative Tomaszewski felt that the implication would
result in the loss of Alaska's marijuana industry.
Mr. Rice agreed.
Co-Chair Foster moved to invited testimony.
2:06:27 PM
BRANDON EMMETT, CO-CHAIR, GOVERNOR'S TAX TASK FORCE ON
RECREATIONAL MARIJUANA AND HEMP, FAIRBANKS (via
teleconference), shared that the bill was the product of
the task force's recommendations. The task force supported
the bill.
2:07:32 PM
JOAN WILSON, DIRECTOR, ALCOHOL AND MARIJUANA CONTROL
OFFICE, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC
DEVELOPMENT (via teleconference), stated that six more
licensed businesses in Alaska had closed in the past month
since she had testified to the House Labor and Commerce
Committee. There were currently 176 retail stores, and 1.9
licensed cultivators to every store in the beginning and
now there were 1.3 per store. Alaskans making great
contributions to the economy, but the tax liability was
stated to be the number one reason for closure. She was not
an expert on the right tax rate, but she stated it was a
high priority and time to fix the issue.
2:11:19 PM
JANA WELTZIN, CO-CHAIR, GOVERNOR'S ADVISORY TASK FORCE ON
MARIJUANA, ANCHORAGE (via teleconference), thanked the
committee. She is an attorney representing many marijuana
businesses in Alaska. The tax on the industry was not
workable or sustainable. The industry was an economic
driver for Alaska, but already had astronomical challenges
like not having access to banking and the businesses had no
access to business tools. She remarked that distributors
paid a fee of $7,600 to the state per year. She stated that
the bill initially resulted in a short term revenue
reduction; however it would become positive in the
2:15:35 PM
Representative Josephson asked if it was $7,600 per year.
Ms. Weltzin confirmed the amount.
Representative Josephson queried the percentage of the
total take.
Ms. Weltzin did not have the answer but could work with
Department of Revenue and follow up.
Representative Josephson asked Mr. Rice about the change in
the mix. He asked if it meant the consumer was buying a
poorer grade or flexibility on what sellers were selling.
Mr. Rice answered it was very difficult in regulations to
define.
Representative Josephson asked how many of the 176
retailers were located in Anchorage. He wondered whether
closures related to the abundance of retail stores.
Ms. Weltzin did not have the number in Anchorage. She
believed there were a lot of stores there. She would be
happy to follow up.
Mr. Rice had the data and would provide it.
2:20:34 PM
Representative Hannan asked if Mr. Rice had prepared the
slides.
Mr. Rice agreed.
Representative Hannan turned to a slide showing marijuana
tax revenue forecast, which showed it rebounding and
revenue positive starting in FY 26, but none of the fiscal
notes showed any economic return. She stated her only
concern was about the loss of revenue to the dedicated
streams. She asked when they would be tax positive.
Mr. Rice responded that the bill had originally been
proposed the past year.
Representative Hannan answered that it did not answer her
question. None of the department fiscal notes reflected any
positive revenue in the coming five years.
Mr. Rice shared that he could not speak to the fiscal
notes.
Co-Chair Foster noted they would have to return to the
topic. Mr. Brandon Spanos with Department of Revenue was
not available currently.
Representative Hannan restated her question.
Co-Chair Foster stated that Representative Sumner's office
or his own office would follow up to get the information.
Representative Galvin remarked on the flat tax to the
cultivator, and switching the tax over to the consumer. She
wondered whether was there consideration of making it more
changeable.
2:25:39 PM
Representative Sumner replied that dropping all to the
consumer was an issue. There was a focus on the tax
transition within the legislation.
Representative Galvin stated her understanding the $12.50
was per ounce remained intact.
Mr. Rice agreed.
Representative Galvin asked if they had considered a
percentage of the sales to the retailers.
Representative Sumner stated his understanding of the
question whether there should be a wholesale or retailer
tax.
Representative Galvin understood that in general it was
rare to be taxing farmers or growers because the nation had
typically avoided it.
Representative Sumner replied that another thing to
consider was wanting to discourage the black market. He
remarked that many of the cultivators who were closing may
be exiting the legal market and entering the black market.
They did not want to encourage the situation.
2:30:28 PM
Representative Galvin looked at slide 4, and taxing the
cultivator or the consumer at the retail store. He asked
what the 11 other states were doing.
Mr. Rice responded that there were a variety of different
nuances like potency and generally the price base taxes in
different ways.
Representative Galvin always thought of a tax as
potentially being hurtful to a market. For example, she
would hate to lose revenue from the e-cigarette market.
Mr. Bickford answered that the tax was being dropped.
Mr. Rice shared that the portion was likely to be shared by
the end user. He remarked that in a survey, about 30
percent of the savings would flow to the end user but he
thought it was a conservative estimate.
2:34:27 PM
Representative Sumner stressed they were not pushing up
marijuana consumption, but were discouraging the black
market.
Representative Ortiz referenced concerns raised by
Representative Hannan.
Mr. Rice responded that he had walked stakeholders through
the model.
Representative Ortiz read a question from a constituent
regarding the issue that the legalization of marijuana
would result in a positive impact.
Mr. Rice clarified he was speaking about legal consumption.
2:39:25 PM
Representative Ortiz returned to the constituent concern.
Representative Sumner replied that he was attempting to
address the issue.
Mr. Bickford added that Alaska was one of the first legal
markets, and there was action in other states to adjust to
the appropriate tax to keep the industry from "crumbling."
Representative Coulombe looked at the explanation of
changes, and she thought it started with a higher sales tax
Representative Sumner responded that the history started at
a 3 percent sales tax went to 10 percent and down to 6
percent.
Representative Coulombe asked if the projections were based
on 6 percent.
Mr. Rice agreed.
Representative Coulombe asked if the bounce back would be
higher or sooner.
Mr. Rice responded that a higher tax rate would generate a
higher tax revenue, but would be offset in the lower price
elasticity to the consumer.
Representative Coulombe was trying to get clarification if
going to high would impact consumption.
Representative Sumner answered that it would contribute to
black market consumption.
Co-Chair Johnson asked if it had been done by voter
initiative.
Mr. Bickford agreed.
Co-Chair Johnson thought it was not necessarily to
establish an industry. She had concerns about a number of
the slides in terms of the background. She had a concern
about the restorative justice account and how a reduction
in the taxes would impact the account, and felt that the
impact looked to be significant. She asked how much it
would cost to get DPS to do some testing.
2:48:41 PM
Co-Chair Foster noted that the next meeting would include
the fiscal note review. He noted the Commissioner Cockrell
was available in the room
JAMES COCKRELL, COMMISSIONER, DEPARTMENT OF PUBLIC SAFETY,
asked for a repeat of the question.
Co-Chair Johnson asked if there was a test the department
could determine when someone was under the influence.
Commissioner Cockrell could not speak for the other
departments, but some were trained as drug recognition
experts.
2:51:17 PM
Co-Chair Johnson queried the impacts and issues related to
people who were driving motor vehicles while under the
influence of marijuana.
Mr. Bickford asked whether the bill changed the bill about
how testing was administered to suspected marijuana users.
Co-Chair Johnson wanted to make sure that she was
understanding the actual cost to society, and the
restorative justice account. She was trying to understand
the other costs of legal marijuana.
Commissioner Cockrell answered that enforcement had dealt
with marijuana for a long time and there was additional
training for law enforcement officers.
Representative Sumner also saw the resolution from the Mat-
Su Borough Assembly. He did not believe the bill was the
proper vehicle because it was addressing taxes. He thought
it should be a separate bill.
Co-Chair Johnson appreciated what he was saying but she had
the idea of an amendment. She wondered if there was another
cost to society the legalization of marijuana, and reducing
cost but seeing more expense. She did not believe her
question was out of line.
2:56:53 PM
Mr. Rice clarified that 25 percent of the revenue went to
UGF, 50 percent went to the Recidivism Reduction Fund, and
25 percent went to the Marijuana Education and Treatment
Fund.
Representative Coulombe stated that the bill idea came out
of the idea that tax revenue was projected to decrease and
the bill was trying to change it.
Representative Sumner answered that the tax had been going
down.
Representative Coulombe stated that the bill was proposing
a tax change but the fact was the revenue was decreasing
and something needed to change. She pointed out that there
was decline and more in the black market, which the bill
was trying to fix.
Mr. Rice agreed.
3:00:51 PM
Representative Ortiz wondered whether the bill would be
neutral on the public safety impact on the state.
Commissioner Cockrell replied it would be neutral.
Representative Hannan wanted to see the revenue data
projection from DOR.
Co-Chair Foster stated that DOR would be available at the
next bill hearing.
Mr. Rice answered that actuals from DOR were in the model.
Representative Josephson asked for the average sales tax in
the 11 other states in the presentation.
Mr. Rice did not know off the top of his head.
Co-Chair Foster asked to have the information followed up
on.
Representative Josephson was concerned about the potential
loss of revenue.
Representative Sumner replied that 6 percent would be
revenue positive.
3:04:44 PM
Co-Chair Foster asked for any closing comments.
Representative Sumner thanked the committee.
Co-Chair Foster relayed the next meeting would have
departments and fiscal notes.
HB 119 was HEARD and HELD in committee for further
consideration.
Co-Chair Foster reviewed the schedule for the following
day.
ADJOURNMENT
3:05:47 PM
The meeting was adjourned at 3:05 p.m.
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