Anchorage regs would ban pot clubs, pesticides

The Municipality of Anchorage doesn’t exactly trust state regulations, but appears to see the new marijuana industry as a revenue source worth mining.

An Anchorage ordinance would ban cannabis clubs and cafes, force retailers to foot the bill for cultivators’ pesticide use, and subject the Anchorage industry to city inspection on top of the required state inspection. Meanwhile, a separate ordinance establishes a retail marijuana sales tax that exceeds the city’s tax cap.

The dual licensing ordinance would require Anchorage marijuana businesses to apply for a municipal license as well as a state license.

Industry hopefuls say dual licensing is redundant, and along with the sales tax puts undue burden on retail businesses. Industry also fears city inspectors and law enforcement could use their powers to harass retail owners, mirroring concerns brought up during the state Marijuana Control Board rulemaking process.

 City officials say they want more involvement with an industry that’s still federally illegal. Officials list “control over industry” in the “pro” column of an early dual licensing discussion paper, and ordinances are geared toward giving the city more control than it would otherwise have if it simply deferred to state regulations.

Committee chairman Ernie Hall said the city is still waiting for Lt. Gov. Byron Mallott to approve state regulations on Jan. 24.

“We’re still in a kind of never never land,” said committee chairman Ernie Hall. “Until the state regulations come out and the lieutenant governor signs it, we’re still kind of in limbo.”

The Anchorage Assembly, however, is expected to vote on the dual licensing ordinance on Jan. 26, leaving only two days for draft revisions. Hall implored the cannabis industry to remember that Assembly process still leaves plenty of room for changes.

“I want everybody to understand that this ordinance is being introduced. Don’t panic. There’s a process yet for this,” said Hall.

The dual licensing and tax ordinances apply mostly to retail operations.  Municipal attorney Bill Falsey said the city’s intent is to focus on retail marijuana licenses to give Anchorage more control of the industry; much of the cultivation will likely be done elsewhere not subject to the city’s oversight.

The ordinance would allow city officials to inspect and levy fines for marijuana business violators — just as in state regulations, which fine violators up to $10,000 — but Falsey said they’ve engineered a staggered fine structure to keep fines smaller for lesser offenses.

“Ours will be tailored to different provisions,” said Falsey. “We’re going to have smaller violations with smaller fines, larger violations with larger fines.”

Bruce Schulte, the chair of the Marijuana Control Board and ex-officio member of the committee, wondered why the city should have so much enforcement need beyond collecting revenue.

“Why wouldn’t we just defer to the state?” asked Schulte. “I’m not sure what value we gain other than money into the city coffers. Or is that the goal?”

Falsey said city enforcement should be able to enforce state regulations, as well as its own extra regulations, without having to go through the state board.

“As we have municipal code enforcement doing purely municipal things,” said Falsey, “they may stumble on infractions on the licensing and regulatory side. When we have someone in power to do enforcement, they should be fully in power to enforcement.”

The state marijuana board already pays half its licensing fees to the locality where the license is held, so the city will charge nothing for the license.

The draft ordinance would ban both marijuana clubs and onsite consumption licenses, the latter of which the state specifically allows. Falsey said a ban is only a procedural necessity to bring the issue up when the Assembly meets.

“The Assembly has asked that these issues be brought back to it,” Falsey said. “We know these questions are coming back to the assembly one way or the other.”

The city already has an indoor smoking ban, but it has workarounds including private smoking clubs. Marijuana club Pot Luck Events has used this comparison frequently in defending its legality as a non-public place where cannabis consumption is permitted.

Falsey said the Assembly might want its own ordinances regarding clubs and cafes. The state’s allowance for onsite marijuana consumption was not unanimous in the first place, he said, and the city might differ in opinion.

“The onsite consumption and smoking clubs were highly contentious in the state regulatory discussions,” said Falsey. “Alaska is now currently the only jurisdiction anticipating whether or not there are marijuana café. Certainly the more conservative way would be to fall back on the Colorado Washington Oregon approach.”

The city infractions mirror some of the state’s licensing requirements, as well as adding others where the city feels the state regulations didn’t address. The city’s hands could reach into other jurisdictions by applying certain rules like a pesticide ban.

The ordinance would ban 59 different pesticides for marijuana cultivation, citing Oregon’s recent anti-pesticide provisions. City compliance officers could spot check retailers’ cannabis for pesticides. Since most cultivation will likely be done outside Anchorage, the city sees this as a way to control industry beyond what will likely be a heavily retail-based Anchorage market.

Industry agreed with the sentiment, but not with method. The system makes retailers responsible — at $500 dollars a pop — for testing their product for pesticides. The cultivators who used the pesticides, however, would have no responsibility beyond souring business relationships with Anchorage retailers.

“Cultivation sends samples, gets it tested,” said Kim Kole, a member of Coalition for Responsible Cannabis Legislation. “Retail has to sit on that product, and send out another sample for the testing facility again? It’s completely redundant and inefficient.”

“We want to start the conversation going early,” said Falsey.

Apart from fines and possible testing expenses, Anchorage’s marijuana industry will face a stiff tax schedule.

The proposed marijuana tax would stick retail marijuana with a 5 percent sales tax, but allow city officials to increase the tax every two years by 2 percent. Conceivably, the tax could rise as far as 12 percent.

Localities have already passed their own tax schedules. Fairbanks has passed a 5 percent marijuana sales tax and Bethel a 15 percent tax. 

 

DJ Summers can be reached at daniel.summers@alaskajournal.com.

Updated: 
01/20/2016 - 1:45pm

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