Mat-Su Assemblyman proposes marijuana moratorium

The Mat-Su Borough could halt marijuana commercial activity in its unincorporated areas sooner than thought if a proposed moratorium passes the Assembly.

Mat-Su Borough Assembly member Randall Kowalke introduced a temporary moratorium on commercial marijuana on April 19. The Assembly will accept public comment and vote on the moratorium on May 3. Depending on the results of an October borough ballot initiative that would ban commercial marijuana, the moratorium could extend indefinitely.

Kowalke said he doesn’t intend the moratorium to be a roadblock. He said state regulatory authorities and the borough’s own zoning regulations make him want to take a pause.

“My ordinance is rather straightforward,” he said. “It’s to call a time out.”

The moratorium responds to zoning concerns, Kowalke said, as his district’s libertarian land ownership practices seem to have found their limit.

The unincorporated borough’s lack of zoning laws has presented a tricky situation, he said. Commercial marijuana cultivation facility proposals are sprouting up in rural areas that could be classified as residential but have no legal distinction as such. Lakefront property owners and others have called him concerned about grandchildren running around in the vicinity of a marijuana grow.

“My district has long prided itself on you buying a piece of land and doing whatever you want on it,” he said. “Those are some of the folks that have contacted me about the marijuana things.”

Further, Kowalke said he’s concerned with the federal background check provision in statute. Marijuana Control Board director Cynthia Franklin has said she will not process marijuana license applications until legislation allows the board to request federal background checks. Two bills in the Legislature allow this, but the Senate and House cannot agree on either.

The motivation, Kowalke said, is to avoid the ambiguity and “to give a time out to try to zone residential issues, give the state time to figure out background checks, and work with planning and zoning.”

The borough already has a ballot initiative scheduled for October that would ban all commercial marijuana in the unincorporated borough. This temporary moratorium would halt commercial licenses until voters decide the measure — potentially making it a permanent ban rather than temporary moratorium.

The moratorium would apply only to unincorporated areas. Palmer, Wasilla, and Houston, as established cities, would be left out. However, both Palmer and Wasilla have each passed commercial marijuana bans. If the temporary moratorium passes, only Houston will remain as a cannabis-friendly zone in the state’s second-largest population center.

Operationally, this gave hopeful businesses time to begin their state licensing process. Over 30 applications to the state Marijuana Control Board have addresses in the unincorporated Mat-Su Borough. About three-quarters of those are for cultivation businesses.

One such business hopeful, Bailey Stewart, said she’s already sunk her life savings into a retail marijuana operation in the borough. Stewart, vice president of the Matanuska Valley Cannabis Business Association, said the time in between now and the October vote is crucial.

The state will begin issuing licenses in early June, provided the Legislature authorizes the federal background checks for applicants. If cultivators and retailers have the opportunity to begin a few months of sales — and pay municipal taxes — the October vote might swing in industry’s favor.

“We had an opportunity to show the community that we weren’t going to be in their face,” said Stewart. “If the moratorium passes we’ll lose that opportunity before the October vote.”

Stewart said she doesn’t think borough lawmakers are antagonistic to the industry. They simply don’t understand either the money involved in setting up a marijuana business or the potential tax dollars to be gained.

The state collects a $50 per ounce excise tax on cannabis cultivators, and municipalities have implemented varied sales taxes, including a 5 percent sales tax in Anchorage with the ability to rise to 12 percent.

Meanwhile, state licenses cost $5,000 on top of the payments for the leased cultivation, retail, or manufacturing premises.

Marijuana entrepreneurs in Alaska have a precarious financial situation in a state with limited capital options. Federally insured banks will neither loan to them nor accept their deposits. State regulations forbid Outside investment. Many like Stewart bootstrap their businesses with savings.

 “We’re talking about an industry that is financial sensitive,” she said. “When you’ve worked this hard for so many years, you don’t want to see your life savings go up in smoke.”

Not only is the downtime between license issuance and the October ballot necessary for public perception, Stewart said, but recovering some of the initial investments as well.

“I would have had the chance to recoup some of my costs,” Stewart said. “Now, they’ve already spent that money. A lot of them, it’s no going back.”

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

 

Updated: 
04/21/2016 - 6:52pm

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