Legislature(2015 - 2016)BARNES 124

03/23/2016 03:15 PM House LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved CSHB 194(L&C) Out of Committee
Moved HB 289 Out of Committee
Moved CSHB 337(L&C) Out of Committee
**Streamed live on AKL.tv**
         HB 337-MARIJUANA TAXES;EXCESS POSSESSION;BONDS                                                                     
3:38:04 PM                                                                                                                    
CHAIR OLSON announced  that the final order of  business would be                                                               
HOUSE BILL NO. 337, "An Act relating to taxes on marijuana."                                                                    
[The committee substitute  for HB 337, Version H,  was before the                                                               
3:41:26 PM                                                                                                                    
KAYLSSA MAILE, Staff to  Representative Gabrielle LeDoux, sponsor                                                               
of HB 337, reviewed the bill.   She noted that HB 337 establishes                                                               
the  bonding   requirement  for  marijuana   cultivators  seeking                                                               
licensure, and  the committee substitute changed  the requirement                                                               
from a  $5,000 cash bond  to the option  of either a  $5,000 cash                                                               
bond, or  a surety  bond.   In addition,  the bill  makes product                                                               
manufacturers  and retailers  secondarily liable  for taxes,  and                                                               
allows the Department of Revenue (DOR)  to assess a tax on plants                                                               
above  the  legal  limit  for  those  who  are  not  licensed  as                                                               
cultivators.  The  other change made in  the committee substitute                                                               
was to  add an immediate effective  date, so that the  bill would                                                               
to be in effect before licenses are awarded.                                                                                    
REPRESENTATIVE  JOSEPHSON   asked  for   the  cost  to   begin  a                                                               
commercial operation -  including lamps and all  of the necessary                                                               
equipment - and a license.                                                                                                      
MS. MAILE was unsure.                                                                                                           
3:43:56 PM                                                                                                                    
KEN ALPER, Director, Tax Division,  DOR, advised that the cost of                                                               
start-up  is part  of the  licensing process  with the  Marijuana                                                               
Control  Board  (MCB),  Alcohol  and  Marijuana  Control  Office,                                                               
Department  of Commerce,  Community &  Economic Development,  and                                                               
DOR  does not  have  a  financial relationship  with  any of  the                                                               
potential marijuana taxpayers.                                                                                                  
REPRESENTATIVE  JOSEPHSON inquired  as  to whether  the only  fee                                                               
imposed by the state  thus far is the $5,000 bond in  HB 337.  He                                                               
     ... I just want to know  what our 60 hands have imposed                                                                    
     on people, and  if it's only $5,000, I'm,  I'm going to                                                                    
     vote for this  bill I think anyway, but I  just want to                                                                    
     get  a   sense  of  whether  we   are  really  creating                                                                    
     impediments that, that  were not part of  the spirit of                                                                    
      the [Alaska Marijuana Legalization Ballot Measure 2                                                                       
MR.  ALPER stated  that fees  and  costs are  established by  MCB                                                               
through the regulatory process; in  fact, the legislature has not                                                               
put any direct costs on the industry.                                                                                           
3:46:02 PM                                                                                                                    
CYNTHIA  FRANKLIN,   Director,  Alcohol  and   Marijuana  Control                                                               
Office,   Department   of   Commerce,  Community   and   Economic                                                               
Development, offered to answer questions.                                                                                       
REPRESENTATIVE JOSEPHSON repeated his question.                                                                                 
MS.  FRANKLIN  advised that  the  cost  of starting  a  marijuana                                                               
business  depends on  the type  of  license and  on the  business                                                               
model.  Monies  paid to the state are an  annual licensing fee of                                                               
either $1,000  to $5,000, and a  nonrefundable $1,000 application                                                               
fee, which is split between the state and local government.                                                                     
REPRESENTATIVE  JOSEPHSON estimated  that  the  maximum range  of                                                               
government  fees  begins  at   approximately  $11,000,  plus  the                                                               
capital costs of the business.                                                                                                  
MS. FRANKLIN pointed out that the  $5,000 bond is only imposed on                                                               
the cultivator.  Other types  of marijuana licensing, such as for                                                               
a testing facility, would not requiring bonding.                                                                                
REPRESENTATIVE TILTON asked for  an explanation of the difference                                                               
between a tax and a penalty against an illegal operation.                                                                       
3:49:41 PM                                                                                                                    
KONRAD JACKSON, Staff to Representative  Kurt Olson, Alaska State                                                               
Legislature,   relayed    that   Legislative    Legal   Services,                                                               
Legislative  Affairs Agency,  advised  that a  tax is  accessible                                                               
immediately  without  conviction, and  a  fine  or penalty  would                                                               
require charges and conviction.                                                                                                 
CHAIR OLSON redirected the question to Ms. Franklin.                                                                            
MS. FRANKLIN confirmed that criminal  penalties would still apply                                                               
because   legally  growing,   selling,  or   producing  marijuana                                                               
specified by  the Alaska Marijuana Legalization  Ballot Measure 2                                                               
(2014) only  applies to  individuals, corporations,  and entities                                                               
that  have  a license.    Therefore,  someone growing  without  a                                                               
license  would  have  criminal  charges  assessed  regardless  of                                                               
whether DOR has collected taxes.                                                                                                
3:52:16 PM                                                                                                                    
REPRESENTATIVE HUGHES  moved to  report the  committee substitute                                                               
for  HB  337,  Version  29-LS1490\H,   Nauman,  3/10/16,  out  of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal  notes.  There  being  no  objection,  CSHB  337(L&C)  was                                                               
reported from the House Labor and Commerce Standing Committee.                                                                  

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