The Haines Borough Assembly advanced two ordinances placing excise taxes on marijuana and tobacco.

The marijuana excise tax amounts to $5 on each ounce of marijuana sold from the cultivator. The tobacco tax would charge $2 per pack of cigarettes brought or transported into the Haines Borough and 45 percent of the wholesale price on other tobacco products.

Assembly member Heather Lende made an amendment to increase the marijuana excise tax to $20. “The major business of marijuana in the Haines Borough is going to be growing it and exporting it,” Lende said. “To base it only on sales tax for us, I don’t know if it would be all that much.”

Three Haines marijuana cultivation permits are in the state review process. Two retail permits are in review.

Assembly member Tresham Gregg said the increase added to the state’s $50 tax seems “a little stiff for a business to basically have to incur $70 an ounce right off the bat.”

Assembly member Sean Maidy said raising an excise tax to $20 would promote black market sales and is bad for small businesses.

A taxfoundation.org report analyzing state marijuana taxes places the importance on taxing at the retail level, but doesn’t distinguish between excise and sales taxes.

“Tax rates on final retail sales have proven the most workable form of taxation for several reasons, including administrative simplicity and the risk of double-taxation of vertically integrated businesses,” the report says.

The report also warns against over-taxing, which encourages the black market.

“Colorado, Washington, and Oregon have all taken steps to reduce their marijuana tax rates,” the report says. “Colorado concluded with strong evidence that its 30 percent tax rate did not sufficiently reduce the black market, and more recent ballot initiative proposals all over the country propose rates between 10 and 25 percent.”

Assembly member Tom Morphet wants to charge a sales tax on marijuana and pair it with an alcohol tax. He said in the long-run, the borough stands to make more money on the sale of retail marijuana as opposed to its cultivation.

“Eventually we’re going to get to the point where there’s one person that grows marijuana up in the Mat-Su Valley or in Seattle and they’re going to put everybody else out of business,” Morphet said.

Any sales tax placed on a product must be approved by the voters. Municipalities can create excise taxes without voter approval.

Lende’s motion to increase the excise tax to $20 failed 3-2 with Morphet and Maidy opposed.