Marijuana business owners are breathing a sigh of relief after the Anchorage Assembly voted down a proposed tax increase.

A proposal put forth by Mayor Ethan Berkowitz would have increased the local tax from 5 percent to 7 percent.

More than a dozen people from the industry showed up to voice their opposition on Tuesday night.

“With ever-increasing competition and no license caps, we are financially fighting to keep our doors open,” Ashley Taborsky told assembly members.

Taborsky is the operations director for Hillside Natural Wellness, a store that opened in south Anchorage in January.

She said opening a store in 2018 is drastically different than opening one when marijuana was first legalized because prices have continued to fall.

“The majority of marijuana businesses have not gotten their feet underneath them yet,” Taborsky said.

While the cost of that two-percentage-point increase was meant to come from customers, Taborsky said marijuana businesses can’t afford to drive people away with high prices.

“It's very competitive from a cost perspective, and there's no doubt in my mind if that tax would have gone through retailers themselves would have been eating the difference,” she said.

Assemblyman Eric Croft was one of two who voted in favor of the increase. He said more money coming from the marijuana industry could benefit the entire community by offsetting property taxes.

“People city-wide, businesses, residences, for the personal or inventory tax, all of that would be reduced dollar for dollar,” Croft explained.

The muni initially set the marijuana tax as 5 percent when the drug was legalized in 2016. Assembly members can’t raise the tax by more than 2 percent at a time, and can only approve an increase every two years.

The overall marijuana tax cap is set at 12 percent.

“I have nothing against the marijuana industry. I thought it was a good idea to legalize and tax it, but I think now it needs to pay its fair share and help us solve some of the budget problems we have,” Croft said.

The muni’s finance department estimated the current marijuana tax will generate $3.5 million for the 2018 fiscal year. The two-percentage-point increase would have added $700,000 this year.

Croft said that’s the amount needed for about five police officers or the price of cleaning up homeless camps around Anchorage.

Taborsky said she believes it’s too soon for a tax increase and said the assembly should remember there’s more at stake than money.

“Every time you have to increase your prices, you're not just competing with the local market, with other business owners, you're competing with a very healthy and real black market. They're not paying taxes and licensing fees,” she said.

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