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State estimates new costs if recreational marijuana legalized

  • Author: Laurel Andrews
  • Updated: July 7, 2016
  • Published March 5, 2014

With the prospect of marijuana becoming legalized in Alaska, the state is looking ahead and has outlined potential costs that various departments may face should the ballot measure be voted into law come August.

"We're really trying to be prepared if the initiative passes," Alcoholic Beverage Control Board Director Shirley Coté said on Wednesday. Coté's department would be in charge of crafting the regulations surrounding marijuana legalization.

A Jan. 23, 2013 report presented before the ABC board on Feb. 11 outlines the increased costs that eight Alaska agencies could face if cannabis is legalized. Using information from Colorado and Washington state, which have both legalized recreational marijuana, the Alaska Department of Commerce, Community and Economic Development asked various departments to estimate potential costs of the initiative measure.

The report stresses that there are "numerous unknowns" in the state's implementation of the initiative, including whether a Marijuana Control Board would be established by the Legislature. Estimated costs may vary, according to Leslye Langla, special assistant to Department of Commerce Commissioner Susan Bell. When the state compiled the data "there was nothing implemented at that time, it was just (Colorado and Washington's) estimates," she said.

And estimates are still hard to come by. Even now, Colorado doesn't have any hard data, Langla said. "The impacts have been so extreme in so many departments" that they are still working to figure out the extent of the changes.

However, the numbers give a glimpse into how Alaska is preparing for the possibility of legalized cannabis. The state estimates that higher costs would initially be connected to the development of a tax and revenue structure, and in subsequent years, costs would shift to public health and education activities. An estimated 16 new jobs would be created.

Alaska estimates various agencies will dole out an extra $3.7 million to $7 million the first year.

Unknown are potential revenue and savings the state could see if the initiative becomes law -- for instance, what savings the Department of Public Safety might realize if cannabis is decriminalized. "We haven't gone into that kind of depth," Coté said. She hopes to have an estimate of potential revenue from the marijuana excise tax sometime this summer.

Here's a breakdown of estimated potential costs to the state:

Department of Revenue

First year: $650,000-$800,000

Second year: $300,000

• Three new jobs: tax auditor III, tax technician II, and investigator III -- $300,000.
• One-time expense for system configuration of the new excise tax on cannabis -- $350,000 to $500,000.

Department of Commerce, Community and Economic Development

First year: $1.6 million

Second year: $1.4 million

"Actual costs will likely be different," the memo states, due to expenses the legislature or other departments may incur.

The department recommends the creation of a task force, something Colorado enacted. The task force would identify legal, policy and procedural issues, and offer suggestions and proposals for legislative and executive action, and would be composed of 17 uncompensated members representing interest groups affected by initiative.

• Program coordinator job created the first year -- $107,800. ?
• Eight additional jobs the second year, including personnel services -- $847,000.
• Total travel and per diem for task force members and new employees -- $16,600 the first year, and $119,900 the second year.
• Equipment and office supplies -- $27,060 the first year, $188,140 the second year (due to support services for new employees).
• Contract costs for various studies, including work with Department of Law. Also a new database for analysis and development of business rules and use of vehicle costs -- $1.4 million first year, $258,100 second year.

Department of Health and Social Services

First year: Up to $3 million

The department expects that initial costs will be low, while higher costs will surface in subsequent years as health consequences rise. The department considered two recent studies, one from the Proceedings of the National Academy of Science and another from the United Nations Office on Drugs and Crime, Cannabis: A Short Review, to arrive at their estimates. The department estimates an increase in various services:

• Increase in substance abuse and addictions treatment -- $200,000, or a 10 percent increase in treatment services of marijuana dependence.
• Mental health treatment services -- $1.1 million, or a 5 percent increase.
• Physical health services through public health and primary-care providers -- $400,000.
• Medicaid costs to cover treatment and services -- $27,000 or 10 percent increase in current marijuana treatment services covered by Medicaid.
• Enforcement against marijuana access by youth -- $140,000, or increase of 2 percent.
• Prevention, education and early intervention programs for adolescents and young adults -- $640,000.

Department of Public Safety

First year: $1.4 million

Second year $1.2 million

The department assumes that legalization will lead to more marijuana users, and thus an increase of people driving under the influence, as well as an increase in the illegal exportation of marijuana lawfully cultivated in Alaska.

• Three new drug enforcement unit trooper investigators -- $594,400.
• One-time training costs for new positions -- $232,800.
• More troopers required to receive drug recognition expert certification -- $62,500.
• Media campaign on the dangers of driving under the influence of cannabis -- $500,000.
• Increased number of blood samples sent to toxicology analysis to detect marijuana -- $45,000.

Department of Environmental Conservation

First year: Up to $136,900

Any marijuana products considered food would fall under the DEC's jurisdiction. Thus, the department foresees needing to add a new position to its department:

• Environmental Health Officer III -- $136,900

University of Alaska

First year: Undetermined

The report estimates that the University of Alaska would need to implement changes to university policies regarding possession or use of drug on campus, as well as additional costs to law enforcement. There may be legal costs for advising the campuses, and the potential for health care costs and rates to increase.

Office of the Lieutenant Governor

First year: $9,000

• Travel to public hearings concerning the initiative -- $9,000.

Division of Elections

First year: $71,257 (These costs, associated with the certification of the initiative, have already been incurred.)

• Personnel services -- $69,957.
• Printing of booklets -- $1,300.

Correction: The article above originally omitted the Dept. of Revenue's low estimate of configuring a system to collect an excise tax. The figure has been added.

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