Juneau’s first legal marijuana businesses is facing financial and licensing problems.
The City and Borough of Juneau Assembly voted 5-2 Monday night to protest renewal of Rainforest Farms’ cultivation and retail licenses in light of almost $35,000 in unpaid 2019 sales taxes.
All merchants in the city and borough are required to collect a 5 percent sales tax when goods are sold —marijuana is also subject to an additional 3 percent sales tax — and send the collected money to the city. Sales tax revenue is used for general government operations and capital projections.
Mayor Beth Weldon and Assembly members Maria Gladziszewski, Carole Triem, Alicia Hughes-Skandijs and Wade Bryson voted for a motion that would protest renewal for the retail license by the end of the day Wednesday and the cultivation licence renewal by the end of the day Thursday until the unpaid taxes are either paid or a confession of judgment for the unpaid sum is obtained.
A confession of judgment in this case would be a contract that established responsibility for repaying $34,808.74.
Assembly member Loren Jones recused himself from the vote and discussion since he is on the state’s Marijuana Control Board, and Assembly member Rob Edwards was not present.
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The matter generated nearly an hour of discussion since two men with the company WCC doing business as Green Leaf Alaska delivered testimony. Both Aaron Bean of Sitka and Michael Scarcelli, who said he resides in Juneau, urged the Assembly to not protest the license renewals, or at least treat each license as separate matters.
James Barrett is listed as the current licensee for the business, and CBJ notified Barrett via email and certified mail of the unpaid taxes, according to a letter included in the Assembly meeting packet. Barrett did not return a phone call seeking comment.
Bean and Scarcelli said their interest in the matter was because they are working to purchase Rainforest’s marijuana retail business, and each man said they had information they could not share publicly that would explain why the taxes weren’t paid.
“We’re doing everything in our power, and we have been working with the municipality,” Bean said. “I would ask for the purposes of forwarding any objection that the two licenses are separate.”
The Assembly opted to not go into a closed session to hear information that Bean said could be defamatory. City attorney Robert Palmer said it would be unusual to go into executive session to discuss a public matter like unpaid sales tax.
Scarcelli said he had already signed for a confession of judgment for almost $80,000 of unpaid Rainforest Farms sales tax from 2018 , and the 2019 debt was accrued before he set foot in Juneau.
City Finance Director Jeff Rogers said he could not verify that Scarcelli or Bean were the people paying off the debt, but the 2018 repayment plan seemed to be current.
Assembly member Wade Bryson asked if there was a plan in place to pay for the 2019 debt. He also pointed out the deadline for August and September sales tax was quickly approaching.
“We do have a plan moving forward,” Scarcelli said.
City Manager Rorie Watt said the Assembly may be making a relatively simple decision more complex than it needed to be.
“We have thousands of businesses in the borough that pay their sales tax,” Watt said.
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That line of thinking ended up prevailing, especially in light of the earlier confession of judgment for unpaid sales tax.
Bryson said he had been on the other side of the issue as a business owner and the previous confession of judgment should have been a “wake-up call.”
“Sales tax is not a business’ money, you’re merely a pass through from the citizens to the city,” Weldon said before the vote to protest. “If you own a business, that’s the first thing you should pay. I hope that you new folks can take care of this with the sales tax people and end up with a confession of judgment and move forward in the time allotted.”
• Contact reporter Ben Hohenstatt at (907)523-2243 or bhohenstatt@juneauempire.com. Follow him on Twitter at @BenHohenstatt.
