Legislature(2023 - 2024)BARNES 124
03/31/2023 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| Real Estate Commission | |
| HB119 | |
| HB17 | |
| HB92 | |
| HB93 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 92 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| += | HB 119 | TELECONFERENCED | |
| += | HB 17 | TELECONFERENCED | |
| += | HB 93 | TELECONFERENCED | |
HB 119-MARIJUANA TAX
[Contains discussion of HB 117]
3:26:42 PM
CHAIR SUMNER announced that the next order of business would be
HOUSE BILL NO. 119, "An Act relating to marijuana taxes; and
providing for an effective date."
3:27:19 PM
HEATH HILYARD, Staff, Representative Cathy Tilton, Alaska State
Legislature, introduced HB 119 on behalf of the sponsor, the
House Rules Standing Committee by request. He provided context
on how the proposed legislation came to be. He referenced the
recommendations in the report from the Governor's Advisory Task
Force on Recreational Marijuana. He explained that originally a
single bill would have had all the task force's recommendations;
however, the drafting of this was too long, and two separate
bills were drafted, HB 119 and HB 117. He informed the
committee that everything in HB 119 is also in HB 117; however,
HB 117 is going through a substantial rewrite. He stated that
the tax portion has been extracted from HB 117 and put into HB
119. He stated that the task force has provided feedback on
some of the sections in the proposed bill which may need to be
amended. He expressed the understanding that one of the main
reasons for the taxation provision in the bill is the legal
marijuana recreation industry is attempting to remain
competitive with the black market.
3:29:36 PM
MR. HILYARD paraphrased the sectional analysis on HB 119 [copy
included in the committee packet] which read as follows
[original punctuation provided]:
Section 1: This section reduces the excise tax that is
imposed, by the state, on the sale or transfer of
marijuana from a cultivation facility from $50 per
ounce to $12.50 per ounce. This is repealed July 1,
2028 (see Section 8) to be replaced with a 3% sales
tax at the retail level (see Section 4).
Section 2: The department may exempt part of the
certain parts of a marijuana plant from taxation or
establish a rate lower than $12.50 per ounce. This is
already done for parts of the plant. This is repealed
July 1, 2028 (see Section 8) to be replaced with a 3%
sales tax at the retail level (see Section 4).
Section 3: This section directs all the marijuana tax
revenue to the Marijuana Education and Treatment Fund.
Interest earned on this fund will be deposited into
the General Fund. The fund does not lapse. The
legislature may appropriate 33% of the annual
estimated tax collected to the Department of Health
for the program, the Department of Commerce,
Community, and Economic Development, or to the general
fund.
Section 4: A sales tax of 3% is imposed on marijuana
and marijuana products sold from a retailer to a
consumer. Effective July 1, 2028See Section 10.
Section 5: Monthly Statements and payments. Each
retail marijuana store will send a statement to the
department on or before the last day of each month. It
must include the total amount of marijuana sold to
consumers and the total value of the marijuana sold.
Tax payments from retail stores cover the preceding
month. Effective July 1, 2028See Section 10.
Section 6: Upon the effective date (July 1, 2028) of
Sections 4, 5, and 6 this section replaces
"cultivation facility" with "retail marijuana store"
for the purpose of administration and enforcement of
tax.
Section 7: The Recidivism Reduction Fund is repealed.
Currently 50% of Marijuana tax revenue is directed to
this fund to be used by the Department of Corrections,
the Department of Health, or the Department of Public
Safety for recidivism reduction programs. Under
Section 3 of this act tax revenue is directed to the
Marijuana Treatment and Education fund.
Section 8: Repeals the excise tax (Sections 1 and 2 of
this act) levied on the cultivator, effective July 1,
2028. It is replaced with a 3% sales tax levied on the
retailer as per Section 4, effective the same date.
Section 9: Applicability: the new excise tax rate
(Sections 1 and 2) is applied to taxes accrued on or
after the effective date. Section 10: Sections 4-6
are effective July 1, 2028.
3:33:05 PM
BRANDON EMMETT, Co-Chair, Governor's Advisory Task Force on
Recreational Marijuana, made himself available for questions on
HB 119.
3:33:28 PM
REPRESENTATIVE PRAX stated that he had voted in favor of
decriminalizing marijuana because of the black market. He
questioned how the proposed legislation would affect the black
market for marijuana. He expressed the understanding that the
current high tax encourages the black market.
MR. HILYARD concurred, and he added that the task force did not
have access to sophisticated modeling from the Department of
Revenue for its work; however, he expressed the understanding
that the access to modeling has changed.
MR. EMMETT added that there is no hard data which shows how the
industry is controlled by the black market. He offered that all
the evidence, such as information from consumers, cultivators
and retailers, points to the black market having 45 percent of
the marijuana industry. He stated that the task force has
requested the excise tax be reduced because this is preventing
the sale price of marijuana from competing with the black
market. From speaking to customers, he expressed the
understanding that untaxed and untested marijuana can be bought
for about half of the price. He expressed the opinion that the
threat to the industry by the black market is real, and the
proposed legislation would help the legitimate market be
competitive.
3:36:40 PM
REPRESENTATIVE CARRICK pointed out that Section 3 would change
the funding going to the Department of Health (DOH), which has
been designated for [marijuana] education and treatment. She
expressed the understanding that this funding would be put into
two additional sources: the Department of Commerce, Community,
and Economic Development (DCCED), to help grow the industry, and
the general fund. She questioned these fund designations.
MR. HILYARD stated that this recommendation came directly from
the task force.
REPRESENTATIVE CARRICK questioned the merit in limiting the
funds to DOH and DCCED by splintering the appropriations to the
general fund.
MR. HILYARD deferred to Mr. Emmett.
MR. EMMETT responded that when the task force analyzed the ways
the funds were being allocated, it was felt that funding may be
better spent with a greater allocation to help the market as
opposed to the recidivism-reduction fund. He added that the
task force did not have the information that is now available.
He stated that now the task force is amicable to this being
unchanged. He expressed support for the increase of funds going
to DOH; however, "that's not something we're necessarily hanging
our hat on either."
3:39:39 PM
REPRESENTATIVE PRAX expressed the concern of the
constitutionality of dedicating a tax to any specific thing.
CHAIR SUMNER responded that this would be "intent" language, as
revenue streams cannot be designated.
MR. EMMETT expressed the opinion that the power of
appropriations is on the legislature, and the task force does
not have a strong opinion in the matter.
3:40:36 PM
REPRESENTATIVE RUFFRIDGE observed that the reduction in the
excise tax would be significant. He expressed the understanding
that if a sales tax is being imposed, this would be new. He
questioned the purpose of taxing at "every step" and questioned
the purpose of the excise tax.
MR. EMMETT answered that a stepwise system for altering the tax
structure would be the most appropriate because it would be a
gradual change from an excise tax to a retail tax. Because of
the nature of business as a revenue stream, he said, the
retailers are best suited to collect tax. He explained that
this is because the municipalities already require retail tax on
marijuana. He continued that there would be a transition period
between the flat excise tax and the retail tax, so the excise
tax would no longer exist in the future.
MR. HILYARD, in response to a follow-up question, stated that
the intention is that Section 8 would repeal the excise tax by
2028.
3:43:04 PM
CHAIR SUMNER announced that HB 119 was held over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 3.1.23 Cheryl Markwood Real Estate Resume.pdf |
HL&C 3/31/2023 3:15:00 PM |
|
| 3.1.23 Jennifer Mcconnel Labor Relations.pdf |
HL&C 3/31/2023 3:15:00 PM |
|
| 3.1.23 Ely Cyrus MCB.pdf |
HL&C 3/31/2023 3:15:00 PM |
|
| HB 92 - Sponsor Statement.pdf |
HL&C 3/31/2023 3:15:00 PM |
HB 92 |
| HB 92 - v.B.pdf |
HL&C 3/31/2023 3:15:00 PM |
HB 92 |
| HB 92 - Fishermen's Fund Presentation.pdf |
HL&C 3/31/2023 3:15:00 PM |
HB 92 |
| HB 92 - Fishermens Fund Resoultion 22-01.pdf |
HL&C 3/31/2023 3:15:00 PM |
HB 92 |
| HB 92 - Fisherman's Fund Report of Vessel-Site Insurance Form.pdf |
HL&C 3/31/2023 3:15:00 PM |
HB 92 |
| HB 119 Sectional Analysis.pdf |
HL&C 3/31/2023 3:15:00 PM |
HB 119 |
| HB 119 Sponsor Statement.pdf |
HL&C 3/31/2023 3:15:00 PM |
HB 119 |
| HB0092 Fiscal Note.PDF |
HL&C 3/31/2023 3:15:00 PM |
HB 92 |
| Phleps_HB119_HLAC_042323.pdf |
HL&C 3/31/2023 3:15:00 PM |
HB 119 |
| Peace Frog Botanicals Support for HB119.pdf |
HL&C 3/31/2023 3:15:00 PM |
HB 119 |