The Sitka School Board has offered informal support for a plan to tax the sale of cannabis products, to pay for extracurricular activities in the school district.
The Sitka Assembly has drafted a ballot proposal for voters this fall that would eliminate the municipal cannabis sales tax and replace it with a slightly higher consumption tax. At its last meeting, the school board backed the proposal — with one major caveat.
The problem is just a line in the ordinance on the ballot proposal stating that the money raised by the new tax would be “included in calculating local support” according to state law – where that might have the unintended effect of diverting classroom funding to extracurricular activities.
It’s an oversight, according to assemblywoman Rebecca Himschoot, who sponsored the ordinance. She clarified things with the school board at their June 1 meeting. 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 the three co-sponsors, that these funds complement existing district efforts,” Himschoot said. “So we expect the district to continue with current funding levels. And we will add to that, and the ultimate goal – obviously, elusive but valid – will be to make school activities, if possible, free and open to all.
Himschoot said the problematic language would be removed from the draft order, with the approval of the rest of the assembly. Another likely change will be to eliminate the top proposed tax rate of 10% on marijuana and cap it at 8%.
Sitka already charges a sales tax which varies seasonally between 5 and 6%. Cannabis products would be exempt from regular sales tax, if voters approve the ballot measure. Himschoot said this makes the new consumption tax easier for the cannabis industry in Sitka to bear.
“So we’re hearing from the three companies we’ve spoken with: one company has been very supportive, one company has become supportive with the changes we’re making, and we don’t really hear from the third company,” Himschoot said. And when I say ‘very supportive’, they understand the need for activities at the end, and using this (tax) as a means to that end is something they support.”
Taxing marijuana is complicated. Outgoing school board president Andrew Hames recalled serving on the Marijuana Advisory Board in 2016 and learning how excessive taxes could make legal cannabis uncompetitive with the existing illegal market.
“And in those days people who were looking to start a business were so concerned about being burdened with taxes and not being able to, first of all, compete with the black market,” Hames said. “And number two, be sustainable with just the amount of spend. Due to the nature of the product, they didn’t have the same tax deductions. So they were very hesitant, which surprised me at the time because the “One of the big reasons for legalization was that we could tax that and we’re not taxing that at all right now. And so the thinking was, let’s get this back on track. And then we can revisit that a few years down the road.
Hames said he was happy the assembly was now pursuing the idea.
Funding student activities has been a difficult issue over the past two decades. Travel costs are enormous, and students and families are asked to both fundraise for activities and pay fees that have become so high that equity is a serious concern.
The school board has explored solutions over the years, formed parent committees, without any major breakthrough. Board member Paul Rioux thought the consumption tax on cannabis products was the first real opportunity in some time.
“As much as I hate to see new taxes, I was thinking back to my comment from a few months ago, you know, maybe looking back at the good old days,” Rioux said. “And we are looking at situations where costs are rising and revenues are stagnating or even declining. And if we don’t work as a community to solve these problems before they reach our doorstep, they will simply crush us.
Both Blossom board members Teal-Olsen and Todd Gebler liked the proposal. Gebler said his knee-jerk reaction was that “any source of income would be welcome.”
Assemblywoman Himschoot encouraged council members to talk about the vote proposal at the next assembly meeting on June 14. She reminded the council that sales tax revenues were up overall in Sitka and that replacing the cannabis sales tax with a slightly higher tax to benefit students would not be considered. as unfair to the sector.
“And we always have to recognize the black market risk when we raise taxes on this industry,” she said. “So I guess there’s a certain level of faith and trust in the Sitkans to do the right thing. There won’t be a huge difference in outcome for most people in the city using marijuana products.