House Finance Committee hears HB 91 tax overhaul recap; fiscal notes show multi‑million dollar revenue drops

Juneau — The Alaska House Finance Committee on Feb. 25, 2026 heard a reintroduction of House Bill 91, a marijuana tax overhaul sponsored by Representative Ashley Carrick that would reduce the existing excise tax from $50 per ounce to $12.50 immediately and, after a transition period, replace the excise tax with a 6% retail sales tax.

"The bill you have before you today builds off the work that was started during the 33rd Legislature," Representative Ashley Carrick said, noting the proposal follows a 2022 advisory task force recommendation that tax reform could stabilize the industry and help close the black market. Carrick told the committee Alaska raised about $25,000,000 in marijuana excise revenue in 2025 and that existing excise receipts are statutorily allocated: 50% to the recidivism reduction fund, 25% to the marijuana education and treatment fund, and 25% to the general fund.

Agency witnesses briefed the committee on seven updated fiscal notes. Acting Tax Director Brandon Spanos summarized revenue projections tied to the tax structure in the bill and said the division estimates an $8,100,000 reduction in state revenue in FY 2027 (declining to $6,500,000 in FY 2028 and $5,000,000 in a later out year) if the bill’s changes take effect as assumed. Spanos warned that creating a new retail sales tax in a compressed timeline raises implementation costs; the Department of Revenue estimated programming and stand‑up expenses could double to roughly $2,000,000 without at least 12 months to implement.

Several fiscal notes described programmatic impacts if marijuana tax receipts decline. Kevin Worley of the Department of Corrections said projected reductions in the recidivism reduction fund could lower a community residential center appropriation by about $2,100,000 and require a general‑fund offset. Jen Carson of the Division of Behavioral Health told the committee reductions would affect grants for recidivism programs, residential and withdrawal management services, outpatient behavioral health, the Bethel sobering center and peer/consumer support programs. Diana Thornton at the Department of Public Safety said funds used for the Council on Domestic Violence and Sexual Assault community grants and victim advocacy also face reduced revenue and that the department proposed general‑fund replacement in its fiscal note.

The bill includes operational changes intended to reduce burden and shrink opportunities for diversion. Carrick highlighted provisions allowing upstream sales (stores to sell unsold product back to producers), a proposed move to biennial licensing, and a change from monthly to quarterly tax remittance. Kevin Richard, director of the Alcohol and Marijuana Control Office, said removing a batch‑tagging requirement (section 2) would lower the AMCO services outlay by about $250,000 per year but that switching to biennial registrations would lower marijuana revenue by roughly $2,200,000 every other year.

Committee members pressed witnesses about black‑market activity and enforcement. Bailey Stewart, chair of the Alcohol and Marijuana Control Office board, said the state is seeing ‘‘diversion’’—black‑market product entering the recreational market typically to avoid taxation—and that some illicit product arrives by mail from the Lower 48. Representative Ballard argued legalization has enlarged the black market and cited what she said were large percentage and dollar‑value increases in illicit activity; that claim was not quantified or verified during the hearing.

Representatives and agency staff also discussed implementation choices that materially affect the fiscal note. Carrick told the committee that removing the proposed requirement to establish tax collection facilities in multiple judicial districts would reduce the bill’s operating expenditures by roughly $3.6 million; Spanos said removing those cash‑room requirements would reduce operating costs but would not change the revenue reduction estimates tied to the tax rate change.

The committee took no formal action on HB 91 and set the bill aside for further work. Co‑Chair Foster said the Finance Committee would reconvene later that day at 1:30 p.m. for additional presentations; no vote was taken on the bill during the morning session.