Alaska Cannabis Businesses Owe Nearly $1.8M in Back Taxes

Alaska cannabis businesses owe nearly $1.8 million in back taxes due to a flat-tax structure paid by growers instead of at the point-of-sale.

Full story after the jump.

By the end of June, Alaska cannabis businesses owed $1,785,751 in back taxes, and the state Marijuana Control Board has started shutting down the businesses for non-payment, the Anchorage Daily News reports. In Alaska, cannabis taxes aren’t charged at the point-of-sale, rather paid by growers who say that flat tax structure $800 per pound on flower and $240 per pound for concentrates requires them to pay the same amount of money regardless of the end-product quality.

In the fiscal year 2021, Alaska regulators collected just under $29 million, so the $1.8 million in unpaid taxes is a small portion of the total taxes that cultivators pay the state.

Alaska Marijuana Industry Association (AMIA) President Lacy Wilcox told the Daily News that while high-THC crops could sell for around $4,000 a pound, the $3,000-range is more typical. But if a crop sample sent off for a potency test has lower THC levels, cultivators might only be able to get $2,000 per pound wholesale. After state taxes are paid, the cultivator can be left with $1,200 to cover the labor, rent, supplies, and energy costs associated with that crop. Cultivators can destroy crops to avoid the tax liability but will, in turn, make nothing off of the labor and time inputs.

Wilcox called the current tax structure “not sustainable.”

Earlier this year, the AMIA sent a survey asking about whether the state should implement license caps on the industry currently there are no caps and 70% of survey respondents indicated they supported such caps. The lack of caps, some in the industry argue, has led to a market surplus and oversaturation, which has a negative effect on wholesale prices.

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