A. 
Applicability. Unless provided otherwise, this chapter shall apply to the taxation of all marijuana cultivated within the City for commercial or retail sale purposes, including marijuana cultivated by a standard marijuana cultivation facility and a limited marijuana cultivation facility.
B. 
Purpose. The purpose of this section is to provide for the levy of an excise tax on marijuana cultivated within the City by any marijuana cultivation facility, and the enforcement of such tax.
C. 
Authority. This chapter and the regulations related to marijuana establishments herein are adopted pursuant to the authority granted by AS 17.38.210 and 29.35.010(6).
(Ord. 16-09(S) § 5, 2016; Ord. 20-07 § 3, 2020)
A. 
"Abnormal bud"
means a flower formed on a flowering marijuana plant and consists of calyx, pistils, resin, and trichomes, that also:
1. 
Failed a microbial testing required by 3 AAC 306.645(b); or
2. 
Contains observable seeds;
B. 
"Clones"
has the meaning given in 3 AAC 306.990(b)(9);
C. 
"Flower and bud"
means the hairy, sticky, or crystal-covered parts of mature female marijuana plants generally harvested for their high potency content;
D. 
"Immature bud"
means an immature flower formed on a flowering marijuana plant, and consists of calyx, pistils, resin, and trichomes that generally:
1. 
Appear loose, wispy, or leafy; and
2. 
Are not dense to sight or touch;
E. 
"Marijuana"
has the meaning given in AS 17.38.900;
F. 
"Marijuana cultivation facility"
has the meaning given in AS 17.38.900 and includes both a standard marijuana cultivation facility and a limited marijuana cultivation facility as licensed under 3 AAC 306.400;
G. 
"Mature bud"
means a mature flower formed on a flowering marijuana plant, and consists of calyx, pistils, resin, and trichomes that are generally:
1. 
Swelled with resin;
2. 
Dense to sight and touch; and
3. 
Visibly covered in trichomes;
I. 
"Marijuana testing facility"
has the meaning given in AS 17.38.900;
J. 
"Ownership change"
means:
1. 
If the licensee is a partnership, including a limited partnership, any change in the identity of the partners, or in the ownership percentages held by any partners;
2. 
If the licensee is a limited liability company, any change in the identity of the members, or in the ownership percentage held by any member; or
3. 
If the licensee is a corporation, any sale of corporate stocks to a person not currently an owner, or any change of the percentage ownership of an existing shareholder;
K. 
"Remainder of the plant"
means any part of a flowering marijuana plant not included in subsection (C) of this section;
L. 
"Retail marijuana store"
has the meaning given in AS 17.38.900;
M. 
"Transfer"
means the exchange of marijuana, as defined under AS 17.38.900, with or without consideration, or by barter, between marijuana establishments, or within marijuana establishments possessing multiple permits, for commercial purposes.
(Ord. 16-09(S) § 5, 2016; Ord. 20-07 § 4, 2020; Ord. 22-07 § 4, 2022)
A. 
Tax to Be Paid. The City hereby levies an excise tax on all marijuana cultivated in any facility licensed pursuant to 3 AAC 306.400, including standard marijuana cultivation facilities, and limited marijuana cultivation facilities as follows:
B. 
Marijuana Excise Tax.
1. 
All nonexempt marijuana transferred from a marijuana cultivation facility shall be taxed as follows:
a. 
Mature bud, as defined in HMC § 4.24.020(G), will be taxed at $10.00 per ounce.
b. 
Clones will be taxed at $0.75 per clone.
c. 
The remainder of the plant not included in subsections (B)(1)(a) and (b) of this section will be taxed at $3.00 per ounce.
2. 
A marijuana cultivation facility that is also licensed as a marijuana product manufacturing facility must pay 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 that is also licensed as a retail marijuana store must pay tax on all marijuana transferred from the cultivation facility to the retail marijuana store for the month in which the marijuana was transferred.
(Ord. 16-09(S) § 5, 2016; Ord. 20-07 § 5, 2020; Ord. 22-07 § 4, 2022)
A. 
The tax imposed under this chapter does not apply to marijuana if the state of Alaska prohibits the levying of this tax under AS 17.38.
B. 
Transfers to a licensed marijuana testing facility are exempt from the excise tax on marijuana.
(Ord. 16-09(S) § 5, 2016)
A. 
Except as otherwise provided by AS 17.38.020, no marijuana cultivation facility may plant, propagate, cultivate, harvest, trim, dry, cure, package, or transfer marijuana without a license issued under this chapter.
B. 
The City Clerk, upon application and payment of the fee, shall issue a license to each marijuana cultivation facility. The application must include the following information:
1. 
The applicant's name and address;
2. 
The name under which the marijuana cultivation facility will operate;
3. 
A copy of the applicant's current City business license and its state marijuana establishment license, showing that it has been approved for active-operating status;
4. 
Such other information that is indicated on the City's application form.
C. 
The City Clerk may refuse to issue a license if there is reasonable cause to believe that the applicant has willfully withheld information requested to determine the applicant's eligibility to receive a license, or if there is reasonable cause to believe that information submitted in the application is false or misleading and is not made in good faith.
D. 
A license required by this chapter is in addition to any other license required by law.
E. 
A license issued under this chapter shall include:
1. 
The name and address of the licensee;
2. 
The type of business to be conducted;
3. 
The address at which the business is conducted;
4. 
A license number; and
5. 
The year for which the license is issued.
(Ord. 16-09(S) § 5, 2016; Ord. 20-07 § 6, 2020)
For each license issued under this chapter, and for each renewal, the fee is $250.00 per year.
(Ord. 16-09(S) § 5, 2016)
A. 
Licenses issued under this chapter shall expire on June 30th of each respective year. On or before May 1st of each year, the City Clerk shall send written notice to licensees that it must file a renewal application prior to the expiration of the license. Such notice shall be sent to each licensee's current address on file with the Clerk's office.
1. 
If June 30th falls on a Saturday or Sunday, the deadline is extended to 4:30 p.m. on the first business day following June 30th.
2. 
A licensee is not excused from filing a renewal application as required in this section even if the applicant fails to receive a renewal notice from the City Clerk.
B. 
A person whose license is lost, stolen, or defaced shall immediately file an application with the City Clerk for reissuance of the license for the balance of the unexpired year.
(Ord. 16-09(S) § 5, 2016)
A. 
A licensee under this chapter shall, not later than 10 days after an ownership change, report such change to the City Clerk on a form prescribed by the Clerk.
B. 
If any change required to be reported under this section will result in a change in controlling interest of the license, the licensee must file an application for transfer of license to another person pursuant to HMC § 4.24.090.
(Ord. 16-09(S) § 5, 2016)
A license under this chapter is not transferrable, but instead expires upon the effective date of an ownership change. Not later than 10 days after the effective date of ownership change, the licensee shall provide written notice to the City Clerk of the same, which must include the name, address, form of organization, and jurisdiction of organization of the transferee, and surrender the license to the Clerk.
(Ord. 16-09(S) § 5, 2016)
A. 
The City Clerk shall not refund any license fee paid pursuant to this chapter upon the surrender or revocation of a license after the beginning of the license year, with the exception that upon application, the City Clerk will refund a license fee shown to have been paid or collected in error.
B. 
If a remittance by a licensee exceeds the amount due, and the City Clerk, on audit of the account in question, is satisfied that this is the case, the City Clerk shall, upon written request of the licensee, refund the excess to the licensee without interest.
C. 
Any claim for refund filed more than one year after the due date of a tax or license fee is forever barred.
D. 
A licensee may claim a credit for excise tax paid for marijuana that is returned to the licensee. The credit must be claimed for the month in which the marijuana was returned. The licensee must provide proof acceptable to the City Clerk that the tax had been previously paid and was refunded to the purchaser.
E. 
A separate tax return must be filed for each location when a taxpayer is operating in several locations within the City.
(Ord. 16-09(S) § 5, 2016; Ord. 20-07 § 7, 2020)
A. 
A license issued under this chapter shall be prominently displayed at the licensee's place of business.
B. 
A licensee shall surrender a license within 10 days after:
1. 
A revocation of license;
2. 
A cessation of business;
3. 
A change of ownership; or
4. 
A change of a place of business.
C. 
The City Clerk may suspend or revoke a license issued under this chapter:
1. 
For violation of this chapter or a regulation of the City adopted pursuant to this chapter;
2. 
If a licensee ceases to act in the capacity for which the license was issued.
D. 
No marijuana cultivation facility whose license is suspended or revoked shall plant, propagate, cultivate, harvest, trim, dry, cure, or package marijuana for transfer during the suspension or revocation. No disciplinary proceeding or action is barred or abated by the expiration, transfer, surrender, or renewal of a license issued under this chapter.
E. 
The City Clerk will inform the City Council of a licensee's failure to pay tax when due or to file a return as required by this chapter, so that it may determine whether to initiate license suspension or revocation proceedings by filing an accusation with the Alaska Marijuana Control Board as provided in AS 17.38.190.
(Ord. 16-09(S) § 5, 2016; Ord. 20-07 § 8, 2020; Ord. 22-07 § 4, 2022)
A. 
On or before the last day of each calendar month a licensee shall submit to the City Clerk a tax return, upon forms provided by the City Clerk, for each license, and submit payment for the taxes due as prescribed by the City Clerk.
1. 
The return shall be signed under penalty of perjury by the licensee or agent and shall include:
a. 
A copy of the 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 number of the applicable license issued under this chapter;
e. 
The name under which the marijuana cultivation facility is being operated;
f. 
A report setting forth the total amount of marijuana transferred from the marijuana cultivation facility in ounces, with fractional ounces calculated to the third decimal place, for the preceding month;
g. 
The amount of tax due;
h. 
Such other information and supporting documentation which may be required by the City Clerk.
B. 
A marijuana cultivation facility licensed under this chapter shall file a tax return each month, even if it did not cultivate or transfer any marijuana in the City during the preceding month.
C. 
The taxes imposed under this chapter and the return required by this section must be received by the City Clerk, or postmarked on or before the last day of each calendar month following the month covered by the return.
D. 
A separate tax return must be filed for each location when a taxpayer is operating in several locations within the City.
(Ord. 16-09(S) § 5, 2016)
If a licensee fails to file a return as required by this chapter, or when the City Clerk finds that a return is not supported by the records to be maintained pursuant to this chapter, the City Clerk may prepare and file a return on behalf of the licensee. Involuntary returns filed under this section may be premised upon any information that is available to the City Clerk, including, among other things, a copy of the materials the applicant submitted to the Alaska Department of Revenue in accordance with 15 AAC 61.010, and comparative data for similar businesses. A licensee for whom an involuntary return is filed under this section shall be subject to liability for the tax stated in the return, as well as subject to the penalties and interest provided for in this chapter. A return prepared by the City Clerk is prima facie, good and sufficient for all legal purposes. However, nothing prevents the licensee from presenting evidence on appeal to rebut the presumed sufficiency of a return prepared by the City Clerk, nor does the presumption of sufficiency alter the parties' respective burdens of proof once the licensee has presented evidence to rebut that presumption.
(Ord. 16-09(S) § 5, 2016)
A. 
Any tax return filed hereunder may be amended by the licensee within one year after the due date of the tax return being amended. No amendment by the licensee shall be allowed after this one-year period.
B. 
Any tax return prepared and filed by the City Clerk on behalf of the licensee may be amended by the licensee within one year of the date filed by the City Clerk. No amendment by the licensee shall be allowed after this one-year period.
(Ord. 16-09(S) § 5, 2016)
Any payment submitted to the City Clerk for any taxes, penalties, interest, or cost due under any provision of this chapter or any return or any finding or determination by the City Clerk under this chapter shall be credited to the monthly tax period for which it was remitted, first to the payment of costs and then to penalties, interest, and taxes in that order.
(Ord. 16-09(S) § 5, 2016)
A. 
No person shall operate a marijuana cultivation facility within the City without complying with the provisions of this chapter.
B. 
A penalty of six percent of the taxes due shall be incurred automatically when a person fails to pay the full amount of the tax due under this chapter within seven calendar days following its due date. An additional penalty of six percent of the taxes due shall be incurred automatically when a person fails to file a tax return or report within seven calendar days following its due date under this chapter. If a person fails to pay the full amount of the tax due and/or file a tax return or report as required under this chapter within 16 days after its due date, the six percent penalties incurred above shall be increased automatically to 15 percent.
1. 
The penalty shall be computed on the unpaid balance of the tax liability as determined by the City Clerk.
2. 
Notice of the penalties incurred and to be incurred shall be given to the person responsible for payment of the taxes or for filing the return or report when such tax payment or return or report is delinquent for seven calendar days after its due date.
3. 
The penalties provided for in this section shall be in addition to all other penalties and interest for under this chapter.
C. 
If a properly filed amended return reduces the total tax liability or the tax required to be paid, or the determent reduces the tax liability, the related penalty will be reduced accordingly.
D. 
All penalties and remedies enumerated in this chapter are cumulative.
E. 
Unless otherwise provided in this section, any person who violates or fails to comply with the provisions of this chapter shall be personally liable for all costs, interests, penalties and taxes due under this chapter plus a penalty equal to 30 percent of the tax due. For good cause shown, the Mayor may waive or reduce all or part of any penalty imposed under this subsection.
(Ord. 16-09(S) § 5, 2016)
A. 
A civil fraud penalty may be assessed against a person in addition to a penalty for failure to file or failure to pay.
B. 
If it is determined by the City Clerk that a tax deficiency or part of a tax deficiency is due to fraud, then a penalty will be added to the tax. The penalty is 50 percent of the deficiency due or $500.00, whichever is greater. The penalty is computed on the total amount of the deficiency due.
C. 
Fraud is the intentional misrepresentation of a material fact with the intent to evade payment of tax which the person is believed to owe. The person must have had knowledge of its falsity and intended that it be acted upon or accepted as the truth.
D. 
To establish civil fraud, the City Clerk must prove by clear and convincing evidence that:
1. 
The tax liability was understated; and
2. 
The understatement was the result of an intent to evade tax.
E. 
An intent to evade tax may be demonstrated by any relevant evidence, including but not limited to the following:
1. 
The person has provided false explanations regarding understated or omitted amounts of marijuana cultivated or transferred;
2. 
The person has provided falsified or incomplete source documents;
3. 
The person has not justified an omission or understatement of a significant amount of marijuana cultivated or transferred;
4. 
The person has substantially overstated a deduction and has failed to justify the overstatement.
(Ord. 16-09(S) § 5, 2016)
A. 
If any person who is liable to pay a tax or license fee under this chapter neglects or refuses to pay the tax or licensee fee after demand, the amount, including interest, additional amounts, or assessable penalty together with costs, is a lien in favor of the City upon all property and rights to property, real or personal, belonging to that person.
B. 
The lien imposed by this section arises upon delinquency and continues until the amount is paid or a judgment against the person arising out of the liability is satisfied.
C. 
A lien arising out of a tax due under this chapter, including the penalties and interest on the tax, shall be prior, paramount, and superior to all other liens, mortgages, hypothecation, conveyances, and assignments, upon all real and personal property of the person liable for the tax and upon all the real and personal property used with the permission of the owner to carry on the business which is subject to the tax.
D. 
The lien on personal and real property may be enforced in a manner similar to that provided by AS 29.45.300 through 29.45.480 for enforcement of real and personal property tax liens.
(Ord. 16-09(S) § 5, 2016)
In addition to any penalties imposed by this chapter, interest at the rate of 12 percent per annum shall be charged on the unpaid balance of delinquent taxes.
(Ord. 16-09(S) § 5, 2016)
A. 
Any person aggrieved by any action of the City Clerk in issuing, suspending, revoking, or refusing to issue any license under this chapter or in fixing the amount of taxes, penalties, interest, or costs under this chapter may apply to the City Clerk and request a hearing within 30 days from the date the City Clerk mails the notice of the Clerk's action. Upon timely application under this subsection for a hearing, the Mayor shall hold a hearing to determine whether a correction is warranted. Hearings before the Mayor under this subsection may, at the option of the Mayor, be conducted by an administrative hearing officer designated by the Mayor. The hearing officer shall conduct the hearing and prepare findings and conclusions. These findings and conclusions must be forwarded to the Mayor for adoption, rejection, or modification and issuance of a final order or decision by the Mayor. An application for a hearing must notify the City Clerk of the specific action complained of and amount of tax, interest, cost, or penalty contested and the reason it is contested. After receipt of a written decision by the Mayor, a person may appeal to the Superior Court of the Third Judicial District in accordance with the Alaska Appellate Court rules. The person shall be given access to the department's file in the matter for preparation of the appeal.
B. 
A request for appeal is filed on the date it is personally delivered, or is delivered to the City Clerk by the United States Postal Service, the date of the postmark stamped on the properly addressed cover in which the request is mailed. If the due date falls on Saturday, Sunday, or a City observed holiday, the due date is the next working day. A current mailing address must be provided to the City Clerk with the request for appeal, and any change in mailing address after the request for appeal is filed must be reported to the City Clerk.
C. 
If the notice to the person pursuant to subsection (A) of this section shows an amount due, the uncontested portion of the amount due must be paid within 30 days after the date of the notice. If the uncontested amount is not paid within 30 days, collection action will be taken on that amount even if the person has filed a request for appeal. Payment of the total amount due may be made any time before the hearing. If the City Clerk has reason to believe that collection of the total amount due might jeopardize by delay, immediate payment of the total amount will be demanded and the City Clerk may pursue any collection remedies provided by law. Payment in full does not affect the person's right to a hearing.
D. 
If a person requests a hearing and fails to appear at the hearing, the Mayor or hearing officer may issue a decision without taking evidence from that person, unless that person shows reasonable cause for failure to appear within seven days after the date scheduled for the hearing.
E. 
Taxes, licenses fees, penalties and interest declared to be due in the final administrative decision must be paid within 30 days after the date of the decision, or a bond must be filed with the court in accordance with the Alaska Court Rules of Appellate Procedures.
(Ord. 16-09(S) § 5, 2016)
A. 
Marijuana cultivation facilities shall keep complete and accurate records to support the information to be included in the monthly tax returns required by this chapter, including information regarding transfers. The records must include an accounting that inventories live plants, trimmings, and any dried product on the first and last day of each month including:
1. 
An invoice, sales receipt or other record memorializing the transfer of marijuana from a marijuana cultivation facility, which must separately state the amount of tax due after the sale or transfer.
B. 
Any person selling marijuana at a retail marijuana store who cannot produce records showing taxes were paid on any marijuana in their possession are secondarily liable for the unpaid tax on marijuana.
C. 
Persons subject to the chapter shall keep such other documents and records as the City Clerk prescribes.
D. 
The City Clerk may, during business hours, enter the business premises of a licensee under this chapter, so far as it may be necessary for the purpose of examining such products and the related business records.
(Ord. 16-09(S) § 5, 2016)
The City Clerk may adopt policies and procedures providing for the application and interpretation of this chapter and provide forms for reporting and collecting the tax imposed by this chapter, so long as they are approved by the Mayor prior to implementation and do not conflict with any federal, state or local law.
(Ord. 16-09(S) § 5, 2016; Ord. 20-07 § 9, 2020)
A. 
All tax returns, documents, records, and/or reports filed with the City pursuant to this chapter and all data obtained from tax returns, documents, records, and/or reports are confidential as provided by HMC § 2.50.050(F) and may not be released for inspection by any person except the Mayor, Treasurer, City Attorney, or the Council; provided, however, that such data may be released upon court order.
B. 
It is the duty of the City Clerk to safely keep tax returns, documents, records, and/or reports and all data thereof secure from public and private inspection except as provided by this chapter.
C. 
This section does not prohibit the City from compiling and publishing statistical evidence concerning the data submitted; provided, that no identification of particular tax returns, documents, records, and/or reports is made. Nothing in this section shall be deemed to prohibit the internal auditor from examining the tax returns, documents, records, and/or reports; provided, that no information obtained from specific or identified tax returns shall be made available to persons other than those authorized to review them under subsection (A) of this section.
(Ord. 16-09(S) § 5, 2016)