The Haines Borough Assembly discussed separating marijuana and tobacco excise taxes from one ballot proposition into two, and getting rid of a marijuana excise tax altogether.
The assembly held its first public hearing Tuesday, July 25 on the ordinance that charges an excise tax of $2 per pack of tobacco and $5 per ounce of marijuana to the wholesaler.
Several residents, including those involved in the local marijuana industry, took issue with the single proposition, and the taxes themselves.
Jason Adams, manager of a local marijuana business that’s applied for two permits from the state, wanted the assembly to ungroup tobacco and marijuana. He also requested the assembly wait a year until the local marijuana industry was more established before taxing it.
Donnie Turner singled out the proposed $2 excise tax on tobacco. He said it unfairly targets a small percentage of a low income population.
“They’re not going to quit,” Turner said. “They’re just going to eat less or turn their heat down or do something else.”
Assembly member Sean Maidy agreed that the tobacco tax was a regressive tax. He was also opposed to instituting an excise tax on marijuana and asked borough staff to look into a potential sales tax on the product.
“I’m going to vote no on this,” Maidy said. “I’m going to shoot for a sales tax once we find out what kind of sales tax we can put on it that’s feasible and intelligent. We can always start small…and we can raise it accordingly.”
Excise taxes are charged before a product reaches a retailer as opposed to a sales tax which is charged at the point of retail sale.
Assembly member Tom Morphet supported the separation of the tobacco and marijuana excise taxes but wanted to couple tobacco and alcohol.
Alcohol cannot be the only product singled out for a higher sales tax rate than other items, according to Alaska state law. Most municipalities solve this by including another item taxed at a higher rate when increasing tax on alcohol, Schnabel said in a separate interview.
Morphet also opposed an excise tax on marijuana because it would inhibit the new industry.
Assembly member Heather Lende cited Petersburg’s $25 excise tax on marijuana cultivators.
The state imopses a $50 excise tax on cultivators.
“The most compelling arguments for legalizing marijuana was the revenue it would bring to municipalities and the state,” Lende said.
A second public hearing on the taxes and ballot proposition will occur at the assembly’s Aug. 8 regular meeting.