The Sitka School Board has offered its informal support for a plan to tax the sale of cannabis products, in order to pay for extracurricular activities in the school district.
The Sitka Assembly has drafted a ballot proposition to put before voters this fall that would eliminate the municipal sales tax on cannabis, and replace it with a slightly higher consumer tax. At its most recent meeting, the school board backed the proposition – with one major caveat.
The problem is just a line in the ballot proposition ordinance stating that the money raised by the new tax would be “included in the calculation of local support” per state law – where it might have the unintended effect of diverting funding from classrooms into extracurriculars.
That’s an oversight, according to assembly member Rebecca Himschoot, who sponsored the ordinance. She cleared things up with the school board at its meeting on June 1. This money is intended to land outside the state funding formula, and directly support student participation in sports and activities.
“It’s really important to the assembly, or at least to the three co-sponsors that these funds be supplemental to the district’s existing effort,” said Himschoot. “So our expectation is that the district will continue with current funding levels. And we’ll be adding to that, and the ultimate goal — obviously, elusive-but-worthy — will be to make school activities, if at all possible, free and open to everyone.”
Himschoot said that the problem language would be deleted from the draft ordinance, with the approval of the rest of the assembly. Another likely change will be eliminating the highest proposed tax rate of 10-percent on marijuana, and capping it at 8-percent.
Sitka already charges a sales tax which alternates seasonally between 5- and 6-percent. Cannabis products would be exempt from the regular sales tax, if voters approve the ballot measure. Himschoot said this made the new consumer tax easier to bear for the cannabis industry in Sitka.
“So we’re hearing from the three companies we’ve been talking with: One company has been very supportive, one company has become supportive through the changes that we’re making, and we’re not really hearing from the third company,” said Himschoot. “And when I say ‘very supportive,’ they understand the need for activities in the end, and using this (tax) as a means to that end is something they’re supportive of.”
Taxing marijuana is complicated. Outgoing school board president Andrew Hames recalled serving on the Marijuana Advisory Committee in 2016, and learning how excess taxes might make legal cannabis uncompetitive with the existing, illegal market.
“And at that time, there was so much concern by people who were looking to starting a business at being burdened down with taxes, and not being able to, number one, be competitive with the black market,” Hames said. “And number two, be sustainable with just the amount of expenses. Because of the nature of the product, they didn’t have the same tax write-offs. So they were really hesitant, which at the time surprised me because one of the main reasons for legalizing was we can tax this and we’re not taxing it at all right now. And so the thought was, let’s get things up on their feet. And then we can revisit this a few years down the road.”
Hames said that he was pleased that the assembly was now pursuing the idea.
Funding student activities has been a difficult problem over the last couple of decades. Travel costs are huge, and students and families are asked to both fundraise for activities, and pay fees that have grown so large that equity is a serious concern.
The school board has explored solutions over the years, formed parent committees, without any major breakthroughs. Board member Paul Rioux thought the consumer tax on cannabis products was the first real opportunity in a while.
“As much as I hate to see new taxes, I was thinking back to what my comment a few months ago about, you know, possibly looking around at the good old days,” said Rioux. “And we’re looking at situations with rising costs and stagnant — if not declining — revenues. And if we’re not working as a community to solve those problems before they reach our doorstep, then they’re just going to run us over.”
Both board members Blossom Teal-Olsen and Todd Gebler liked the proposal. Gebler said his knee-jerk reaction was that “any revenue stream would be welcome.”
Assembly member Himschoot encouraged board members to speak to the proposed ballot proposition at the assembly’s next meeting on June 14. She reminded the board that sales tax revenues were on the rise overall in Sitka, and that replacing the sales tax on cannabis with a slightly higher tax to benefit students wouldn’t be seen as unfair to the sector.
“And we do always have to acknowledge the risk of the black market when we increase taxes on this industry,” she said. “So I guess there’s a certain level of faith and trust in Sitkans to do the right thing. There won’t be a huge bottom-line difference to most people in town who are using marijuana products.”