Legislature(2025 - 2026)GRUENBERG 120
02/22/2025 01:00 PM House STATE AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| HB75 | |
| HB30 | |
| HB91 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 30 | TELECONFERENCED | |
| += | HB 75 | TELECONFERENCED | |
| += | HB 91 | TELECONFERENCED | |
| *+ | HB 87 | TELECONFERENCED | |
| + | TELECONFERENCED |
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.
| 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 |