House committee hears testimony on HB 94 to cut marijuana excise tax, change registration and restore small‑business C‑corp exemption

The Alaska House Labor and Commerce Committee heard invited testimony on Monday, March 3, on House Bill 94, a package of tax and registration changes for the marijuana industry that would lower the wholesale excise tax, change registration renewal to every two years and reinstate a small‑business corporate income tax exemption.

David Goff, staff to Representative Thomas Chesky, opened the presentation and described HB 94 as a three‑part bill to reduce the excise tax, align registration renewal periods with other businesses and restore a C‑corporation small‑business exemption. “Alaska’s current marijuana excise tax places an undue burden on the industry that is overwhelmingly composed of small, Alaska owned businesses,” Goff said. He said the bill would replace multiple weight‑tiered rates with a single $12 per ounce excise tax and change marijuana establishment registration from annual to biennial.

The bill matters to an industry that witnesses said has contracted under the current tax structure and faces competition from illicit and unregulated products. Lacey Wilcox, vice president of the Alaska Marijuana Industry Association, urged the committee to advance HB 94 so businesses can “reinvest, rehire workers, and compete with unregulated markets.” Wilcox said the $50 per ounce excise tax was devised when wholesale prices were much higher and that wholesale prices have since “plummeted by more than 50%,” making the $50 rate unsustainable.

Why it matters: Witnesses said the combination of a high excise tax, federal banking limitations and the denial of ordinary federal deductions under the Internal Revenue Code has made Alaska’s legal market uncompetitive with illicit sellers and with unregulated intoxicating hemp products. Bailey Stewart, chair and legislative liaison for the Marijuana Control Board, told the committee the board supports the bill and called tax relief “necessary” while the board and the Division work on other regulatory steps.

Key provisions and context - Excise tax: HB 94 would replace the current tiered weight‑based wholesale excise tax (the transcript lists $50 per ounce for the highest grade, $25 and $15 for lower tiers) with a single $12 per ounce rate. David Goff said marijuana tax revenue “peaked at nearly $30,000,000 in 2022” and has declined since. - Registration renewal: Sections 1–6 of the bill amend statutes to change marijuana establishment registration renewal from annual to biennial, the sponsor’s staff said. - Small‑business corporate exemption: Section 7 would reinstate an exemption for qualified small C corporations tied to 26 U.S.C. references as quoted in the bill text. The exemption in the draft applies to corporations with “less than 50,000,000 in gross assets,” according to testimony. - Enforcement and administration: HB 94 would consolidate tax language into a single rate (several statutory sections quoted in the hearing transcript: AS 17.3820.2D, AS 17.3821E, and AS 43.61 series, among others) and add civil penalties for delinquent payment to the marijuana tax statute.

What witnesses said - Sam Hatche, co‑owner of Tannenah Herb Company (Fairbanks), said the market has shifted away from flower toward trim, vape, edible and concentrate products and that “if we don’t enact change soon, there’s just not gonna be any revenue collected.” He also said the current renewal schedule is costly to smaller operators, citing an example renewal cost of $7,000 a year for a retail store. - Lacey Wilcox, vice president of the Alaska Marijuana Industry Association, said the effective tax burden on some operators can exceed 30% of wholesale revenue and described HB 94 as “a necessary, simple, and immediate fix” to stabilize businesses. - Bailey Stewart, chair and legislative liaison for the Marijuana Control Board, said the board supports the bill and that the industry is contending with both a persistent illicit market and a growing unregulated intoxicating hemp market. Stewart said those unregulated channels “see no taxation of any kind, face no enforcement action, and are actively undermining the legal industry.”

Committee discussion and clarifying points Committee members pressed witnesses on measurement of the illicit market, the origin of the $12 per ounce figure and the fiscal impacts on programs funded by marijuana tax revenue. David Goff said the $12 rate is just under a one‑quarter reduction (he characterized the task force stage 1 recommendation as a 75% reduction of the current weight‑based rate, yielding about $12.50). Members noted competing estimates of historical tax receipts; witnesses referenced Department of Revenue and task‑force materials.

Representative Thomas Tomaszewski (identified in the transcript as the bill sponsor in later remarks) acknowledged the bill will reduce revenue for programs funded by the marijuana excise tax — including education and recidivism grants — and said lawmakers would need to “look hard” at how those programs are funded if the excise tax is reduced. He said the committee should act now to provide industry relief while longer‑term options (including a statewide retail sales tax that has been proposed in other bills) are considered.

No vote took place. The committee heard invited testimony from industry, the Marijuana Control Board and the bill sponsor; members said they will return to the measure in a later session. The committee adjourned at 4:05 p.m.

Ending note: Committee members signaled willingness to consider both short‑term excise relief and broader retail tax models in future work, but several witnesses and members said immediate relief was the primary objective of HB 94.