Pot permits wait on background check bill

A number of bills in Juneau are creating delays in completing approvals for marijuana business license applications.

Prospective marijuana business owners began submitting license applications to the state on Feb. 24, with more than 200 received as of March 25, but their licenses will be held at the end of the process until one bill passes.

Marijuana Control Board director Cynthia Franklin said her staff of four reviewers is still working on licenses, but that they run into a wall at the end of the process where criminal background checks must be performed.

“The rumor that we’ve halted applications is false,” said Franklin. “We are working on them.”

Without passage of House Bill 75, Franklin said her staff cannot request federal background checks to ensure marijuana licensees have not had any felony convictions in the last five years, a regulatory requirement. The bill gives statutory enabling authority for the Department of Public Safety to request the federal checks.

Franklin said licenses are still in their early initiation phase. Only one of the 200-plus applications has reached the final stage of criminal background checks.

Franklin said she believes the bill will have no trouble passing by April 19, and that the licensing timeline will not be significantly delayed.

“We’re going to be just fine and dandy,” she said.

In February, Franklin announced a revised timeline in which the state will issue licenses beginning June 7, an alteration from the voter initiative requirement of May 24.

The state requires a “seed to sale” tracking system for all cannabis, meaning cultivators will have to possess marijuana licenses before even planting their first crop. Cannabis takes roughly 100 days to grow to maturity, so retail stores will not have legal product until mid-September at the earliest.

Cultivation licenses have a hiccup of their own. HB 337 would require cultivators to pay a $5,000 bond to the state before their license is approved. If HB 337 passes, cultivators will have their licenses held until they provide proof of this bond.

Franklin said she believes the bills will pass, but marijuana bills have moved slowly in a Legislature snowed under by a $4.1 billion budget deficit and an avalanche of budget cuts and tax proposals.

HB 75, presented as an administrative fix-it bill from Rep. Cathy Tilton, R-Wasilla, amends statute to allow the state to request federal background checks, as well as opts unorganized borough villages out of commercial marijuana activity.

State regulations require background checks for all marijuana business applicants. Specifically, rules approved by the state Marijuana Control Board will deny a marijuana application to an applicant with any felony on record in the past five years, any misdemeanor involving a controlled substance, weapons charge, or violence within the last five years, or a Class A misdemeanor relating to selling, furnishing, or distributing marijuana or operating an establishment where marijuana is consumed contrary to state law.

Marijuana regulations do not currently specify Federal Bureau of Investigation background checks.

Earlier Marijuana Control Board drafts incorporated this language, but the Departments of Law and Public Safety said such requests would require statutory changes, not regulatory ones.

Franklin and Tilton argue an FBI background check is the only way to verify criminal records for federal or Outside convictions, which do not appear on Alaska’s court system. 

The Municipality of Anchorage will need to play catch up with marijuana licenses. At a March 22 Anchorage Assembly meeting, member Ernie Hall recommended, based on conversations with Franklin, that the Assembly postpone marijuana business until the state has ironed out its own process.

“There is a tremendous amount of work yet to be done at the state level,” said Hall, “which has been a concern on our part from the very beginning, that we would get our part of the work done and the state wouldn’t be up to speed. And that’s kind of beginning to become true.”

Municipal attorney Bill Falsey confirmed that the municipality has discontinued its marijuana discussions until further notice, and that it has not received any completed applications from the state.

To begin its own licensing process, the municipality must receive completed applications from the state.

Both Fairbanks and Juneau have already approved conditional use permits for marijuana businesses, and are awaiting state license approval.

2016 pot tourism a
moot point

With delays, the cannabis market will miss virtually all of the 2016 summer tourists, one of the key demographics the industry hopes to capture.

The Alaska cannabis industry has long maintained that tourists will find new reason to drop money in the Last Frontier now that recreational marijuana has been legalized. They won’t know until 2017, as the full marijuana industry rollout won’t present any legal sales until September at the earliest.

With nearly 2 million visitors per year dropping $941 per person per visit, Alaska’s $2.4 billion tourism industry could be a vast revenue pool for the marijuana industry and its accompanying taxes.

As of yet, the tourist industries have not marketed Alaska as a marijuana destination, or taken any kind of regulatory stance, until the industry has grown enough to establish marijuana as a selling point.

Southeast Alaska communities and Fairbanks have expressed a drive for marijuana tourism dollars in the past, and are among the municipalities with the most lenient of local controls. Several Southeast communities have filed requests to lower the state’s 500-foot buffer zone from school and churches to 200 feet. 

On-site consumption

Hall focused on licensing, but also touched on marijuana social clubs and onsite consumption provisions.

“It would be appropriate for the Assembly as a whole to kind of take a hiatus for a bit,” Hall said. “We’ve got our land use in place. We’ve got our licensing in place. We’ve got all of the major elements for marijuana in place. But when it comes to marijuana social clubs or on-site consumption, there’s a number of things that are happening currently.”

Hall mentioned a “number of things,” but only one bill concerning these items is in the Legislature.

An anti-smoking bill, HB 328, would effectively rescind the Marijuana Control Board’s on-site consumption provision, which allows retail marijuana establishments to apply for an on-site marijuana café license.

The bill is aimed at tobacco use. Tucked into the bill’s definitions, however, is a ban on marijuana consumption anywhere but in private homes. Apart from banning tobacco, the bill would apply to any plant “intended for inhalation.”

The bill has bipartisan support, with with co-sponsors from all over the state including the House majority and minority leaders. 

Since being introduced on Feb. 22 by Rep. Dave Talerico, R-Healy, the bill has since been co-sponsored by the House Majority leader Charisse Millett, R-Anchorage, House Minority leader Chris Tuck, D-Anchorage, Reps. Bob Lynn, Bryce Edgmon, D-Dillingham, Bob Herron, D-Bethel, Lynn Gattis, R-Wasilla, Neal Foster, D-Nome, Cathy Munoz, R-Juneau, and Benjamin Nageak, D-Barrow.

On March 24, Rep. Adam Wool, D-Fairbanks, planned to offer an amendment to the bill that would exempt retail marijuana stores from the provision the same way certain tobacco stores who maintain 90 percent of their revenue from tobacco sales are exempt. The meeting was cut for time, however, and Wool did not officially offer the amendment.

Falsey said the municipality had planned to further discuss marijuana social clubs and on-site consumption provisions.

“I think everyone understood that there was more to come on on-site consumption post February,” said Falsey. “The consensus seems to be now that we should wait to see what the state does.”

Marijuana Control Board chairman Bruce Schulte, however, said the state has already decided, and that the board does not plan to revisit social clubs and on-site consumption.

“We have taken the position that clubs are not our purview to either regulate or ban and on-site consumption requires only operating parameters,” he said.

DJ Summers can be reached at [email protected].


03/30/2016 - 8:50pm