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State agencies forecast millions in regulation costs if Alaska legalizes pot

Michelle Theriault Boots

If a ballot measure to legalize retail marijuana in Alaska passes, it will cost the state between $3.7 million and $7 million to set up a regulatory system and enforce the new law, a report prepared by eight state agencies found.

Public agencies ranging from the Department of Public Safety to the Department of Environmental Conservation claimed they'd need funds for everything from more troopers to "target illegal diversion and exportation" of Alaska-grown pot to an additional health inspector charged with monitoring still-theoretical marijuana bakeries.

The cost analysis, presented at a meeting of the state Alcoholic Beverage Control Board last month, offers a first glimpse at the way the State of Alaska would approach regulating a new marijuana industry.

Voters will have a chance to weigh in on legalization on the Aug. 19 primary ballot.

The report acknowledges that many details about how legalization would be implemented haven't been worked out.

"There are numerous unknowns," the report says.

Pro-legalization activists are skeptical of the report's conclusions.

The Campaign to Regulate Marijuana like Alcohol in Alaska, the group backing the ballot initiative, called the report "not exactly an objective or well-researched document."

"It was put together hastily by government bureaucrats who have a vested interest in arguing for bigger budgets and more money from Juneau," said campaign spokesman Taylor Bickford.

If the measure passes, Alaska has a nine-month lead time before the law is implemented.

Big questions to resolve include whether the state's existing Alcoholic Beverage Control Board would have authority over pot growing and retail sale establishments, or whether a new "Marijuana Control Board" would be set up.

For the analysis, eight agencies used information from Colorado and Washington's experiences to estimate their own potential costs.

The up-front costs of the first year of the law will be higher than subsequent years, according to the report.

"Over the longer term, it would be expected that more of the state's total costs would become public health and education activities as the extent of the impact on public health becomes more defined," the cost breakdown said.

Among the costs the agencies claim the law would generate:

• If new food facilities opened selling marijuana products, the Food Safety and Sanitation program, under the Department of Environmental Conservation, says it would need an additional position to conduct health inspections of eateries, at a total cost of $136,900.

• The Department of Public Safety says arrests for possession would decrease but the agency would need to spent more money cracking down on tax-evading growers exporting high-quality Alaska pot outside the legalized system.

"Demand for Alaska-grown marijuana is high due to its exceptional THC content. Became Alaska-produced marijuana may be considered high quality, there is potential that Alaska would become a marijuana exporting state," the department said.

The agency wants "at least three additional Alaska State Trooper positions to target the illegal diversion and exportation of marijuana lawfully cultivated in Alaska."

DPS said it would also ask for extra money for a media campaign warning of the dangers of stoned driving and training money to help troopers recognize whether a driver is high. Total first year costs: $1,434,700.

• The Department of Revenue said it would need to hire a tax auditor, tax technician and an investigator to oversee a new excise tax the initiative would create.

Not in the report: any estimate of potential tax revenues generated by legal marijuana. The initiative would impose a $50 per ounce excise tax on the sale or transfer of marijuana, to be paid for by the marijuana cultivation facility.

In Colorado, the first state to legalize retail pot, marijuana sales generated $3.5 million in taxes and fees in January alone, according to the state's Department of Revenue.

Campaigners say the state's cost analysis doesn't reflect the above-ground economic boost.

"What we do know is that regulating marijuana like alcohol will bolster our economy, create jobs, and generate new revenue for Alaska," Bickford said. "Marijuana sales will be conducted by legitimate taxpaying businesses, instead of criminal enterprises who are currently controlling a multi-million dollar underground industry."

Reach Michelle Theriault Boots at or 257-4344.