The Ketchikan Gateway Borough Assembly postponed action Monday on a marijuana sales tax of up to 10 percent, to provide borough staff time to look into a proposal that would tax marijuana based instead on its potency.
Assembly Member Glen Thompson made the proposal to tax the potency of pot.
He has spoken against “sin” taxes that add to the cost of specific items, such as tobacco or marijuana. However, he said, perhaps increasing the cost of high-potency cannabis products could help keep those items out of the hands of youth.
“Kids get into them and eat a piece of candy with 80 mg of THC in it, we have a real problem,” he said. “So, I think a 10-cent-per-mg THC content tax makes a lot of sense in terms of the retail sales. And it would be up to 10 cents. It just changes it from a straight percentage on the retail sales to include a calculation for the concentration of these products.”
TCH is the active ingredient in marijuana.
The Assembly postponed action on the pot tax until the next Assembly meeting to get more information on Thompson’s proposal.
Thompson noted at the end of Monday’s meeting that if the marijuana excise tax is adopted and ratified by voters, he would push to have revenue from that tax go into the local school capital improvement project fund. He said money from the state has been drastically cut for those projects.
“I’m going to make the suggestion that of that marijuana tax does pass that those funds be put into that fund,” he said. “Therefore, if you don’t smoke pot, you don’t support the kids.”
One citizen spoke to the issue during public comment Monday. Mark Woodward is working on plans to open a retail marijuana store on Stedman Street.
He said he has no problem paying taxes, because that’s something businesses have to do. But, he said, “are there other industries that you ask these types of rates for? If not, then ask yourselves: Why are you asking us for those rates? Is it because you’re not going to get a lot of opposition? As a small business owner who wants to get involved in a strong, local business, it seems like the borough – and the city – is making it difficult for us to do that.”
The Assembly spent a lot of time Monday talking about a proposal from Assembly Members Stephen Bradford and Bill Rotecki that would have tripled the single-purchase sales tax cap from $1,000 to $3,000. The original proposal also waived sales taxes on the first $500 of residential rent.
The Assembly split the motion, though, and debated each item separately. Assembly Member Mike Painter was excused from discussion of the tax cap because he declared it would financially affect his business.
Assembly Member John Harrington was excused from discussion of the rental tax waiver because he said his rental properties are contract-based and those contracts include sales tax. Therefore, he said, if the waiver passes, his income would increase.
The Assembly eventually postponed action on the rental issue. Regarding the tax cap, Rotecki notes that the current cap was set in place many years ago, and was never linked to inflation. Maintaining it at $1,000, he said, would maintain a system where the people who can afford more pay fewer taxes.
“So, in other words, the guy who is buying the little things is going to share a greater and greater and greater burden of this method of revenue,” he said.
There was some concern among other Assembly members about the jump from $1,000 to $3,000. Rotecki proposed an amendment that would increase the tax cap to $1,500 instead, but still link it to inflation.
That measure narrowly passed. It initially was a tie vote with Thompson, Harrington and Alan Bailey voting no. Mayor David Landis broke the tie, voting in favor of the amendment.
The issue will come back to the Assembly for a public hearing and second vote.