Blunt Talk: Four things Alaska’s cannabis entrepreneurs wish you knew about their business

SPONSORED: As Alaska’s cannabis business continues to evolve, so do public perceptions (and misconceptions) about the industry.

We asked Alaska dispensary owners to weigh in on the most common misunderstandings they encounter when talking with customers and critics about their businesses. Here are the top four things they said they wish were better understood.

1. The cost of doing business is high.

Cannabis businesses must abide by strict regulations when it comes to money. Upwards of 50 percent of their gross profit may go to taxes, which must be paid in cash to both the IRS and the State of Alaska.

That’s right: Cannabusinesses pay federal income tax.

Because marijuana is still illegal at the federal level, most banks don’t permit cannabis businesses to have accounts, which can make it difficult for owners to stay on top of the financial end of things. Marijuana shops also cannot deduct expenses associated with the building their business is housed in, utilities or labor.

Michelle Cleaver, owner of Weed Dudes in Sitka, said managing taxes is one of her bigger challenges.

“We have to pay our payroll taxes in cash and we can only do so in Anchorage,” she said. “Yet we also have to pay a 10 percent fine with that because we aren’t filing electronically -- even though we aren’t allowed to file electronically.”

2. Edibles get a bad rap.

When cannabis is cooked into a product such as a cookie or candy, it becomes what is commonly known as an “edible.” The classic stereotype is a “pot brownie,” but there are businesses around the country making cannabis-infused lozenges, elixirs, honey, cakes, chocolates, tinctures, and more.

Edibles are popular because they provide effects similar to smoking without the smell or potential impact on lung health. Yet they are also what many business owners cite as the most misunderstood product on the market. In some parts of Alaska, edibles have been banned altogether due to concerns over ingestion by children or unknowing adults. Proponents say that concern is misplaced.

“No child ever died from eating a cannabis product,” Cleaver said. “Why ban them?”

Colorado did report an increase in children treated for consuming cannabis in the years following legalization, with exposure primarily through edibles, but no cannabis overdose death has ever been reported, according to the DEA.

Teri Zell, who owns Bad Gramm3r Dispensary, located just outside of Wasilla, said edibles are also challenging in that Alaska has a per-serving limit of 5mg THC. Tetrahydrocannabinol is the primary psychoactive component of cannabis.

“Colorado and Washington both have a 10mg limit,” Zell said. “Alaska’s is extremely low in comparison.”

3. Dispensary customers aren’t who you think they are.

If you think of pot smokers as hippies and juvenile delinquents, think again. Dispensaries are prohibited by law from discussing any health benefits cannabis could have, but information about potential applications is widely available, and more and more people are curious about what marijuana can do for them. Customers are doing their own research before they shop -- and they come from all walks of life.

“People assume that our clients are primarily younger and outside the mainstream,” said Lloyd Stiassny, owner of Uncle Herb’s, which has shops in both Anchorage and Homer. “But we see mainstream consumers every day, and our customers represent a broad-based population of Alaska, all age groups, all reasonable and responsible adults.”

A recent Yahoo! News/Marist Poll study found that nearly 55 million adults in the United States regularly use cannabis. In 2014, research from the Centers for Disease Control and Prevention found that more adults were using marijuana than teenagers -- and while use among teenagers decreased between 2002 and 2014, use among adults was on the rise, particularly among adults older adults.

“We have a growing number of older consumers,” Cleaver said. “You’d be surprised at the demographic of some of our customers.”

4. The industry has a real economic impact.

Economists project that Alaska’s recession will end this year, but they don’t expect the state’s economy to recover to pre-recession job numbers. About 12,000 jobs have been lost since 2015 -- about one per every 62 residents.

Meanwhile, the cannabis industry debuted in Alaska during the recession and has grown each year. Although exact job numbers are hard to pin down, the October 2018 Alaska Economic Trends report estimates that greenhouse and nursery jobs will double by 2026, and agriculture will be the second-fastest growing industry in the state, as a direct result of the marijuana industry.

Then there’s the revenue.

Last year, the industry paid more than $12.7 million in marijuana taxes. Growers pay a state tax of $50 per ounce of mature cannabis bud, $25 per ounce for immature or abnormal buds, $15 an ounce for leaves and trim, and $1 per clone. Half of the tax money collected from cannabis businesses goes into a fund intended to reduce prison recidivism. Beginning in October 2018, another 25 percent goes into a Marijuana Education and Treatment Fund.

The remaining 25 percent -- a total of $5.4 million in FY 2018 that’s projected to increase to $6.2 million in 2019 -- is included in Alaska’s unrestricted revenue, which totaled $2.4 billion last year. By comparison, motor fuel surcharges brought in $6.3 million in 2018, and charitable gaming (raffles, pull-tabs and bingo) accounted for $2.4 million in excise taxes.

That $12.7 million in marijuana tax doesn’t include local sales taxes; the usual corporate taxes paid by every other business in the state; and secondary effects as new cannabis businesses pay contractors, attorneys, accountants, marketers, and other vendors.

Between cultivators, retailers, manufacturers and testing companies, there are now more than 300 active marijuana licenses in Alaska.

“This is a dynamic industry, filled with creative and hardworking entrepreneurs,” Stiassny said. “We serve a broad base of appreciative customers who welcome and support legal access to a product they consume and enjoy.”

ALASKAbuds provides Anchorage residents with top-quality cannabis, edibles, concentrates, accessories and supplies. Join us this winter as we celebrate the grand opening of our second location -- the first cannabis retail store in Bethel!

Blunt Talk is a series of original articles sponsored by Alaska cannabis businesses and organizations to highlight the real people, families, businesses and groups impacted by the legalization of cannabis in Alaska.

This story was produced by the creative services department of the Anchorage Daily News in collaboration with the series sponsors. The ADN newsroom was not involved in its production.