That Time Marijuana Tax Revenue In Alaska Fell Below Expectations

Hidden between reports of the opening of California’s recreational marijuana market and U.S. Attorney General Jeff Sessions renewed war on marijuana is a story out of Alaska from the Associated Press that legal marijuana tax revenues fell in November. The news comes in stark contrast to reports from Nevada, where state legislators recently called for a special session of the state legislature to decide what to do with an excess of tax revenues.

According to the report from the AP, tax revenues in Alaska dropped to $870,000 in November, slightly down from the previous month’s take of $920,000.

Coupled with the news of declining tax revenue comes a report out of Fairbanks that cannabis growers are beginning to feel burdened by the state’s tax structure. Rising supply in the state - quality supply according to a report by The Daily News-Miner - is causing wholesale prices to dip. Some farmers state the prices have fallen from $20 per gram to around $18.

What is beginning to hamper business in Alaska is the $50 per ounce tax growers pay on the cannabis they sell to retailers. Voters across the state set those rates in 2014.

According to The Daily News-Miner, growers would prefer to see tax rates tied to market conditions, but a fiscal crisis in Alaska leave them with little hope of that happening.

The situation in Alaska is a far cry from that in Nevada, where an estimated $5.8 million in tax revenue was brought in for October. So successful have Nevada’s legalization efforts been that State Senator Tick Segerblom (D-Las Vegas) took to Twitter to celebrate.

However, as more states see fit to legalize marijuana, tax revenue may lean more towards the way of Alaska than Nevada. California residents no longer need to make the journey over state lines to purchase legal cannabis.

As Kelly Mazzei, excise tax supervisor with the Alaska Department of Revenue told the AP, the state is still uncertain as to why tax revenues dropped in November. She suggested market conditions or growing cycles as two possibilities.

Cary Carrigan, a spokesman for the Alaska Marijuana Industry Association, spoke about the issue in more detail with The Daily News-Miner.

“We’re not at a point where everything has stabilized, and we are going to see what the industry is going to be,” Carrigan said in an interview. “I haven’t heard anybody say, ‘Yeah, we did it. Now we are making profit. Now we have our investment paid for.””

Meanwhile, as the state hopes that November’s returns were just a minor blip, growers continue to fight for a more equitable tax structure.

“We know there is an issue,” Mazzei told The Daily Miner. “The bottom line is we are trying to find the right answer. We are trying to be fair.”

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