Dozens of Alaska marijuana growers are behind on their taxes by a total of more than $2 million, according to a March 18 letter by the Alaska Department of Revenue’s Tax Division.
Some cannabis cultivators owe less than $200. Others owe tens of thousands. One company listed has a bill in the high hundreds of thousands. Cannabis companies are on payment plans and some have gone out of business, according to the state revenue department.
The biggest overdue tax bill listed of $719,338 involves Fairbanks grower Alaskan Blooms. Alaska Cannabis Company, based in Nikiski, had an outstanding balance of $146,975. Green Degree, based in Wasilla, owed $134,706 in marijuana taxes, according to the letter.
Karen Lowry is a part-owner of Alaskan Blooms and said they have been in communication with the Alaska Department of Revenue and the Alcohol and Marijuana Control Office. She said the tax debt now is a bit less at between $600,000 and $700,000, and it reflects the large-scale nature of their operation.
“When you are a bigger business, you have bigger numbers,” she said.
“We did get behind. We are catching up. We are back on track.”
Lowry thinks the number of cultivators who are behind on their taxes is due to a larger problem with the tax structure on growers.
The state of Alaska taxes marijuana bud and flower on the wholesale level at a rate of $50 an ounce. “Immature or abnormal” bud and flower is taxed at a rate of $25 an ounce. Trim is taxed at $15 per ounce.
The tax comes out to $800 for a pound of mature bud and flower, whether a pound sells for $2,500 or $3,000.
“It should be a percentage-based tax like every other state that has legal cannabis,” Lowry said.
Brandon Emmett agrees. The former Alaska Marijuana Control Board Member, partner in a marijuana company and board member for the Alaska Marijuana Industry Association said the $50-an-ounce excise tax has dogged the industry from the beginning. The reason it hasn’t changed is because it hasn’t been a priority for the Alaska Legislature, he said.
“A flat tax creates an immobile price floor. It does not take into consideration market fluctuations,” Emmett said.
Alaska is the only state with a flat excise tax. But there is disagreement within the state cannabis industry about whether the tax needs to change, according to Emmett. Some marijuana businesses have thrived under it.
“You have to operate in the environment with which you live,” Emmett said. “Most of the cultivators who have been around from the start, and who have been able to adapt to the generally fluctuating tax rate as prices rose and fell, have survived.”
He could think of at least 20 cultivation companies that have opened and closed since Alaska voters approved “an act to tax and regulate the production, sale, and use of marijuana” in 2014.
Of the 47 growers in tax debt to the state as of Jan. 31, 28 were on a payment plan, out of business or had a balance of less than $200.
The letter to the Marijuana Control Board listed the balances owed by 19 companies from all over Alaska including Eagle River, Anchorage, Kasilof, Ketchikan and Port Alexander.
Contact staff writer Amanda Bohman at 459-7545 or follow her at twitter.com/FDNMborough.