Legislature(2025 - 2026)GRUENBERG 120
02/25/2025 03:15 PM House STATE AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| HB25 | |
| HB87 | |
| HB91 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 25 | TELECONFERENCED | |
| += | HB 87 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 91 | TELECONFERENCED | |
HB 91-MARIJUANA: TAX/RETAIL STORES/REGISTRATION
3:51:07 PM
CHAIR CARRICK announced that the final 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."
3:51:49 PM
STUART RELAY, Staff, Representative Ashley Carrick, Alaska State
Legislature, on behalf of Representative Carrick, prime sponsor
of HB 91, began by answering two questions that were brought up
during the previous committee hearing of the bill. He specified
that he sent information pertaining to fund designations.
Additionally, he said that there are no additional revenue
sources for these funds; they are strictly tied into the current
marijuana excise tax.
MR. RELAY offered the sectional analysis for HB 91 [copy
included in committee file], which read as follows [original
punctuation provided]:
Section 1. Allows for "upstream sales" of marijuana
products to allow marijuana stores to sell unused
products back to producers.
Specifically, it amends AS 17.38.070(a)(6) to allow
for delivery, distribution, and sale of marijuana and
marijuana products to a consumer, marijuana
cultivation facility, or a marijuana product
manufacturing facility.
Section 2. Adds a new section to AS 17.38 relating to
marijuana plant tagging. Specially AS 17.38.075
requires a marijuana cultivation facility to assign a
tracking number to each crop of marijuana plants when
the height exceeds eight inches. It also prohibits the
AMCO board from requiring individual plant tagging.
Section 3. Amends the timeline for required background
checks from five to six years to accommodate biannual
licenses as amended in Sections 4-9.
Sections 4-9. Changes length of marijuana licenses
from one to two years.
Section 10. Conforming changes for Section 1.
Specifically, it amends the definition of a retail
marijuana store to allow them to sell products back to
marijuana cultivation facilities, and marijuana
product manufacturing facilities.
Section 11. Reduces the marijuana excise tax rate from
$50 per ounce to $12.50 per ounce.
Section 12. Allows at least 50% of the annual balance
of the marijuana education and treatment fund to be
used for the youth services grant program within the
community-based marijuana misuse prevention component
of the comprehensive marijuana use education and
treatment program.
Section 13. Establishes a 6% sales tax on all
marijuana and marijuana product sales.
Section 14. Changes the timeline that taxes are due to
the Department of Revenue from monthly to quarterly.
Section 15. Specifies that retail marijuana stores are
responsible for paying the sales tax to the Department
of Revenue.
Section 16. Requires the Department of Revenue to
establish at least one facility in each of the four
judicial districts to collect marijuana sales tax
payments.
Section 17. Repeals 43.61.010(b) which allowed certain
parts of a marijuana plant to be exempt from the
excise tax and allowed for differential excise tax
rates for certain parts of the plant.
Section 18. Repeals the excise tax established in
43.61.010(a) on January 1, 2026.
Section 19. The excise tax reduction applies to taxes
accrued on or after the effective date of section 11.
Section 20. Sections 13-16 take effect January 1, 2026
Section 21. Except for Section 20, this act takes
effect on July 1, 2025.
3:55:53 PM
CHAIR CARRICK asked if committee members had any questions
pertaining to HB 91.
3:56:01 PM
REPRESENTATIVE STORY asked why there were two different
effective dates in Sections 20 and 21.
MR. RELAY responded that Section 20 addresses when the sales tax
takes effect, and it would be six months after the cuts to the
excise taxes begin.
REPRESENTATIVE STORY asked what the rationale for it was.
MR. RELAY responded that it would allow the Department of
Revenue time to implement the new sales tax collection process
and give the industry time to adapt.
3:57:17 PM
REPRESENTATIVE MOORE asked if there had been an analysis for how
much this would cost the state.
MR. RELAY responded that the previous version of the bill
concept had quite a bit of analysis and currently work was being
done to get new data. He said that the fiscal notes suggest
some hits to tax revenue but projections from previous bill
versions show an increase with time and transition.
CHAIR CARRICK noted that there are additional costs due to
policy changes associated with the proposed bill.
REPRESENTATIVE MOORE asked if the additional offices would be a
standalone building or in an already established facility.
CHAIR CARRICK responded that the Department of Revenue could
speak more about this.
MR. RELAY added that this would be a decision for the Department
of Revenue and the fiscal note goes into detail regarding the
costs. He said there were some higher costs associated with
changes.
CHAIR CARRICK forwarded the question to Mr. Spanos.
3:59:39 PM
BRANDON SPANOS, Deputy Director, Tax Division, Department of
Revenue, answered questions related to HB 91. He said that
looking at District 2, there were only a couple of retailers in
that location, and they did not anticipate a staffed location
and have considered a drop-off style of collection. He said
that both Juneau and Fairbanks were candidates for a physically
staffed location.
4:01:02 PM
REPRESENTATIVE STORY asked whether community groups impacted by
the loss of funding were spoken to in order to get input for how
they would recoup losses.
MR. RELAY responded not at this time and efforts were being made
to work with the Department of Health to better understand
impacted programs.
REPRESENTATIVE STORY opined that the hardest part of the
proposed bill was how to continue the services with a loss of
tax derived revenue. She said that she would like to learn more
from those impacted by decreased funding.
4:02:42 PM
REPRESENTATIVE HIMSCHOOT said she was concerned about the
programs that receive this funding. She asked how the six
percent sales tax was chosen and whether the bill attempts to
get funds back to recipients who have relied on excise tax
funding.
MR. RELAY responded that this bill would not change any of the
designations. He said that documents from the previous
legislation, House Bill 119 [heard during the Thirty-Third
Alaska State Legislature], were being analyzed regarding
potential revenue impacts.
REPRESENTATIVE HIMSCHOOT commented that the impact on revenue is
a primary concern for her.
4:04:55 PM
REPRESENTATIVE HOLLAND said that as he understands the bill, the
underlying intent is an attempt to restructure an industry that
has gone stagnant. He raised concerns about sales tax layering
on top of other sales taxes. He was wondering why a sales tax
was adopted as opposed to an excise tax reform.
CHAIR CARRICK said that this is a great segway for the Alcohol &
Marijuana Control Office (AMCO).
4:06:38 PM
BAILEY STUART, Chair and Legislative Liaison, Marijuana Control
Board, said that the Marijuana Control Board has held no
discussions regarding HB 91 since it was introduced after the
last board meeting. She cited a March 2024 letter of support
from AMCO in support of a 3 percent tax rate. She said that
there is support for immediate tax relief and said that
marijuana legalization has been a bright spot for Alaska's
agricultural industry and has generated thousands of jobs. She
said despite its success; the legal cannabis industry is facing
difficult "economic headwinds." She discussed issues currently
facing the industry and said that the state has the highest tax
rate in the country. She said Alaska's legal marijuana industry
is at a breaking point from unregulated markets. She said that
most businesses are small, locally owned, and face burdens. She
said the consequences are visible and some businesses are
surrendering their licenses and facing collapse. She said that
if this continues, then the legal market will get overtaken by
unregulated markets. She said that with certainty, if there is
no tax reform, there will be no revenue left to collect.
MS. STUART commented about the batch tagging provision. She
said that the Marijuana Control Board has carefully revised
tagging requirements to ensure public health, safety, and
enforcement are maintained. She said last year the department
went from clone tagging to batch tagging and increased the
tagging requirements for plants. She urged support to reduce
marijuana taxes and have considerations for batch tagging.
MS. STUART said that she could not answer Representative
Holland's question and said some communities already have taxes
on marijuana. She said some sales taxes are as high as 15
percent and with an additional 6 percent, it would be taxed at
21 percent. She said it may push people away from legal
products and generate safety concerns.
4:10:40 PM
REPRESENTATIVE HIMSCHOOT said that she found that 20
municipalities had a sales tax and offered her understanding
that only Bethel had a 15 percent sales tax. She asked if other
communities now had high sales taxes.
MS. STUART confirmed that only Bethel was taxed at 15 percent.
4:11:14 PM
REPRESENTATIVE HOLLAND asked whether there had been
consideration to modify the excise tax to avoid layering sales
taxes in the municipalities. He asked why sales tax would be
beneficial.
MS. STUART responded that the industry is supportive of reducing
the excise tax to $12 an ounce but there would be a lot of
complications with it.
REPRESENTATIVE HOLLAND said his next question was related to the
growing impact of illegal marijuana sales. He was curious
whether enforcement of the laws had been compromised by
reductions in enforcement measures. He said he wanted to
understand the economics of black-market competition.
MS. STUART responded that there was no enforcement of illegal
marijuana on the market. She said she has been trying to
unravel this problem. She said that marijuana for the most part
doesn't kill people and public safety resources have prioritized
drugs such as Fentanyl and other "insidious" controlled
substances. She said that illegal markets are sheltered due to
other priorities with the Department of Public Safety.
4:14:49 PM
REPRESENTATIVE MOORE asked if considerations were made to make a
standalone bill for policy reform and a separate bill for tax
reform.
CHAIR CARRICK said she wanted to consider policy that would
support the industry in addition to preserving revenue for the
state. Her intent was to stabilize and support the industry.
She said that more discussions about this could take place.
CHAIR CARRICK, after ascertaining that there were no additional
questions or comments, announced that HB 91 was held over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 25 Written Testimony ACAT 2-20-25.pdf |
HSTA 2/25/2025 3:15:00 PM |
HB 25 |
| HB 25 Backup LTR Biodegradable Products Institute 2-20-25.pdf |
HSTA 2/25/2025 3:15:00 PM |
HB 25 |
| HB 25 Written Testimony 2-24-25.pdf |
HSTA 2/25/2025 3:15:00 PM |
HB 25 |
| HB 87 Sponsor Statement.pdf |
HSTA 2/25/2025 3:15:00 PM |
HB 87 |
| HB 87 Ver A.pdf |
HSTA 2/25/2025 3:15:00 PM |
HB 87 |
| HB 87 Fiscal Note.pdf |
HSTA 2/25/2025 3:15:00 PM |
HB 87 |
| HB 87 Presentation 2-25-25.pdf |
HSTA 2/25/2025 3:15:00 PM |
HB 87 |
| HB 91 Backup Recidivism Reduction Fund Allocation Summary Leg Finance.pdf |
HSTA 2/25/2025 3:15:00 PM |
HB 91 |
| HB 91 Backup MET Allocation Summary Leg Finance.pdf |
HSTA 2/25/2025 3:15:00 PM |
HB 91 |
| HB 91 Written Testimonny 2-22-25.pdf |
HSTA 2/25/2025 3:15:00 PM |
HB 91 |