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Associated Press 

Tax proposed on pot grower whether legitimate or illegal

Sponsor says it is in line with voter intent to treat marijuana like alcohol


Marijuana growers in Alaska could see operation expenses spike if a tax and bond bill introduced by an Anchorage lawmaker passes.

The bill would punitively tax marijuana grown illegally in the state and require a $5,000 cash bond requirement for new legal marijuana businesses.

A House Labor and Commerce committee heard support from the Alaska Department of Revenue on Wednesday during a first hearing on Republican Rep. Gabrielle LeDoux's bill.

"The initiative itself referred to treating marijuana like alcohol," said Ken Alper, director of the department. "Many of the powers embedded in this bill are powers that we currently have on alcohol and make it much easier for us to administer the alcohol tax. We think we'll do a better job of collecting Alaska's marijuana tax if we have the authorities in this legislation."

Detractors of the bill said the requirement of a $5,000 cash bond could keep smaller commercial growers out of the industry. The bond would be collected if a marijuana business failed to pay its taxes.

Brian Olson, owner of Alaska Berries winery in Soldotna, said he intends to file for a cultivation license.

"A $5,000 cash bond, on top of a $1,000 non-refundable application and a $1,000 license, by the time they get all of the security deposits in there, they've got a lot of money invested in a small operation," he said. "I do believe it's going to really hamper this beginning industry."

James Barrett, a Juneau man who is applying for cultivation, retail sale and testing licenses questioned how the bond would be collected and whether cash payment would be acceptable as cannabis businesses cannot use banks.

The bill also makes product manufacturers and retailers liable for marijuana taxes on their inventory. A licensed business would be deterred from selling marijuana that was purchased from an unlicensed grower if they were required to pay taxes on any inventory they could not prove came from a legal grower, LeDoux said in her sponsor statement.

The bill would put a $50-an-ounce penalty on marijuana that is found to be grown illegally, though it is unclear exactly how much revenue the state would generate from such a penalty as illegal marijuana busts are inconsistent.

LeDoux referenced a record bust in Homer in mid-February during which Homer police discovered 1,000 cannabis plants in a warehouse with an estimated value of $1.5 million. Alper estimated the state would levy about $250,000 in penalties for a bust of that magnitude.

Still, he said, taxing marijuana is not likely to solve the state's budget problems without a significant increase in consumption.

"If only we can get every Alaskan to consume about 10 pounds of marijuana a year, we could probably balance the budget," Alper said, grinning. As committee members laughed, he said: "We might have some other social problems."

The proposed tax on marijuana is another source of revenue for a state struggling to balance its budget in the face of a $3.5 billion deficit.

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This bud's for you - and will come with an extra tax for growers if a new bill filed in the Alaska Legislature becomes law.

Lawmakers have been reluctant to move on other tax proposals as they work on cutting the state's operating budget. Of the six resource tax proposals proposed by the governor, just one - an increase on motor fuel taxes - has moved through at least one committee. The other taxes on mining, fishing, alcohol, tobacco and cruise ships have yet to advance.

There are indicators, however, that with the passage of the budget bills focus will turn toward new sources of revenue for the state.

During a press conference on Thursday House Speaker Mike Chenault, R-Nikiski, said that while the budget is the only thing the legislature is constitutionally required to pass, revenue measures are going to be important for Alaska's future.

"We all know that we can't balance our budget on the current revenue stream that is available," he said.


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