Alaska’s Cannabis Tax Structure Faces Criticism and Calls for Reform
The Alaska cannabis industry is facing a crisis, with many growers and advocates calling for a change in the state’s tax structure. Since Alaska legalized recreational cannabis in 2015, the state has imposed an excise tax on each ounce of cannabis sold to retailers and manufacturers. However, this tax has been criticized for being too high and not taking into account changing market prices.
The tax structure has led to a decline in the number of licensed growers, with the number falling nearly a quarter between 2023 and 2025. This decline is attributed to increasing operational costs and the high tax rate, which many growers say is unsustainable.
Growers and advocates argue that the fixed tax rate does not account for changing market prices and is too open to interpretation, leading to some growers miscategorizing products to pay lower taxes. This has resulted in lower revenue for the state and an increase in the illegal cannabis market.
One proposal, House Bill 91, aimed to address these issues by slowly changing the tax structure to a sales tax, starting with a flat rate of $12.50 per ounce. However, the bill stalled in the House Rules Committee, and the industry remains divided on the specifics of the proposed tax structure.
Some argue that a sales tax would be more effective, while others believe that a state sales tax on top of local taxes would be too burdensome. The lack of consensus and the industry’s divisions have made it challenging for lawmakers to take action.
Despite the challenges, Rep. Ashley Carrick, a Fairbanks Democrat, plans to reintroduce the bill in the next legislative session, hoping to find a solution that supports both the industry and the state’s revenue. With the industry facing declining revenue and the illegal market thriving, many are hopeful that lawmakers will take action to reform the tax structure and ensure the long-term success of the cannabis industry in Alaska.
