In one month, Alaska was able to generate $2 million dollars in cannabis taxes. The state has had many opportunities to break the multi-million dollar barrier, with this record being set in October 2019. Like many other states the heaviest tax burden is placed on the cannabis cultivators. The tax then gets continually passed down through wholesalers, distributors, retailers and eventually to the customers.
Generating $2 million of cannabis tax revenue is no small feat and marks a milestone in the growing Alaskan industry. Alaska Department of Revenue Excise Tax Manager Kelly Mazzei “Last year we basically skirted that $2 million mark. In fact we got to 1.9, 1.9, 1.8, but never hit that $2 million.”
As the Alaska pot industry matures, the state may see structural changes. Executive Director of the Alaska Marijuana Association Cary Carrigan has taken note of the burden cultivators have been bearing. “The smart business model was always the intent to diversify. And I think that’s what we’re seeing here” she noted.
Tax revenue in Alaska is split between state programs. Half of the revenue is given to the state’s Recidivism Reduction Fund, while the other half is split equally between the Alaska Department of Health and Human Services’ Marijuana Education and Treatment Fund and the general tax coffer.
The state hopes the cannabis tax revenue will continue to be this fruitful. For such a progressive cannabis state, this should come as no surprise. Alaska was the first state to legalize on-site marijuana consumption at dispensaries.
There are a few dispensaries in California that allow on-site cannabis use in accordance with local policies. Denver businesses can apply for an on-site vape permit.The majority of recreational states allow at-home use leaving the individual to deal with possible rent housing risks or fines.
Creating a safe haven at Alaskan dispensaries for smokers is something the industry desperately needs. With the development of more social consumption sites and new start-ups being created every month, industry officials expect Alaskan dispensaries to continue the stream of cannabis tax revenue for the rest of the year.
Alaska’s growth comes at an opportune time. It was only two years ago in November 2018 when several cultivators went out of business. Since then tax revenue has been slowly growing and is on pace to meet the expected 5% increase in cannabis tax revenue for 2020.
Contributed by Richard Sanchez