Cannabis tax revenue picking up in the Mat-Su

PALMER — Saturday marks the three-year anniversary of cannabis legalization in Alaska, and at last week’s Mat-Su Borough Assembly meeting, Development Services Manager Alex Strawn updated the assembly on pot tax revenues and what the future holds for Alaska’s newest industry.

In October of last year, Mat-Su voters rejected a proposal to ban legal marijuana sales in the Valley, and voted for a 5 percent tax on all sales in the borough. By March of 2017, the first of the operations began opening for business with one cultivation and one retail facility on line. There are currently 18 conditional use permits in the borough.

At the meeting, Strawn showed graphics revealing tax revenues received by the borough from cannabis retailers and cultivators.

First quarter tax revenues came in at $6,135, second quarter taxes were at $59,379. Third quarter tax revenues were not yet available, but Strawn predicted they would come in at over $100,000-$120,000, based on the general escalation of commercial activity quarter-to-quarter.

Strawn said the key to continued growth is tied to reducing regulations, which lead to higher prices.

“Right now we’re at about $20 per gram for legal, and $10 a gram for illegal. There’s variances there, but that’s the general price,” Strawn said. “The legal is tested, it’s in childproof packages and you can’t sell to intoxicated people or anything like that. As well, it generates revenue for the Borough. As has happened in the Lower 48 where marijuana prices are matching, or are even lower than the black market — I think that will happen here. What prevents it is the cost of licensing and permitting, regulations that come with it, and, of course, taxes.”

Strawn said there are three licensed facilities that have not come on the market yet. He said August appears to have been the month when businesses really began operating at a steady pace.

“In August we saw the shift where supply has caught up with demand, because of the cultivation facilities,” Strawn said. “(Retailers) were able to compete with each other instead of just being able to sell everything as soon as it comes to fruition.”

Strawn discussed two major issues related to the legal marijuana industry that will be coming up. One is the possibility of establishing on-site consumption licenses at the control board’s meeting on Nov. 14-15, and the other is legalizing industrial hemp, as presented in SB6, which likely won’t be addressed until next year’s regular session.