Senate committee hears SB73 to cut marijuana wholesale excise tax, move to biennial registration and reestablish small‑business C‑corp exemption

Senate Bill 73, sponsored by Sen. Matt Klayman, would reduce Alaska’s marijuana wholesale excise tax, simplify tax tiers, change registration from annual to biennial, and reestablish a small‑business corporate income tax exemption for qualifying C corporations.

Klayman said the current wholesale excise tax—$50 per ounce on mature product—was established by 2014 initiative and has not adjusted to market changes. The bill would lower the excise tax to $12 per ounce and remove the department’s authority to set lower rates for particular parts of the plant, creating a single tax rate. Klayman also proposed returning the small business C‑corp exemption (for corporations under federal 26 U.S.C. 1202(e) criteria) that expired in 2023, which he said would relieve small firms now facing corporate income tax for the first time in a decade.

“Alaska’s marijuana industry is currently taxed $50 per ounce at the wholesale level. This represents the highest effective tax on marijuana in the United States,” Klayman said. He told the committee the industry has seen falling prices, growing black‑market competition and business closures, and argued the combination of tax relief and administrative simplification would help keep legal businesses operating.

Staffer Carly Dennis summarized statutory changes: sections in title 17 would shift registration to biennial renewals; sections in title 43 would implement the excise tax rate change and reinstate the small business exemption; and the bill would carry an effective date of July 1, 2025.

Industry witnesses described the market as in “triage.” Lacey Wilcox, vice president of the Alaska Marijuana Industry Association and sales operations manager at Top Hat Cannabis, said retailers and other licensees support the bill as an immediate measure to keep businesses afloat, even though many in the industry still view a retail sales tax as the more equitable long‑term solution. Jana Weltzien, an attorney who represents dozens of licensees, told senators the industry faces multiple pressures: the federal 280E tax code limits allowable deductions for marijuana businesses; falling wholesale prices; and increased availability of untaxed intoxicating hemp products sold outside the regulated system.

Committee members sought fiscal details. Senator Ray Jackson asked about total lost revenue; staff and the Department of Revenue’s tax division described a departmental fiscal note estimating a loss in the tens of millions (Department of Revenue’s summary noted a $14,500,000 impact for tax changes included in their note while other department fiscal notes were incorporated into a larger total). Dan Stickel, the Department of Revenue chief economist, said the department’s fiscal note represents the tax‑division impact including both the excise change and the small business exemption.

Regulatory enforcement questions surfaced: Senator Young asked about enforcement against intoxicating hemp products sold outside the regulated marijuana market. AMCO enforcement lead Joe Bankowski said AMCO’s primary mandate is licensed marijuana businesses and that enforcement of intoxicating hemp falls under the Department of Agriculture; he said AMCO is collaborating with Agriculture on renewed enforcement efforts but deferred detailed operational questions to Agriculture.

After invited testimony and questions, the committee set SB73 aside for further consideration with no roll‑call vote recorded.

If enacted, SB73 would change Alaska’s marijuana excise tax structure, move registration to biennial renewals, and reintroduce a state corporate exemption for qualifying small C‑corporations—changes sponsors say would stabilize the legal market amid price declines and enforcement challenges.