The Sitka Assembly is one step closer to putting a marijuana tax question out to the voters, but it will be a slightly lower tax than previously advertised.
When the group met on Tuesday (6-14-22), it settled on an 8% consumer tax on cannabis products to go before voters in the municipal election this October. If the proposition passes, the consumer tax would replace the current 5-6% sales tax, and the revenue would go toward the Sitka School District’s student activities fund.
Initially, assembly sponsors proposed a consumer tax on marijuana that would have gradually increased to 10%. But after hearing pushback from Sitkans in the cannabis industry, they reduced the highest tax rate to 8%. They also removed language that would have lumped the funding in with the city’s annual allocation to schools. Sponsors intend that the revenue generated from the new tax is additional, and specifically dedicated to student activities.
Sitka High School teacher Mike Viera said he appreciated the assembly’s approach and willingness to change direction, mid-course.
“I am appreciative of the thoughtfulness in the way that the co-sponsors have gone about this discussion, and their willingness to pull back and talk to industry and work with them on a compromise and come up with something that, again, you are not deciding tonight, you’re just deciding if the voters can decide,” he said. “So I think this is a great way to approach it.”
But during public testimony, the assembly continued to hear some pushback from Sitkans in the cannabis industry. Mike Daly owns Northern Lights Indoor Gardens, a local dispensary and grow operation. Opposed to a tax increase, he said the assembly was focusing on the wrong thing. He said if they addressed Sitka’s “black market” for cannabis, they’d have twice the tax revenue they have now.
“I really believe you guys are gonna stick with another tax and you’re gonna end up putting us out of business,” Daly said. “But I guarantee if there was guys making moonshine, or something like that, and selling it to the kids, you guys’d be all over that. But it’s like you guys could care less about the black market, and it’s all over this town.”
No assembly members voiced concern with the concept of taxing marijuana at 8%, but Crystal Duncan remained concerned with how the funds would be applied by the schools. While she supported giving the schools more revenue, Duncan wanted assurance that the funds would be used with equity in mind.
“I’m kind of excited by the prospect of exploring how we can make this more accessible to the students who need it, who were turned away a long time ago, because their family, they just don’t have that type of support to offer students,” Duncan said. “Maybe its just a difficult thing for us to establish or figure out as part of this vote and how we would pass that money through. But if its about equity, this doesn’t bring equity.”
Rebecca Himschoot said that wasn’t necessarily something they could control.
“It wouldn’t be the purview of this body to create the policies around this,” Himschoot said. “I feel like that’s the work of the school board. But if we can eliminate one of the barriers, and a barrier to equity is the funding, then that’s what we have the power to do.”
And even with the updated language, Mayor Steven Eisenbeisz remained concerned that they wouldn’t be able to guarantee the funding would be truly “additional” which was his ultimate hope for the ordinance.
“I don’t see yet how this doesn’t become just revenue replacement, instead of additional revenue to student activities,” Eisenbeisz said. “If you want to get a little more complicated, essentially we’re taking sales tax, which some sales tax does go to fund schools…we’re pulling it out and…in a very complicated accounting method, giving it back to them for the exact same purpose in a year with a slight increase.”
Eisenbeisz asked sponsors if they’d been able to figure out a way to ensure the money would be used as intended into the future. Assembly member Kevin Knox said there are no guarantees in governance or politics, and things can always change.
“If you are uncomfortable with that change, or you don’t like changes that are being made, you go to the polls, you make changes there,” Knox said. This is going to give our community opportunity to weigh in and take this opportunity…the only guarantee that we have is death. So moving on from that, we have to trust the process.”
Ultimately the decision to put a marijuana consumer’s sales tax on the ballot this fall passed on a 5-2 vote with Eisenbeisz and Duncan opposed. It will come before the assembly for a final reading on June 28.