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Alaska Raked in $11 Million in Marijuana Tax Revenue This Year

This fiscal year, the tax revenue from marijuana sales has exceeded expectations.

A.J. Herrington

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Alaska Raked in $11 Million in Marijuana Tax Revenue This Year
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The State of Alaska collected more than $11 million dollars in marijuana tax revenues from cultivators in the 2018 fiscal year, officials said Wednesday. The amount exceeded predictions from the Alaska Department of Revenue by nearly $2 million.

The numbers reported Wednesday are for the fiscal year that ended June 30. The figures only include taxes from cannabis cultivators and not revenue collected from retail stores and other marijuana businesses.

Tax Revenues Exceed Predictions

The state collected more than $1.2 million in the month of June alone, the most ever. And officials believe the revenues collected in July, the first month of fiscal 2019, will be even higher.

Kelly Mazzei, an excise tax supervisor with the Department of Revenue, said that taxes on the state’s cannabis industry have continued to trend upward.

“We absolutely are exceeding our predictions and additionally we are seeing a very steady increase in tax revenue collection each month,” Mazzei said.

Mazzei also said that as the legal marijuana market grows it is difficult for the department to estimate future revenue.

“I don’t believe the market has saturated and we haven’t seen exactly what capacity the state is going to operate in as far as cultivation and retail stores and the other facilities,” said Mazzei. “So we could continue to collect an unknown amount of money in taxes.”

Tax Money Invested In Crime Reduction and Drug Programs

Half of the tax money collected from the cannabis industry is earmarked for the state’s new Recidivism Reduction Fund. Money from the fund is then allocated to several different programs aimed at reducing the number of ex-offenders that return to crime.

Beneficiaries of the fund include the substance abuse treatment program and community residential centers for the Department of Corrections and the Department of Public Safety’s council on domestic violence and sexual assault.

And earlier this week, Alaska Governor Bill Walker signed into law Senate Bill 104. That measure designates another 25 percent of cannabis tax revenue to related social programs.

“It also deals with some of the funding on the tax on the marijuana revenue,” Walker said about the new law. “Twenty-five percent of that will go into education program associated with awareness of marijuana, those kinds of things,” he explained.

All remaining cannabis tax money will go to the state’s general fund.

New Tax Rates Coming?

The Department of Revenue is considering a change to the system under which cannabis cultivation taxes are assessed. Currently, all cannabis flower produced is taxed at a rate of $50 per ounce. The remainder of the plant, including leaves and stems, is taxed $15 per ounce when sold.

Under a proposal now being reviewed, a third tax rate would be added for abnormal and immature buds. This lower quality flower would be assessed a tax of $25 per ounce.

“We understand now with feedback that there is some lower quality bud, maybe some that’s failed a test result for mold so it could go to a product manufacturer, but it won’t go to a retail store. So, therefore, we don’t believe cultivators should be paying $50 an ounce if they’re not getting that price at market,” said Mazzei.

The department is accepting public comments on the proposed change until August 10.

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