Assembly rejects pot tax hike, tightens unlawful camp rules

A battery-powered rig for cannabis concentrates at a marijuana jobs fair in Anchorage in 2015. (Photo: Zachariah Hughes, KSKA)

In a surprising move, the Anchorage Assembly voted down a proposal to raise taxes on cannabis businesses. During a Tuesday night meeting, more than a dozen people from the local industry spoke against the proposed tax increase. And the testimony proved effective.

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Two years ago, voters in Anchorage gave the Assembly the ability to increase taxes by two percent biennially on the new industry up to a ceiling of 12 percent. That’s on top of the taxes collected by the state. The ordinance discussed Tuesday would have been the first bump, from the current five percent up to seven.

Testimony was dominated by cannabis business owners and employees. No one from the public spoke in favor of the change.

Susan Nowland owns a retail cannabis shop in downtown Anchorage, and told the Assembly the industry is still in its infancy, struggling to get its financial footing. Nowland and others want more time before paying higher taxes on sales.

“I believe in taxation. It’s good for the industry. But I think it’s too soon right now,” Nowland said. “Give us a chance.”

Mayor Ethan Berkowitz’s administration hoped the tax increase would help boost revenues to the city above the $1.3 million it brought in last year, shifting a small portion of the municipal budget off of property owners.

But opponents say cannabis retailers in Anchorage are already paying several times more in taxes than it costs the municipality to regulate and monitor their operations.

The discussion scrambled the Assembly’s normal ideological splits.

“Clearly the industry has already paid for its costs,” Assembly member Amy Demboski said.

Demboski is a fiscal and social conservative who usually votes against measures favorable to the cannabis industry. But on this issue, she came out forcefully on behalf of businesses in opposing the tax increase.

“I don’t believe the administration has demonstrated a need. Nor do I think they have been the best stewards of tax-payer money, therefore I will not vote to give them more of it,” Demboski said, prompting scattered applause but cannabis supporters in the audience.

The resounding 8-to-2 vote against the proposal was unexpected by many.

Cannabis remains expensive to grow and sell in Alaska relative to other states that have legalized. However the tax rate on retailers in Anchorage is not outside the normal range of other hub cities, below Seattle on the high end, but above Portland on the lower side in the overall tax burden.

The Assembly also approved a change in how it clears unlawful campsites in the areas around public parks and trails.

In what could be a dramatic change in enforcement, Assembly members unanimously voted for a more aggressive policy that designates broad zones where camps have to be vacated along a faster time-line. The move is meant to address vocal and increasingly organized complaints from property owners that the city does not do enough to clear out large, sprawling improvised outdoor shelters scattered throughout the parks and green-belt.

The Assembly will provide campers 72 hours to leave areas that fall into the new prohibited zone category. Those include public lands near parks, trails, schools and other civic infrastructure. In those instances, the municipality will store people’s belongings in a city-run facility if they request it. Up until now, the policy on the books targeted individual campsites for clean up, which critics say just pushes the problem from spot to spot instead of expelling unlawful encampments.

Zachariah Hughes reports on city & state politics, arts & culture, drugs, and military affairs in Anchorage and South Central Alaska.

@ZachHughesAK About Zachariah

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