Chapter 5.09
EXCISE TAX ON MARIJUANA
Sections:
5.09.015 Excise tax on marijuana.
5.09.025 No tax-free days for excise tax on marijuana.
5.09.030 Disposition of proceeds.
5.09.035 Monthly excise tax returns and payment of excise tax due.
5.09.040 Collection procedures.
5.09.045 Confidential information.
5.09.050 Penalty and interest.
5.09.055 Lien for excise tax, interest and penalty due.
5.09.060 Records maintenance and inspection.
5.09.005 Purpose.
The purpose of this chapter is to provide for the levy, collection, and enforcement of an excise tax on marijuana cultivated by a licensed marijuana cultivation facility within the City and Borough of Wrangell for commercial or retail sale purposes, including marijuana cultivated by a standard marijuana cultivation facility and limited marijuana cultivation facility. The excise tax is imposed on the sale or transfer of marijuana from a marijuana cultivation facility to a retail marijuana store or a marijuana product manufacturing facility. [Ord. 933 § 2, 2017.]
5.09.010 Definitions.
A. “Flowering” means a marijuana plant that has visible crystals, buds, or flowers, or for which the exposure to light is scheduled with the intent to produce crystals, buds, or flowers.
B. “Immature” means a marijuana plant 18 inches or less in height, with no visible crystals, buds, or flowers, and in which the exposure to light is scheduled with the intent to prevent formation of crystals, buds, or flowers.
C. “Mature” means a marijuana plant over 18 inches in height.
D. “Marijuana” has the meaning given in AS 17.38.900.
E. “Marijuana cultivation facility” has the meaning given in AS 17.38.900 and includes both a standard marijuana cultivation facility as licensed under 3 AAC 306.400 and a limited marijuana cultivation facility as licensed under 3 AAC 306.400.
F. “Marijuana establishment” has the meaning given in AS 17.38.900.
G. “Marijuana product manufacturing facility” has the meaning given in AS 17.38.900.
H. “Marijuana testing facility” has the meaning given in AS 17.38.900.
I. “Retail marijuana store” has the meaning given in AS 17.38.900.
J. “Transfer” means the exchange of marijuana, with or without consideration, or by barter, between marijuana establishments, or within marijuana establishments possessing multiple permits, for commercial purposes. [Ord. 1013 § 2, 2021; Ord. 933 § 2, 2017.]
5.09.015 Excise tax on marijuana.
A. An excise tax is imposed on the sale or transfer of all marijuana from a marijuana cultivation facility licensed to operate within the City and Borough of Wrangell pursuant to 3 AAC 306.400, to a retail marijuana store or a marijuana product manufacturing facility, as follows:
1. All nonexempt marijuana sold or transferred from a marijuana cultivation facility shall be taxed as follows:
a. Any part of the flower and mature bud, as defined in 15 AAC 61.990, shall be taxed at $10.00 per ounce;
b. The remainder of the plant (including immature bud), not included in subsection (A)(1)(a) of this section, shall be taxed at $2.00 per ounce.
2. A marijuana cultivation facility within the City and Borough of Wrangell that is also licensed as a marijuana product manufacturing facility must pay the excise tax on all marijuana transferred from the cultivation facility to the product manufacturing facility for the month in which the marijuana was transferred.
3. A marijuana cultivation facility within the City and Borough of Wrangell that is also licensed as a retail marijuana store must pay the excise tax on all marijuana transferred from the cultivation facility to the retail marijuana store for the month in which the marijuana was transferred. [Ord. 1013 § 3, 2021; Ord. 933 § 2, 2017.]
5.09.020 Exemptions.
Transfers to a licensed marijuana testing facility are exempt from the excise tax on marijuana under this chapter. [Ord. 933 § 2, 2017.]
5.09.025 No tax-free days for excise tax on marijuana.
There shall be no tax-free days for the excise tax on marijuana. [Ord. 933 § 2, 2017.]
5.09.030 Disposition of proceeds.
The proceeds of the excise tax levied under this chapter shall be deposited by the director of finance in the general fund of the borough. [Ord. 933 § 2, 2017.]
5.09.035 Monthly excise tax returns and payment of excise tax due.
A. Every marijuana cultivation facility licensee within the City and Borough of Wrangell shall, on or before the last day of each calendar month, submit to the director of finance an excise tax return, upon forms provided by the finance department, and submit payment for the excise taxes due.
1. The return shall be signed under penalty of perjury by the licensee or agent and shall include:
a. A copy of the state marijuana excise tax return for that month submitted by the licensee to the Alaska Department of Revenue in accordance with 15 AAC 61.010;
b. The name and address of the licensee;
c. The name and address of the person filing the return, if different from the licensee;
d. The name under which the marijuana cultivation facility is being operated;
e. A report setting forth the total amount of marijuana transferred from the licensed marijuana cultivation facility in ounces, with fractional ounces calculated to the third decimal place, for the preceding month;
f. The amount of excise tax due;
g. Such other information and supporting documentation which may be required by the finance director.
B. A licensed marijuana cultivation facility in the City and Borough of Wrangell shall file an excise tax return each month.
C. The excise taxes imposed under this chapter and the return required by this section must be received by the finance director, or postmarked on or before the last day of each calendar month following the month covered by the return.
D. A separate excise tax return must be filed for each location when a licensee is operating in several locations within the borough. [Ord. 933 § 2, 2017.]
5.09.040 Collection procedures.
A. Whenever the finance director believes a return is inaccurate, or whenever a marijuana licensee is delinquent in filing the required monthly return or paying excise tax due, the finance director shall mail to the licensee’s last address on file with the borough a written demand requesting the filing of a corrected or required excise tax return and payment of the excise tax due within 10 days.
B. In the event the licensee does not comply with the demand, the finance director shall make an excise tax assessment against the licensee. The assessment shall estimate the taxable revenue received or the amount transferred by the licensee during the period in question. The estimate may be based upon previous returns filed by the licensee, the excise tax return and information the licensee submitted to the Alaska Department of Revenue in accordance with 15 AAC 61.010, and any other relevant information known to the finance director. The assessment shall state the amount of taxes, penalties and interest assessed, and shall contain a brief statement explaining the basis of the assessment.
C. A notice of assessment shall be sent to the licensee’s last known address by first class mail. The notice of assessment shall contain a copy of the assessment and a statement notifying the licensee of the licensee’s right to a hearing before the borough manager. The notice of assessment shall state that if a timely request for a hearing before the borough manager is not made, the assessment shall become final 30 days after the date the notice of assessment was mailed to the licensee.
D. The licensee shall have a right to a hearing before the borough manager concerning the assessment. The licensee may request a hearing by delivering to the borough manager a written request for a hearing within 30 days of the date the notice of assessment was mailed. The borough manager shall schedule the hearing and notify the licensee of date and time for the hearing by mail. The hearing shall be conducted informally. The licensee shall make available for examination and copying at the hearing the licensee’s books, records, papers and other documents pertaining to the period involved in the assessment. The licensee shall be given an opportunity to produce records and testimony and to present argument relating to the assessment.
E. After the hearing, the borough manager shall issue a written decision upholding or modifying the assessment. The decision shall be mailed by first class mail to the licensee’s last address on file with the borough. The decision shall notify the licensee that the borough manager’s decision may be appealed to the excise tax board of appeals by filing with the manager a written notice of appeal to the board of appeals within 30 days of the date the written decision of the manager was mailed to the licensee. Failure of the licensee to file a timely appeal shall be deemed a waiver of any right to appeal the borough manager’s decision and the modified assessment, or the original assessment if no modification is made, shall be the final assessment for the purpose of determining the licensee’s liability to the borough.
F. Board of Appeals.
1. The excise tax board of appeals consists of three members. One member shall be appointed by the mayor from the borough assembly, with majority approval of assembly. One member is to be appointed by the appellant. One member is to be mutually agreed upon by the other two members. If the third member is not mutually agreed upon within 45 days after receipt of the written decision of the finance director, the mayor shall appoint the third member with majority approval of assembly. The board shall elect from its membership a chairperson, a vice-chairperson and a secretary. Three members of the board shall constitute a quorum for the transaction of business. The borough shall provide secretarial and other staff support required by the board.
2. All decisions of the board shall be in writing and shall be maintained and indexed by the excise tax office for review by the public. Records and proceedings before the board are public, except that the board may deliberate in closed session. The board may recommend, in writing, that the borough manager compromise and abate penalties and interest, and may recommend, in writing, that the borough manager negotiate and enter into a payment plan for delinquent excise taxes, penalties and interest.
3. The board shall follow rules of procedure governing excise tax appeals and proceedings as adopted by the borough assembly.
4. The board shall issue a final decision upholding or modifying the assessment. The final decision shall be mailed by first class to the seller’s last known address. The final assessment shall notify the seller that it is the final administrative decision of the borough on the subject of the assessment and may be appealed to the Superior Court for the State of Alaska in accordance with state law and court rules.
G. After an assessment has become final, the borough may file a civil action against the licensee for collection of the excise taxes, penalties and interest due under the assessment. The licensee shall be liable to pay the borough’s full reasonable attorney’s fees and costs incurred in the civil action. Interest and penalties on the assessment shall continue to accrue until the licensee’s liability has been paid in full.
H. The City and Borough of Wrangell shall inform the Marijuana Control Board of a licensee’s failure to pay the excise tax due, or to file a return, as required under this chapter. [Ord. 933 § 2, 2017.]
5.09.045 Confidential information.
A. Except as otherwise provided in this section, returns filed with the borough for the purpose of complying with the terms of this chapter and all information obtained from such returns are private and confidential, and such returns and information shall be kept from inspection by private persons, to the extent permitted by applicable federal and state law.
B. This section does not prohibit the delivery to a person, or the person’s duly authorized representative, of a copy of any return filed by that person.
C. This section does not prohibit the publication of statistics presented in a manner that prevents the identification of particular buyers or sellers.
D. This section does not prohibit the disclosure of such returns or information through enforcement or collection proceedings or when required by court order or prohibit furnishing such returns and information on a reciprocal basis to other agencies or political subdivisions of the state or United States concerned with the enforcement of tax laws.
E. The borough may disclose, by public inspection or publication, the name (including any business name), the estimated balance due, and the current status of payments and filings of any marijuana licensee who does not file a return or remit in full all excise taxes and any penalty and interest due within 45 days after being required to do so by the provisions of this chapter. In disclosing or publishing information under this section, the borough need not notify a taxpayer prior to disclosure or publication. Publication of delinquencies under this section may report excise tax amounts delinquent by more than 45 days according to records maintained by the borough in the normal course of business. Publications may indicate whether the amount has been calculated based upon voluntary filings or based upon involuntary estimated filings. Publications need not reflect whether the amount is disputed by the taxpayer.
F. Notwithstanding any other provision of this section, the borough may disclose the total amount of excise taxes paid to it pursuant to this chapter as part of its customary budgeting and financial reporting processes. [Ord. 963 § 2, 2019; Ord. 933 § 2, 2017.]
5.09.050 Penalty and interest.
In the event a return is not made or the appropriate excise tax not paid within one month following the reporting month, a penalty of 15 percent of such excise tax as is unpaid shall be added thereto. Interest at the rate of 15 percent per year from the date of delinquency until paid shall accrue monthly. [Ord. 933 § 2, 2017.]
5.09.055 Lien for excise tax, interest and penalty due.
The excise tax, interest and penalty imposed under this chapter shall constitute a lien in favor of the borough upon the assets or property of the licensee within the borough. The lien arises upon delinquency and continues until liability for the amount is satisfied or a judgment against the licensee arising out of the liability is satisfied. [Ord. 933 § 2, 2017.]
5.09.060 Records maintenance and inspection.
A. Marijuana cultivation facilities shall keep complete and accurate records to support the information required to be included in the monthly excise tax returns required by this chapter, including sales and transfers. The records must include an accounting for inventories of live plants, trimmings, and any dried product on the first and last day of the month.
B. An invoice, sales receipt, or other record of the sale or transfer of marijuana products from a marijuana cultivation facility must separately state the amount of excise tax due after the sale or transfer.
C. Persons subject to this chapter shall keep such other records as the borough finance director may prescribe.
D. The borough manager, or the manager’s designee, may, during business hours, enter the business premises of a licensee to inspect and examine the records, books, and other documents of the licensee, in order to carry out the provisions of this chapter. [Ord. 933 § 2, 2017.]