Alaska marijuana growers' back tax debt tops $1M
The amount of back taxes owed by Alaska marijuana companies has topped more than $1 million.
The Outpost at Kushtopia is one business that’s received a violation notice from the state for past due taxes.
Phillip Izon owns Kushtopia’s retail shop and grow facility and says the retail side is thriving.
“It’s been growing exponentially in my eyes,” Izon said. But he said Alaska’s tax structure is hurting cultivators.
Unlike other states where taxes are based on a percentage of sales, Alaska has a $50 per ounce flat rate.
Izon had hoped to expand his cultivation operation, but he said the money’s not there.
“When it comes down to it, the expenses associated with growing the weed are going to take people down and people are going to go out of business,” he said.
The Department of Revenue reports in November 2018 there were a total of 32 cultivators owing $728,400. That was 25% of all marijuana taxpayers at that point.
In August 2019, that number had jumped to 43 cultivators with a debt of $1,050,465.
In a report from Nov. 15, 2018, excise tax supervisor Kelly Mazzei wrote, “The high number of past due accounts is alarming and the Department of Revenue will continue to report the names of the delinquent taxpayers monthly to the Marijuana Control Board through AMCO, excluding the accounts that are currently on payment plans.”
Izon said it’s evident Alaska’s tax structure isn’t working.
“I may end up shutting my whole grow down and paying my tax debt off. That’s pretty much the only thing I can do. The more I grow the bigger my tax debt is,” Izon said.
He’d like to see the tax burden pushed to the retail and manufacturing side, like businesses the specialize in edibles and concentrates.
Izon also believes a percentage-based tax like other states have is a better way to collect the money as the market price fluctuates.
“If I try to sell a pound of weed for $1,000 in Alaska right now I would pay $800 in taxes. That means I would take home $200,” Izon said.
AK Best Buds is another Mat-Su Valley company on the delinquent list.
Ronald Hand owns the business off Knik Goose Bay Road. His wife Tracey Hand said the company has set up a payment plan with the Department of Revenue to chip away at their debt.
She also agrees the state should get rid of the flat rate.
“Absolutely, yes. Based on price, not based on weight. I think everyone would agree that would be fair,” Hand said.
Izon wants marijuana businesses to succeed in Alaska and hopes lawmakers look at how the state can make changes to help the industry as it grows.
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