The state of Alaska has decided to make some changes to the way it taxes marijuana. These changes were prompted by concerns raised by industry players regarding the lack of distinction between different kinds of cannabis buds.
The type of bud plays a role in the quality (and the price) of any products that are derived from that bud. The tax authorities haven’t been putting this into consideration, an oversight that made legal cannabis very pricey hence inadvertently promoting the black market.
Currently, each ounce of cannabis flower or bud is taxed $50 while trim (the rest of the plant) incurs a $15 tax per ounce. These taxes are paid by the grower as the produce is sent to a manufacturing facility or to a retail store where it is sold as dry bud or any other unprocessed form of the plant.
The new tax measures which will start being implemented on January 1, 2019 will see mature flower or bud incur an excise tax of $50 an ounce while the abnormal or immature flower will attract a $25 tax for each ounce. The rest of the plant will still be taxed at the same level as before, which is, $15 an ounce.
The planned tax changes will see three tiers of taxes for different kinds of marijuana. Many industry participants see these changes as insufficient and they are calling for wide ranging modifications.
However, those broader changes can only be made by the legislative arm of the state by modifying the law under which cannabis became legal in Alaska.
Conducting such extensive reforms would be a time-consuming process that would involve numerous steps, such as conducting hearings in order to gather views from the public and other stakeholders before the appropriate committee prepares a report to be voted on by all legislators.
Alaskans voted in 2014 to decriminalize recreational marijuana and that ballot measure took effect towards the end of February the following year.
Supply shortages compelled many marijuana retailers to close shop for a while in December 2016 and the first month of 2017. These businesses reopened once the shortages were fixed.
The existing tax policy was threatening to take some marijuana companies out of business and the limited changes being made are attempts to allow businesses to lock in some profits so that the industry can remain robust. Earth Science Tech, Inc. (OTCQB: ETST) and FinCanna Capital Corp. (CSE: CALI) (OTCQB: FNNZF) can only hope that all jurisdictions move to make the business environment more favorable to the players.
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