Dope Economics: The Money in Marijuana

Dope Economics: The Money in Marijuana

If you have been in Alaska for the past year, you have been able to watch the process of a state legalizing marijuana. In February, Alaskans officially voted on ballot measure 2. The ballot measure passed three regulations for citizens who would like to legally partake:

A graphic of Alaska and marijuana.

1. Alaskans age 21 and older can now legally possess up to one ounce of marijuana.

2. Alaskans can grow as many as six marijuana plants in their homes (with no more than three flowering).

3. Alaskans can possess any additional marijuana produced by those plants.

Marijuana businesses are expected to be opening from now until 2016. Alaska government committees and marijuana specialists are developing policies that will help both private business and Alaska fiscally marijuana production. In order to further understand the future of the Alaskan marijuana industry, I talked to Cory Wray, the Executive Director of the Alaska Cannabis Institute (ACI).

“Our goal is to provide resources and education for people trying to get in the industry,” Wray said.

The ACI provides three certificates for those interested in marijuana production: edibles and concentrates certificate, grower’s certificates, entrepreneurial certificate. Wray said he has some doubts concerning the tax policies on marijuana, which he said will put marijuana businesses “out of business.”

On July 2nd, Alaska’s marijuana board held their first meeting. The board discussed allowing cannabis clubs, updating the criminal law, clarifying the difference between a personal grow and an illegal operation, and enabling villages to opt out of marijuana sales.

Kyle Hampton, Associate Economic Professor at UAA, has a slightly different take on the story. He believes marijuana will cover the “downfall” of Alaska’s oil industry. Professor Hampton did not, however, think the taxes Cory Wray brought up would actually bankrupt marijuana businesses.

“We already established people will pay extraordinary amounts for this drug,” Hampton said, and added that he did not see any true fiscal cons by legalizing weed. That is, for anyone except the original marijuana dealers, who he imagined were opposed to legalizing it. ​

Please join the discussion in comments, or join in on Facebook and Twitter, under the hashtag #DopeEconomics.

February 24th, 2016 will be the last day the state will accept marijuana business license applications.

  • Cory Wray

    The excise tax that is $50 per oz falls to the bottom line. In other words, the growers cannot write that off. So they will be paying federal taxes on top line profits. That might mean they have to pay the federal government more money than they profited. That sounds like bankruptcy to me. I hope the UAA professor understands 280e and the structure of an excise tax.

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