Alaska marijuana businesses from Barrow to Juneau paying their monthly taxes in cash will have to travel to Anchorage to deposit the money, the state tax division said Wednesday.
The tax division outlined its plans Wednesday, the first news of how Alaska's canna-businesses will pay their monthly taxes since the state held discussion sessions this autumn.
"I'm sure the folks that are planning to do business anywhere but Anchorage are going to be disappointed," deputy director of the Revenue Department's Tax Division, Brandon Spanos, said Wednesday.
Once Alaska's commercial marijuana industry gets up and running later this year, growers will pay excise taxes every month. The division is proposing $50 per ounce of flower or bud, and $15 per ounce for the rest of the plant.
Alaska legalized recreational marijuana in November 2014, and since then, the tax division has been grappling with a so-called "cash problem:" With canna-businesses remaining illegal on the federal level, Alaska's financial institutions aren't opening their doors to the trade. Locked out of traditional banking practices, the state is anticipating an influx of cash payments to its department, which raises security and staffing issues.
In October, the division met with the public to discuss "creative ideas" for solving the problem. Two of the most promising ideas were hiring armored transportation carriers to transport cash, or having multiple cash deposit boxes placed around the state.
In the end, those ideas were found to be too expensive. "With the state's current budget crisis we just have to do the cheapest option," Spanos said.
The cheapest option means keeping the procedures "in-house," Spanos said. Cash will be handled by existing division employees, and one secure deposit box will be placed at the Atwood Building in downtown Anchorage.
"We're doing more with less," Spanos said.
People who can't pay electronically will file online, print out a voucher, take it downtown, where they will deposit the cash into a deposit box. Businesses statewide will need to come to Anchorage monthly, Spanos said.
Reacting to a description of the division's plan, Coalition for Responsible Cannabis Legislation communications director Kim Kole said, "That's awful. That's my initial reaction."
"I understand the concept of minimizing their costs … However, that is unreasonably burdensome for the vast majority of the state and I could see where this could cause problems down the road," Kole said.
"It would not surprise me if it resulted in a lawsuit," Kole added later.
Despite rigid banking rules, the tax division is hoping that many businesses will find ways to pay electronically, as has been the case in other states to legalize marijuana. The state of Washington has said that 75 percent of businesses pay taxes electronically.
Initial estimations say that Alaska's 2016 marijuana tax revenue could be anywhere from around $5 million to $19 million, but how much of that is realized, and how much is in cash, is "just a guess," Spanos said.
The division will need to buy a secure drop box, a safe, cash counting machine, security cameras and alarm systems for the Atwood Building, Spanos said. A rough estimate of costs is around $50,000.
The division may also open a second cash deposit system in Juneau, Spanos said.
"We really explored it and we tried very hard to make it available to everyone but we only have employees in the department in Anchorage and Juneau," he said.
The state hopes to have its cash deposit box up and running by July, when Spanos said it could start receiving its first monthly taxes.