Legislature(2015 - 2016)BARNES 124
03/23/2016 03:15 PM House LABOR & COMMERCE
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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 committee.] 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 remarked: ... 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 (2014)]. 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.