Marijuana Legalization In Alaska:

Potential Economic Implications

Jeffrey Dickson – Samuel Dixon – Lee KearneyUniversity of Alaska Anchorage

Public Finance ManagementSpring 2014

OverviewJob creation – What it could look like.

Tax Revenue – Options & Structures.

Prohibition Costs – Governmental Costs

Jobs5 distinct areas of potential growth:• Production – Law & Geography isolate

AK.• Distribution – Multi-facetted operation.• Retail – Face of the industry.• “Offshoots” – Nontraditional products.• Government – New & Expanded role.

Happening in AK Eagle River resident is buying up business names.

A Girdwood resident is seeing his business expand.

State of Alaska

• Department of Revenue: 3 new positions totaling $300,000 in additional personnel costs.

• Department of Commerce, Community and Economic Development: 9 new positions totaling $954,800 in additional personnel costs.

• Department of Environmental Conservation: 1 new position totaling $136,900 in additional personnel costs.

Clues from CO & WACannaSearch job fair in Denver, Colorado.

Colorado has issued 348 retail marijuana licenses.

Washington officials expect more than 300 retail dispensaries to open this coming summer.

Potential Tax Implications Adequacy

Covers the State’s implementation costssufficient and predictable funding to support the

long-term regulatory and enforcement scheme

CollectablePoints to the use of retail sales and excise taxes

TransparencyLicense Fee and $50 ounce wholesale tax

Potential Tax Structures Colorado

2.9 percent retail sales tax 10 percent state retail sales tax 15 percent excise wholesale tax

Washingtonexcise tax of 25 percent of the selling price of the

product (Wholesale and retail levels)

Potential Tax Revenues Colorado

$100 million annually forecastedCurrently on pace for considerably less

Washington$259 million annually forecasted

AlaskaWe predict $20 million annually

Costs of Marijuana Prohibition

Law Enforcement Costs – Arresting those involved in illegal use, sales and production of marijuana.

Court System Costs – The costs of prosecuting those arrested.

Corrections Costs – The cost of incarcerating those found guilty of violations (including parole costs).

How to Calculate Costs

A Simple Formula

Estimate the percentage of arrests in the state that are related to marijauna offenses. Multiply this by the total costs for all arrests to arrive at the cost related to prohibition for law enforcement. Follow same method for each category.

Three Researcher’s Estimates

Researcher

Law Enforcement Costs

Court System Costs

Corrections Costs

Total Costs

Bates $1.8 million $11.75 million

$6.28 million

$19.83 million

FBI/UCR $3.36 million

$4.85 million

$.90 million $9.11 million

Miron $3.61 million

$14.17 million

$1.75 million

$19.53 million

Recommendations

Recommend the Bate’s study be redone in conjunction with law enforcement and the latest data available.

Recommend that the University assess the cost of the policy to itself.

Recommend the University position itself to have an active and leading role in the task force that will be formed should the measure pass.