City of Fairbanks voters will consider a 5 percent sales tax on marijuana. The city council has approved putting the proposed retail tax before voters in the October municipal election. The tax is an effort to tap unknown revenue that legalized marijuana sales could provide.
Ordinance sponsor, Fairbanks City Council member David Pruhs told the panel that the tax follows on direct language from the statewide ballot initiative approved by Alaska voters last fall legalizing recreational marijuana.
“This is what the industry wanted. They wanted to be treated alcohol,” Pruhs says. “We’re treating them just like alcohol.”
The city of Fairbanks already has alcohol and tobacco taxes. Pruhs further advocated for the proposed marijuana sales tax as an alternative means for the city to raise money to help cover a dip in property tax revenue.
“What we have to do is make the decision: ‘Do we want to put this in its operating form for the voters and let them decide?'”
A version of the tax ordinance that would have allowed the rate to be set anywhere between 5 and 8 percent was turned back by the council after concerns were raised by council member Jerry Cleworth about compliance with the city charter.
“It specifically says that if we’re going to set a rate, then go to the voters. And that’s what we’re doing,” Cleworth says. “But if we’re going to raise that rate, we need to go to the voters again.”
Local cannabis advocate Frank Turney spoke out against the proposed marijuana sales tax, saying it will have a negative effect.
“Pushing people into the black market, so to speak,” Turney says.
Turney and twoother citizens who voiced opposition to the tax, also cited a $50-per-ounce state tax that will be levied on marijuana growers. No one from the marijuana industry testified. The state is still formulating regulations governing commercial marijuana, which becomes legal for licensed operators next year.