AndreTaxCo, PLLC

Alaska Cannabis & Hemp Industries 

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IRC § 280E Analysis / R&D Tax Credit Eligibility

• Does Section 280E Apply to state individual income tax?

  • No. Alaska does not have a personal income tax.

• Does Section 280E apply to state corporate income tax?

  • Yes. The starting point for the Alaska corporate income tax is Federal taxable income. There is no provision that states Section 280E does not apply. 

• Are State R&D Tax Credits Potentially Eligible for "Plant Touching" (e.g. producers, cultivators, manufacturers, retailers) Cannabis Companies?

  • No, see IRC § 280E restrictions.  

• Are State R&D Tax Credits Potentially Eligible for Industrial Hemp Companies & "Non-Plant Touching" Separate Trade or Businesses (e.g. testing laboratories)?

  • Yes​, subject to further 280E analysis regarding company activities, structure, and applicable state laws.

• See Alaska R&D Credit Summary​

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State Law Background

(1) Hemp State Law Authority & Background

• Alaska Stat. § 03.05.010; Alaska Stat. § 03.05.100; Alaska Stat. § 03.05.076 to 03.05.079; Alaska Stat. § 11.71.900; Alaska Stat. § 17.20.020; Alaska Stat. §17.38.900 (2018)              

  • Directs the commissioner of natural resources to adopt regulations related to industrial hemp including approved sources or varieties of seed, testing requirements, and establishing isolation distances.

  • Specifies registration requirements and allowable activities for registered producers of industrial hemp.

  • Directs the department to establish fee levels to cover regulatory costs and annually review these fee levels.

  • Allows for the creation of a pilot program by an institution of higher education or the Department of Natural Resources

  • Defines both industrial hemp and cannabidiol oil. Amends definitions for hashish oil and marijuana.

  • Clarifies that the addition of industrial hemp to food does not create an adulterated food product.

  • Requires a report on or before Dec. 1, 2024.        

 

(2) Medical Marijuana State Law Authority & Background

• Statutory Language (year) - Measure 8 (1998) SB 94 (1999) Statute Title 17, Chapter 37

  • Patient Registry or ID cards - Yes

  • Allows Dispensaries - Yes

  • Specifies Conditions - Yes

  • Recognizes Patients from other states - No, but adults over 21 may purchase at retail adult dispensaries.

  • State Allows for Retail Sales/Adult Use - Ballot Measure 2 (2014) Marijuana Regulations

• Are sales of medical marijuana subject to sales tax?

  • No. Alaska does not have a state sales tax. However, local jurisdictions may impose sales tax.

• Is medical marijuana subject to an excise tax?

  • Yes. Alaska imposes an excise tax when marijuana is sold or transferred from a marijuana cultivation facility to a retail marijuana store or marijuana product manufacturing facility. The cultivator is liable for the tax.

  • Any part of the bud and flower is taxed at $50 per ounce. The remainder of the plant is taxed at $15 per ounce.

  • For reference: Alaska Department of Revenue Excise Tax Statute Regulations

  • On July 2, 2018, the Department of Revenue issued proposed regulations that make changes to the way the state taxes parts of the marijuana plant. Updates are posted to the Department of Revenue website.

 

(3) Recreational Marijuana State Law Authority & Background​

• Ballot Measure: Ballot Measure 2 — Approved Nov. 4, 2014 by 53% of voters 

• Law: Alaska Statute Chapter 17.38: The Regulation of Marijuana; 3 AAC 306 - Regulations

  • State Website: Alaska Alcohol and Marijuana Control Office

  • Effective: Feb. 24, 2015

  • Alaska Medical Marijuana Laws: The possession limits for medical marijuana patients are the same as the limits for adult users.

  • Possession and Cultivation Limits Age: 21+ 

  • Usable Marijuana: up to 1 oz

  • Plants: up to 6 plants with no more than 3 mature plants

  • Hash & Concentrates: Possession of hash and concentrates is illegal. Possession of up to 3 g is a misdemeanor, more is a felony.​

• Are sales of recreational marijuana subject to sales tax?

  • No. Alaska does not have a state sales tax. However, local jurisdictions may impose sales tax.​​

• Is recreational marijuana subject to an excise tax?

  • Yes. The same excise tax that applies to medical marijuana applies to recreational marijuana.​

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(4) Does the State impose a Stamp Tax or Controlled Substances Tax?

• No.​