Cannabis Business in Alaska

Alaska Cannabis Industry Overview

The cannabis industry in Alaska was a thriving sector, having contributed over $29.4 million in combined annual revenue from both medical and adult-use markets in 2023. The industry had a significant impact on the local economy. Here’s a closer look at the demographics and key business types within the industry:

Cannabis Usage Statistics in Alaska

The National Survey on Drug Use and Health (NSDUH) offers insights into marijuana use in Alaska, providing comparisons with national data. Here are key statistics:

• 16.6% of Alaska adults reported current marijuana use in 2016-2017, compared to 9.5% of adults nationwide.
• Since 2008-09, the prevalence of marijuana use among Alaska adults has been significantly higher than the U.S. average.
• The implementation of legal marijuana use and the opening of retail markets have modestly increased adult use, though more data is needed to assess long-term trends.

Types of Cannabis Businesses in Alaska

Cannabis businesses in Alaska fall into two major categories: Cannabis-Touching and Cannabis-Adjacent businesses, each with specific regulations and operational challenges.

Cannabis-Touching Businesses

These businesses are directly involved in the production and sale of cannabis products:

1. Processors: Transform raw cannabis into oils, edibles, concentrates, and topicals.
2. Distributors and Supply Chain: Manage logistics, including transportation and compliance with state tracking systems.
3. Cultivators: Grow cannabis plants indoors or outdoors, focusing on various strains and breeding programs.
4. Dispensaries and Retail Stores: Sell cannabis products to consumers, adhering to strict state regulations.
5. Testers: Ensure the quality and safety of cannabis products through rigorous testing.

Cannabis-Adjacent Businesses

These businesses provide essential services to the cannabis industry without handling the plant:

1. Marketing and Branding: Promote cannabis products within the legal framework.
2. Legal Services and Regulatory Compliance: Assist businesses in adhering to complex cannabis laws.
3. Consulting and Management Services: Support compliance, licensing, and market strategy.
4. Technology and Equipment: Provide essential tools like seed-to-sale tracking systems, POS systems, and security solutions.
5. Accounting Services: Navigate financial and regulatory challenges, particularly those posed by IRS Section 280E.
6. Banking and Payment Processing: Offer financial services crucial for cannabis businesses due to federal banking restrictions.
7. Insurance Services: Provide coverage for cannabis plants, operations, staff, and liability.
8. Packaging and Labeling: Ensure cannabis products meet regulatory packaging requirements.
9. Data Analytics: Optimize business operations and compliance through data analysis.
10. Advocacy Organizations: Represent the cannabis industry in legislative matters.

Differences Between Plant-Touching and Non-Plant Touching Businesses

• State Laws:
  • Cannabis-Touching Businesses: Require specific state licenses and face strict regulations.
  • Cannabis-Adjacent Businesses: Need general business licenses with fewer regulatory burdens.
• Accounting:
  • Cannabis-Touching Businesses: Subject to IRS Section 280E, limiting tax deductions and increasing complexity.
  • Cannabis-Adjacent Businesses: Can claim standard business deductions and have simpler accounting practices.
• Banking:
  • Cannabis-Touching Businesses: Face significant banking restrictions, often operating in cash.
  • Cannabis-Adjacent Businesses: Enjoy broader access to financial services, including loans and credit lines.