02/03/2025 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB14 | |
| SB77 | |
| SB73 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 14 | TELECONFERENCED | |
| *+ | SB 73 | TELECONFERENCED | |
| *+ | SB 77 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
February 3, 2025
1:31 p.m.
MEMBERS PRESENT
Senator Jesse Bjorkman, Chair
Senator Kelly Merrick, Vice Chair
Senator Elvi Gray-Jackson
Senator Forrest Dunbar
Senator Robert Yundt
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 14
"An Act relating to the Alaska Industrial Development and Export
Authority; and relating to workforce housing development
projects."
- HEARD & HELD
SENATE BILL NO. 77
"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
the duties of the Department of Revenue; and providing for an
effective date."
- HEARD & HELD
SENATE BILL NO. 73
"An Act relating to the registration of marijuana
establishments; relating to a tax exemption for qualified small
businesses; relating to marijuana taxes; and providing for an
effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 14
SHORT TITLE: AIDEA FINANCE WORKFORCE HOUSING DEVELOP.
SPONSOR(s): SENATOR(s) DUNBAR
01/10/25 (S) PREFILE RELEASED 1/10/25
01/22/25 (S) READ THE FIRST TIME - REFERRALS
01/22/25 (S) L&C, FIN
02/03/25 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 77
SHORT TITLE: PERM FUND; EMPLOYMENT; ELIGIBILITY
SPONSOR(s): SENATOR(s) KIEHL
01/27/25 (S) READ THE FIRST TIME - REFERRALS
01/27/25 (S) L&C, STA
02/03/25 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 73
SHORT TITLE: MARIJUANA: TAX/REGISTRATION; INCOME TAX
SPONSOR(s): SENATOR(s) CLAMAN
01/24/25 (S) READ THE FIRST TIME - REFERRALS
01/24/25 (S) L&C, FIN
02/03/25 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
HAHLEN BEHNKEN, Staff
Senator Forrest Dunbar
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided the sectional analysis for SB 14.
ANNA BRAWLEY, Assembly Member
Anchorage Assembly
Anchorage, Alaska
POSITION STATEMENT: Testified by invitation on SB 14.
RICHELLE JOHNSON, Director
Research and Technical Assistance
University of Alaska Center for Economic Development
Anchorage, Alaska
POSITION STATEMENT: Testified by invitation on SB 14.
STACY BARNES, Director
Government Relations and Public Affairs
Alaska Housing Finance Corporation (AHFC)
Anchorage, Alaska
POSITION STATEMENT: Answered questions regarding SB 14.
SENATOR JESSE KIEHL, District B
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SB 77.
KARI NORE, Director
External Affairs
Alaska Chamber
Anchorage, Alaska
POSITION STATEMENT: Testified by invitation on SB 77.
EMILY NENON, Director
Alaska Government Relations
American Cancer Society Cancer Action Network
Anchorage, Alaska
POSITION STATEMENT: Testified by invitation on SB 77.
SENATOR MATT CLAMAN, District H
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SB 73.
CARLY DENNIS, Staff
Senator Matt Claman
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided the sectional analysis for SB 73.
BRANDON SPANOS, Deputy Director
Department of Revenue
Juneau, Alaska
POSITION STATEMENT: Verified fiscal notes for SB 73.
DAN STICKEL, Chief Economist
Department of Revenue
Juneau, Alaska
POSITION STATEMENT: Answered questions on fiscal notes for SB
73.
JOE BANKOWSKI, Investigator
Alcohol and Marijuana Control Office
Anchorage, Alaska
POSITION STATEMENT: Answered questions on SB 73 regarding
enforcement.
LACY WILCOX, Vice President
Alaska Marijuana Industry Association
Anchorage, Alaska
POSITION STATEMENT: Testified by invitation on SB 73.
JANA WELTZIN, Lawyer
JDW Counsel
Anchorage, Alaska
POSITION STATEMENT: Testified by invitation on SB 73.
AARON STIASSNY Board Member
Alaska Marijuana Industry Association
Anchorage, Alaska
POSITION STATEMENT: Testified by invitation on SB 73.
RENEE BERGERON, Accountant
Thomas Head and Greisen PC
Anchorage, Alaska
POSITION STATEMENT: Testified by invitation on SB 73
ACTION NARRATIVE
1:31:58 PM
CHAIR BJORKMAN called the Senate Labor and Commerce Standing
Committee meeting to order at 1:31 p.m. Present at the call to
order were Senators Merrick, Gray-Jackson, Dunbar, Yundt and
Chair Bjorkman.
SB 14-AIDEA FINANCE WORKFORCE HOUSING DEVELOP.
1:33:18 PM
CHAIR BJORKMAN announced the consideration of SENATE BILL NO. 14
An Act relating to the Alaska Industrial Development and Export
Authority; and relating to workforce housing development
projects."
1:33:42 PM
SENATOR DUNBAR speaking as sponsor presented an overview of SB
14. He stated SB 14 was called Senate Bill 239 in the previous
past legislature and allowed the Alaska Industrial Management and
Export Authority to provide loans for certain multifamily
housing construction. He stated that HB 14 is a tool to help
people access financing and build housing.
1:35:09 PM
HAHLEN BEHNKEN, Staff, Senator Forrest Dunbar, Alaska State
Legislature, Juneau, Alaska, provided the sectional analysis for
SB 14 as follows:
[Original punctuation provided.]
SECTIONAL ANALYSIS
SB 14: AIDEA FINANCE WORKFORCE HOUSING DEVELOPMENT
Section 1: AS 44.88.070: Adds a new subsection 7 to AS
44.88.070 which states the purpose of the authority.
Providing means of financing and facilitating the
financing of construction of new workforce housing
facilities with five or more units will now be part of
the mission of AIDEA.
Section 2: AS 44.88.080: Adds a new subsection 33 to
AS 44.88.080 stating the powers of authority. One of
the powers of AIDEA will now be to provide means of
financing and facilitating the financing of
construction of new workforce housing facilities with
five or more units.
Section 3: AS 44.88.900(6): Extends the definition of
"development project" to include workforce housing
facilities with five or more dwelling units, as
defined in the new section J of AS 44.88.900(14).
Section 4: AS 44.88.900(14): Adds a new section J to
include workforce housing in the meaning of "project"
under AS 44.88.900(14)
Section 5: AS 44.88.900: Adds a new subsection 22 to
AS 44.88.900 defining "workforce housing". Workforce
housing will be defined as residential housing that
costs the occupants less than 30 percent of the income
of a household with 120 percent of the area median
family income, as determined by the United States
Department of Housing and Urban Development.
1:36:51 PM
SENATOR DUNBAR mentioned that he talked with AIDEA and Alaska
Housing Finance Corporation to avoid overlapping efforts and
both organizations were supportive of SB 14. He said AIDEA had
already taken similar initiatives back in the 80's that aligned
with SB 14. He emphasized that AIDEA has the power, and the
legislature wants the agency to use the power they have. He
stressed that major projects in Alaska cannot move forward
without addressing housing needs and expressed hope that housing
development would become a key part of AIDEA's strategy to
support industry growth in the state.
1:38:21 PM
SENATOR GRAY-JACKSON asked if SB 14 passed would AIDEA be
required by law to help develop industry in Alaska.
1:38:41 PM
SENATOR DUNBAR answered no it would not be a legal requirement.
SENATOR GRAY-JACKSON said AIDEA can already help, but this bill
would make it law. She mentioned her own bills; while the agency
already had authority, putting it in statute ensured there was
no choice.
SENATOR DUNBAR answered SB 14 would not force AIDEA to make any
of those decisions. He stated that there is some vagueness about
whether the list of permitted activities is thorough. He said
housing development fits under current powers and past actions
support that. SB 14 removes any doubt.
1:40:14 PM
CHAIR BJORKMAN stated that some people worry SB 14 could compete
with the private financing market. He asked if that was a
concern.
1:40:28 PM
SENATOR DUNBAR answered he has spoken with private financers
that have said typically multifamily housing arent getting
financed; it's hard to make the numbers work. He stated that in
Anchorage the only major workforce housing developer is Cook
Inlet Housing Authority, which relies on layered tax credits. He
stated that SB 14 couldn't compete with private financing.
1:41:29 PM
SENATOR YUNDT stated that the more options in the market the
better. He asked if AIDEA had shared any preliminary guidelines
on how it's plan would differ from Housing Finance Companies
(HFCs). He opined the plans are too similar, the bill might not
solve the problem.
1:42:17 PM
SENATOR DUNBAR answered AIDEA has not. He agreed that comparing
preliminary guidelines is a great idea and that both groups
believe AIDEA can offer tolls AHFC currently doesn't or can't
offer.
1:43:05 PM
CHAIR BJORKMAN announced invited testimony on SB 14.
1:43:15 PM
ANNA BRAWLEY, Assembly Member, Anchorage Assembly, Anchorage,
Alaska, testified by invitation on SB 14. She paraphrased the
following written testimony:
[Original punctuation provided.]
I'm speaking today as an Assembly member for West
Anchorage, a strong advocate for building housing to
meet our community needs, and a policymaker who is
very focused on local housing action. While I am not
speaking on behalf of the Municipality on this bill,
housing is one of our legislative priorities, and in
line with our overall requests to the State regarding
housing financing (see excerpt below these comments).
I urge your support for SB14.
The Municipality (MOA) is very focused on spurring
housing production, and what we can do at the local
level: cutting red tape, removing barriers,
incentivizing new housing, and making local
investments in affordable housing. The Assembly's
Housing Action and the Mayor's 10,000 Homes in 10
Years Strategy both speak to actions we can take
locally, and we continue making local policy changes
to make it easier to build. The short version: we are
doing everything we can, with the limited levers we
can pull, particularly for small-scale projects like
duplexes and 4-plexes, which the market is trying to
produce and runs into local barriers. It is also
important to understand and acknowledge that while
Anchorage may have more tools at the local level, many
communities with equally dire housing needs are facing
cost and feasibility challenges and have fewer options
to solve these issues on their own.
I've spent a lot of time working with builders and
developers, housing organizations, and people who
specialize in financing, engineering and
infrastructure policy to really understand what the
challenges are, and what needs to be done locally, and
at other levels. This informed our local housing work
and helped me understand what is most needed at the
state level: Infrastructure (meaning water and sewer,
roads, etc.) and Financing (helping make projects
economically viable, where the market isn't producing
them on their own).
1:45:32 PM
MS. BRAWLEY continued with their testimony.
It is also important to think about the different
segments of the housing market, what the market is
already producing and where local action is needed,
and what types of housing the private sector struggles
to provide in feasible way, even as it continues to be
what our communities need. Some types of housing are
getting built, like single family homes; others can
get built as we get local barriers out of the way,
like more 4-plexes; and other housing, particularly
medium- to large-size projects, simply don't pencil
for the private sector without additional investment
or financing options.
Since at least 2012 (documented in an MOA housing
study), multi-family housing has been one of our
biggest needs but is not economic to build in
Anchorage without either direct subsidy or other
incentives. It is also important to consider the fact
this means both rental housing (apartments), and
housing for sale (condos), and all 2 of these are very
needed to meet residents' housing needs. Rental
housing is workforce housing, and only a very few
developers in our community even work in this market.
Condos can be starter homes for young adults, and
downsize options for empty-nesters and older adults,
but we aren't seeing these built anymore.
Outside of Anchorage, the challenges of cost, supply
chains, infrastructure costs and needs, and other
factors in most regions of the state mean these types
of housing are very much needed, and not getting
built. Having more financing options to complement the
private sector, particularly in communities with a
limited real estate market, is one piece of the puzzle
we are all collectively working to solve, to build
more housing in Alaska.
1:47:27 PM
RICHELLE JOHNSON, Director, Research and Technical Assistance,
University of Alaska Center for Economic Development, Anchorage,
Alaska, testified by invitation on SB 14 and read the following:
[Original punctuation provided.]
At CD we're often called to provide data as context
for policy makers, considering our state economic
challenges and housing is very clearly one of the
growing areas of importance when it comes to economic
development for many of the communities that we work
with. I know that it's not news that housing
affordability and availability is and has been a
challenge for Alaska for decades. And the data shows
that almost every area of the state is struggling to
construct affordable housing to meet demand. And that
need has only grown over the years.
Housing cost and availability is listed as a primary
concern in most of the economic development strategic
plans across our state, where many communities are
experiencing housing constraints which ultimately
impact variability to attract and retain workers and
residents in their communities. As of last year,
Alaska ranked 45th in terms of new housing unit
construction per 1000 residents. And this is a new
challenge for the state where we have seen the number
of new housing units constructed decreased by 30
percent over the last decade, despite the price of
housing increasing and seeing clear demand signals and
needs for new housing.
In the world of multi-family housing specifically, new
development has slowed even more with construction of
new units in 2023 at about half of what it was a
decade previously.
These trends show a very clear demand for housing that
is not translating necessarily to increase to
development. And it indicates that traditional
commercial development tools have not been enough to
spur housing construction that's needed across the
state. This is key for Alaska's economy because
housing is tied to our workforce and the workforce is
tied to the state's economic health, with many of the
economic activities that we see on the horizon for the
state coming towards us and new development.
It's very clear that we may certainly see an influx of
workers coming from out of state. And we already know
that through many anecdotal reports that workers
coming to work in our state do experience a lot of
struggles finding housing, affording housing when they
are seeking to move here. That's not on top of what
our residents are already experiencing themselves. We
know that housing is a significant limiting factor
when we're looking at relocation. And it's even a
greater challenge in more rural areas where we see
reports of vacancy rates for rental housing that are
well below the national average of 70 percent.
Kodiak specifically has the tightest housing market
with a 3.3 percent vacancy rate. The bill being
discussed today takes a clear step towards enabling
more construction of deeply needed housing,
specifically multi-family housing. As Senator Dunbar
mentioned, it is a very simple, straightforward step
that really just gives developers another tool in
their toolkit to improve the margins on housing
development. They're sort of on the cusp of financial
feasibility.
AIDEA loans provide developers with a source of
patient capital that commercial financing would not
enable. The AIDEA loan participation would allow
having developers to spread the cost of financing over
a much longer period of time than traditional
commercial loans to and free of cash flows for
developers. As stated, sort of these little
incremental steps to improve financial feasibility
don't solve the whole picture, but they can
potentially help stimulate new construction and move
us towards that goal. In enabling our state employers
to retain their workers, attracting new workers, and
operate at full capacity.
1:52:59 PM
SENATOR YUNDT asked Ms. Barnes to discuss the relationship
between AIDEA and AHFC and share her thoughts on how it might
function.
1:53:18 PM
STACY BARNES, Director, Government Relations and Public Affairs,
Alaska Housing Finance Corporation (AHFC) Anchorage, Alaska,
answered questions regarding SB 14. She said the role of AHFC is
to ensure Alaskans have access to safe, quality, and affordable
housing; a mission the corporation has pursued for over 50 years
through various programs. AHFC supports multifamily housing
through federal low-income housing tax credits, state and
federal grant programs, and developer loans. She stated AHFC may
partner with AIDEA. AHFC will help with initial construction
costs and AHFC will provide long-term financing.
1:55:41 PM
CHAIR BJORKMAN held SB 14 in committee.
1:55:45 PM
At ease.
SB 77-PERM FUND; EMPLOYMENT; ELIGIBILITY
1:56:39 PM
CHAIR BJORKMAN reconvened the meeting and announced the
consideration of SENATE BILL NO. 77 "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 the duties of the
Department of Revenue; and providing for an effective date."
1:56:56 PM
SENATORE JESSE KIEHL, District D, Alaska State Legislature,
Juneau, Alaska, as sponsor of SB 77 he clarified it isn't a
dividend formula bill. The PFD provides checks to Alaskans
intending to remain residents. He stated that eligibility allows
up to 180 days out of state, with 16 allowable absence types. SB
77, based on prior requests from Governor Dunleavy, adds
merchant marine training and academic year college breaks as
allowable absences. It also simplifies medical absence rules, so
emergencies don't cost eligibility. He said the bill improves
PFD division security by allowing staff fingerprinting, making
the recipient list private, and permitting electronic notices.
He stated that it updates absence rules and boosts
administrative efficiency.
2:01:40 PM
CHAIR BJORKMAN announced invited testimony on SB 77.
2:01:56 PM
KARI NORE, Director, External Affairs, Alaska Chamber,
Anchorage, Alaska, testified by invitation on SB 77. She read
the following:
[Original punctuation provided.]
Chair Bjorkman, and members of the Senate Labor and
Commerce Committee, thank you for the opportunity to
testify today. For the record, my name is Kari Nore,
and I serve as the director of external affairs for
the Alaska Chamber. I testify today in support of
Senate Bill 77, an Act relating to the permanent fund
dividend employment eligibility.
The Alaska Chamber was founded in 1953 and is Alaska's
statewide business advocacy organization. Our mission
is to promote a healthy business environment in
Alaska. The Chamber has more than 700 members and
represents businesses of all sizes and industries from
across the state, representing 58,000 Alaskan workers
and $4.6 billion in wages.
2:02:38 PM
MS. NORE continued with her testimony:
By vote of our diverse membership, the Alaska Chamber
has a formal policy position to support clarifying
vocational training absences for purposes of receiving
PFD benefits. We support the enactment of clarifying
changes to the PFD statute in order to assure Alaskans
who are members of the uniformed services or those
attending merchant marine training programs remain
eligible to obtain their PFD, provided they have met
all other eligibility criteria.
Since 1997, over 700 Alaskans have been recruited,
trained, and placed in deep-sea maritime employment by
attending the Paul Hall Center for Maritime Training
and Education. Many of these candidates were youth,
Alaskan Natives, displaced workers, and veterans who
attended an apprentice program paid for through a
labor-management training trust fund. In so doing,
management can be assured the individuals they hire to
crew their vessels are thoroughly trained to USCG
standards and uniformly meet their security, safety,
and competency standards. Furthermore, by recruiting
Alaskans for this apprenticeship opportunity companies
in the Alaska maritime trade, like Alaska Tanker
Company, Crowley Maritime, Matson Navigation, and TOTE
Maritime Alaska, continue to meet their commitment to
hire local. Denying PFD benefits to Alaskans,
particularly younger Alaskans, while engaged in this
required training, discourages them from considering
this pathway as a career opportunity. The purpose for
the local hire effort is for these individuals to be
trained outside and to return to Alaska to spend their
earned wages and enjoy their benefits on their time
off.
In closing, the Chamber supports SB 77 and encourages
swift passage of this straightforward and good for
business bill. Thank you for considering the Alaska
Chamber's comments.
2:04:53 PM
EMILY NENON, Director, Alaska Government Relations, American
Cancer Society Cancer Action Network, Anchorage, Alaska,
testified by invitation on SB 77 and in support of removing
unnecessary barriers that affect cancer patients. She stated
that most cancer care is available in Alaska and most patients
are treated here but complex cases sometimes require out-of-
state care. SB 77 helps streamline confusing absence rules,
making it easier for patients to be honest on their PFD
applications and easing the burden during an already difficult
time.
2:06:55 PM
At ease.
2:09:14 PM
CHAIR BJORKMAN reconvened the meeting and held SB 77 in
committee.
SB 73-MARIJUANA: TAX/REGISTRATION; INCOME TAX
2:09:18 PM
CHAIR BJORKMAN announced the consideration of SENATE BILL NO. 73
"An Act relating to the registration of marijuana
establishments; relating to tax exemption for qualified small
businesses; relating to marijuana taxes; and providing for an
effective date."
2:09:30 PM
SENATOR MATT CLAMAN, District H, Alaska State Legislature,
Juneau, Alaska, as sponsor of SB 73 he read the following
summary:
[Original punctuation provided.]
In 2022, the Governor convened the Advisory Task Force
on Recreational Marijuana. The first recommendation
from that body was an adjustment to the excise tax on
marijuana.
Alaska's marijuana industry is currently taxed at $50
per ounce at the wholesale level. This represents the
highest effective tax on marijuana in the country. The
voters of Alaska established this tax rate with the
passage of ballot measure 2 in 2014, which legalized
recreational marijuana in Alaska. As the industry has
evolved, however, that tax rate has failed to keep
pace with rising business costs and falling prices.
Today, the industry faces competition against a
thriving unregulated black market and substantial
regulatory and financial headwinds. While most of the
past decade saw significant growth in the industry,
the past few years have shown decline in tax revenue
and an increasing number of small businesses going
under.
Senate Bill 73 lowers the tax rate from $50 per ounce
to $12 per ounce. It simplifies the tax structure into
a single rate. Currently, the Department sets lower
tax rates for certain parts of the plant. While the
tax rate for mature product is $50 per ounce, it is
$25 an ounce for immature product and $12 per ounce
for all other grades. This three-tier structure has
proved difficult and inefficient to enforce. It also
creates an incentive for businesses to classify
product at lower grades with less tax burden.
SB 73 moves from annual registration to biennial
registration, reducing administrative burden and
aligning the marijuana industry with other businesses
in Alaska.
Finally, Senate Bill 73 re-establishes the Alaska
Small Business C-Corporation Income Tax Exemption that
expired in 2023. This tax exemption applies to all
small businesses with less than $50 million in gross
assets. The exemption had previously been in place
since 2012. It applies to all small businesses who
meet the active business requirements both marijuana
establishments and other types of businesses. Many of
these small businesses are set to pay state corporate
income taxes for the calendar year of 2024 for the
first time in a decade. Many of them are facing staff
cuts or even being forced to close their doors because
of this unexpected tax. Re-establishing this exemption
will help countless small businesses across the state.
2:12:39 PM
CARLY DENNIS, Staff, Senator Matt Claman, Alaska State
Legislature, Juneau, Alaska, provided the sectional analysis for
SB 73 as follows:
[Original punctuation provided.]
Senate Bill 73
Sectional Analysis Version G
Sections 1-6
AS 17.38.200(d), AS 17.38.210(e), AS 17.38.210(f), AS
17.38.210(h), AS 17.38.210(j), AS 17.38.320; Biennial
licensing.
Amends registration requirements from annual to
biennial renewals.
Section 7
AS 43.20.012(a); Alaska small business tax exemption.
Exempts qualified small businesses who meet the
requirements of 26 U.S.C 1202(e) from the Alaka Net
Income Tax Act.
Section 8
AS 43.20.012; Alaska small business tax exemption.
Defines "Alaska corporation," "parent-subsidiary
controlled group," "qualified small business," and
establishes that a corporation shall be determined as
a small business on the first day of the calendar
year.
Section 9
AS 43.61.010(a); Marijuana excise tax.
Lowers the marijuana excise tax rate from $50 per
ounce to $12 per ounce.
Section 10
AS 43.61.010(b); Marijuana excise tax.
Removes the ability of the department to establish a
lower tax rate for certain parts of the marijuana
plant.
Section 11
AS 43.61.010; Marijuana excise tax.
Clarifies that the tax is owed by all sales and
transfers of marijuana, regardless of the status of
their registration.
Section 12
AS 43.61.020(b); Marijuana excise tax.
Conforming change to reflect a single tax rate.
Section 13
AS 43.61.030(a); Marijuana excise tax.
Clarifies that a person who is delinquent in the
payment of the tax is subject to civil penalties under
AS 43.05.220. Distributed by the Office of Senator
Matt Claman 1.29.2025
Section 14
Applicability.
Clarifies that sections 7 and 8 apply to the tax year
of a corporation beginning on or after the effective
date of this act.
Section 15
Effective Date
This Act takes effect July 1, 2025.
2:14:48 PM
SENATOR GRAY-JACKSON asked what the total amount of loss revenue
is if SB 73 is passed.
2:15:03 PM
SENATOR CLAMAN referred to the fiscal note from the Department
of Revenue's Tax Division, which estimates a revenue loss of
about $14 million.
SENATOR GRAY-JACKSON asked if $14 million was the total of all
fiscal notes.
SENATOR CLAMAN answered yes.
2:16:23 PM
BRANDON SPANOS, Deputy Director, Department of Revenue, Juneau,
Alaska, verified fiscal notes for SB 73. He agreed that the
total fiscal note is $14 million.
2:17:01 PM
DAN STICKEL, Chief Economist, Department of Revenue, Juneau,
Alaska, answered a question regarding the fiscal notes for SB
73. He explained that the Department of Revenue's fiscal note
represents the impact on the Tax Division, including changes to
the marijuana tax and the corporate income tax exemption.
2:18:19 PM
SENATOR YUNDT stated many legal businesses have raised concerns
about their revenues falling, which also reduces state revenue,
as more sales shift to the black market. He asked how often DNR
conducts enforcement actions each year, and has it found any
recent violations.
2:19:03 PM
JOE BANKOWSKI, Investigator, Alcohol and Marijuana Control
Office(AMCO), Anchorage, Alaska, Answered questions on SB 73
regarding enforcement. He stated that the primary mandate is
regulating licensed marijuana businesses. He said the secondary
problem is a growing issue of intoxicating hemp, which AMCO is
addressing with the Department of Agriculture. We're working
toward stronger enforcement, but since hemp falls under their
jurisdiction, some responsibility lies with them.
2:20:00 PM
SENATOR DUNBAR stated that he reviewed the task force
recommendations, noting a two-stage tax plan: stage one lowers
the excise tax, and stage two adds a 3 percent retail sales tax
to offset losses. He asked if SB 73 includes only stage one and
whether the risks are making it harder to add the sales tax
later causing reduced revenue.
2:21:09 PM
SENATOR CLAMAN reviewed last session's bill, which focused more
on sales tax than reducing the excise tax. He said while there
was support for a sales tax then, especially from industry
groups, that support has faded. As a result, SB 73 includes only
step one: lowering the excise tax, not the sales tax, which
could be considered in future legislation.
2:22:08 PM
CHAIR BJORKMAN announced invited testimony on SB 73.
2:22:31 PM
LACY WILCOX, Vice President, Alaska Marijuana Industry
Association (AMIA), Anchorage, Alaska, testified by invitation
in support of SB 73. She said the AMIA is aware step one could
pass while step two gets forgotten. She stated that the retail
tax may be better, but support from businesses has faded. She
said with businesses struggling, the AMIA aims to pass something
before more businesses shut down and the conversation ends.
2:23:23 PM
CHAIR BJORKMAN asked what led to the loss of support for a more
balanced approach to SB 73.
2:23:33 PM
MS. WILCOX answered she wasn't sure there was ever full
consensus. She stated that retailers that were already facing
high federal tax burdens and unable to take key write-offs were
less supportive. While cultivators and manufacturers backed it,
many retailers saw it as an added burden, especially with local
taxes reaching up to 16 percent and in rural areas reaching 30
percent tax with a possible compound tax.
2:24:24 PM
SENATOR YUNDT asked if there has been a decline in sales due to
black market products.
2:24:32 PM
MS. WILCOX answered yes.
SENATOR YUNDT asked whether more enforcement would be
appreciated.
MS. WILCOX answered yes.
2:24:55 PM
JANA WELTZIN, Lawyer, JDW Counsel, Anchorage, Alaska, testified
by invitation in support of SB 73. She said the business she
represents dropped from 20 to 5 employees, with owners working
60+ hours unpaid. She stated that the industry is in triage,
partly due to federal law (280E), which blocks normal tax
deductions, hitting retailers hardest and fueling retail tax
resistance. She said a proposed 3 percent sales tax became 7
percent in the Legislature, adding opposition from retailers.
The current fixed tax rate doesn't drop with prices, making
business unsustainable.
2:27:24 PM
MS. WELTZIN continued with her testimony. She said intoxicating
hemp is now a problem. She stated the Agriculture Division
created a hemp program that allowed high THC products in gas
stationsuntaxed, unregulated, and no age checks. With no
enforcement, legal Alaska businesses are hurting and need help
now.
2:29:17 PM
SENATOR DUNBAR stated that he thought importing from out of
state was illegal due to the federal ban on interstate cannabis
commerce and asked if that no longer true.
MS.WELTZIN answered yes, it's federally illegal, but it's
happening anyway. She stated that the latest DPS report shows
zero seizures of marijuana entering the state. It's not a
priority due to issues like fentanyl, but it's hurting local
businesses and costing jobs. She said her producers can't ship
out for the same reason.
SENATOR DUNBAR said the imported products are likely not being
sold through licensed cannabis retailers.
MS. WELTZIN responded correct; they are not being sold through
the licensed cannabis retailers.
SENATOR DUNBAR stated that many of the legislators supported
cannabis legalization expecting it would generate state revenue,
and it has, especially for Anchorage. He emphasized the flat
excise tax per ounce is inefficient. The percentage of retail
value makes more sense. He said on enforcement of products like
Delta-9 gummies, everyone wants action taken, but enforcement
costs money. He stated that legalization has also made it harder
to clearly distinguish legal products from illegal products. He
asked Ms. Weltzin if she thinks retailers might be more open to
a low percent retail tax applied across the industry, if the
revenue helped fund enforcement to crack down on intoxicating
hemp products.
MS. WELTZIN responded first, marijuana licensees pay eight times
more than liquor licenses annually, not every other year. It is
a smaller group paying more. She stated that if enforcement
needs more resources, they should ask. Second, retailers would
welcome real action on intoxicating hemp. She stated that right
now, it's a blame game between agencies. Meanwhile, kids are
getting high on unregulated Delta-9, and no one's stopping it.
She said retailers already face huge federal tax burdens because
they can't deduct basic expenses. It's hard to accept another
tax when nearby shops sell stronger, untaxed products. She
suggested that the industry needs immediate relief first and
then if marijuana businesses are still standing discussions can
take place about a retail tax.
2:33:58 PM
SENATOR YUNDT asked if there already a Memorandums of
Understanding (MOU) that lets the Alcohol and Marijuana Control
Office (AMCO) act and has the industry reached out to discuss
this with them.
2:34:24 PM
MS. WELTZIN responded at nearly every Marijuana Control Board
meeting; we remind them there's an MOU that lets AMCO enforce
against smoke shops. She stated that she had personally bought
products from several shops, never getting carded. She said that
at a board meeting she showed the products she was able to buy.
Reports made by parents are between law enforcement, AMCO and
the Division of Agriculture. She stated no one takes
responsibility.
2:35:34 PM
AARON STIASSNY, Board Member, Alaska Marijuana Industry
Association, Anchorage, Alaska, testified by invitation in
support of SB 73. Alaska legalized marijuana over 10 years ago
but hasn't updated its tax system, unlike other states. The
market is state-specific and facing major challenges. The
expired S Corp small business tax exemption helped drive
investment, including cannabis. Losing it raises costs and hurts
growth in cannabis, where businesses already face high taxes and
can't deduct expenses under 280E. Adding more taxes now will
worsen the situation, especially with unregulated, untaxed hemp
flooding the market. SB 73 would support small businesses,
create jobs, and stabilize the industry. He stated that cannabis
spans both manufacturing and retailsectors now in decline. It
creates jobs statewide, even in remote towns.
2:41:09 PM
RENEE BERGERON, Accountant, Thomas Head and Greisen PC,
Anchorage, Alaska, testified by invitation in support of SB 73.
She said while the S-Corp exemption benefits cannabis businesses
hit hard by 280E, it also helps small businesses across Alaska.
She stated that many cannabis companies choose C-Corp status to
reduce federal tax burdens from 280Eoften paying 4350 percent
federally. State taxes push that closer to 60 percent, once
excise and local taxes are added. She said for non-cannabis;
Alaska has legacy C-Corpfamily businesses that stuck with the
structure due to costly federal penalties for switching. These
small businesses would now face new state taxes despite
functioning like other pass-through entities, whose owners pay
no state income tax. She stated that the exemption levels the
playing field and ending it unfairly penalizes these businesses
just because of their entity type.
2:44:35 PM
CHAIR BJORKMAN held SB 73 in committee.
2:44:58 PM
There being no further business to come before the committee,
Chair Bjorkman adjourned the Senate Labor and Commerce meeting
at 2:44 p.m.