Senate Finance hears bill to cut marijuana excise tax to $12/oz, reinstate small C-corp exemption and move to biennial registration

Senate Bill 73 was introduced March 6, 2025, by Senator Matt Klayman. The bill would reduce the marijuana wholesale excise tax from $50 per ounce to $12 per ounce, replace the current three‑tier wholesale tax structure with a single rate, change registration and renewals from annual to biennial, and reinstate the Alaska small C‑corporation income tax exemption for qualified businesses.

“Alaska's marijuana industry is currently taxed at $50 per ounce at the wholesale level,” Senator Klayman said in opening remarks. He told the committee the statutory three‑tier tax (higher rates for bud and lower rates for trim) has been difficult to enforce and has incentivized misclassification of product. Klayman said the bill also reestablishes “the Alaska Small Business C Corporation income tax exemption that expired in 2023,” applying to corporations with less than $50 million in gross assets and meeting active business requirements.

Department of Revenue Deputy Director Brandon Spanos presented the division’s fiscal analysis and administrative considerations. He noted the department uses Metrc tracking to monitor transfers and that the multiple-rate structure makes enforcement harder: if retailers report bud as trim in Metrc, the system will reflect that classification. Spanos said the department is “neutral” on the policy choice but recommended a single rate is administratively simpler. The bill’s effective date in the sectional analysis was set to July 1, 2025.

Multiple industry witnesses and regulators testified in support. Jana Waltson, an attorney who co‑chaired the governor’s task force, said many marijuana operators had chosen C‑corporation structures to protect owners’ personal liability in light of federal tax code Section 280E complications. Industry witnesses and the Marijuana Control Board’s chair said enforcement gaps for intoxicating hemp products and a persistent illicit market are shrinking the regulated market and taxing legal businesses out of competitiveness.

Witnesses cited enforcement and market trends: Amy (Bailey) Stewart, chair of the Marijuana Control Board (industry seat), said the state had 480 active licenses at the start of the fiscal year and 471 at the time of testimony and that the board had seen zero new cultivation applicants at its most recent virtual meeting. Department of Revenue fiscal materials presented an updated revenue estimate and anticipated a recalculation of fiscal notes after the spring forecast.

Committee members asked whether the $12 figure follows prior task force recommendations; committee staff responded the task force recommended $12.50 per ounce. Questions also covered distinctions between excise and sales taxes, potential future interstate legalization and the implications for an excise tax, and whether cultivators are excluded from the small C‑corp exemption by federal definitions of farming. Spanos noted the tax division treats many cultivators as farming for purposes of the existing qualified small corporation language; if the committee intends to cover cultivators the statutory language may need revision.

No committee vote occurred. The committee set SB73 aside for further review.