Board approves 27 marijuana licenses where prohibition on Oct. 3 ballot

  • The Alaska Marijuana Control Board approved more than two dozen licenses in jurisdictions with prohibition measures on the Oct. 3 ballot. (Photo/File/AJOC)

The Marijuana Control Board renewed 21 cannabis business licenses and approved 25 new businesses at its Nome meeting Sept. 14-15, but concerns were expressed that more than half of these license holders face a shutdown from Oct. 3 municipal elections.

The Kenai Peninsula Borough, the Fairbanks North Star Borough and the City of Fairbanks all have upcoming votes to ban retail shops and marijuana grows. Of the 45 licenses approved, 27 are in those jurisdictions.

The Alaska Marijuana Industry Alliance has campaigns on the Kenai Peninsula and Fairbanks carrying the message that a vote against the legal industry is a vote for the black market, said Cary Carrigan, the group’s executive director.

“I’m worried enough to tell you that I am investing in this process,” Carrigan said. “If marijuana is made illegal, it will immediately enhance the black market.”

Residents of Alaska voted in 2014 to legalize marijuana, but local governments were granted the right of opt-outs in their communities. So far, only North Pole has banned legal pot sales in an election last fall.

Voters in Valdez decided against a proposed cannabis prohibition in May and the Matanuska-Susitna Borough voted to keep it legal in October 2016, just as the new businesses were licensed to operate.

The state tax revenue raised to date is $2.3 million. One of the key arguments in favor of keeping marijuana legal is the revenue raised for the State of Alaska, Carrigan said.

Yet, even Marijuana Control Board members are siding with opposite camps on the Kenai and Fairbanks ballot props.

Soldotna Police Chief and board chair Peter Mlynarik is campaigning for a ban on the Kenai Peninsula. On KSRM Radio, he announced that he was involved in efforts to organize Prop 1, an ordinance “to prohibit the operation of any commercial marijuana establishment in the Kenai Peninsula and the Kenai Borough.”

Though questions of conflict arose from callers during the KSRM talk show, “Sound Off,” Mlynarik responded that his position chairing the board is to represent public safety. He pointed out that among the five-member board “there is also two other positions … both occupied by industry and both of those individuals have marijuana licenses.”

One of those is board member Brandon Emmett from Fairbanks, owner of Good Titrations. Emmett is working on the campaign to keep marijuana legal in the borough and city. The other industry board member is Nicholas Miller of Anchorage, who is president of the Anchorage Cannabis Business Association.

Among the action items taken up, the board voted to extend the timing of public objections on licenses beyond the 30 days currently granted. Now a person or agency can bring up objections at any stage in the process.

The board did not take up the agenda items put out for public comment from the July meeting in Fairbanks. One of those was the question of whether a cannabis business can offer a percentage of revenue to a landlord in lieu of rent.

Executive Director Erika McConnell said the matter will be taken up with the board meets in Anchorage Nov. 16-17.

License denials

With few action items on the agenda, for two days the five-member board went through license applications and renewals. Though accused early on in public comments of “rubber stamping” licenses by a Talkeetna man who is against a new marijuana business opening there, the board turned down or postponed nearly a dozen license applications.

One Fairbanks cultivator was denied a license based on objections and a technicality: Raven Buds on Lawlor Road in Fairbanks would be located too close to a juvenile drug rehabilitation facility. Tanana Chiefs Conference wrote to the board saying they would “revoke permission to use the access road running across their property if the license is approved,” McConnell advised the board.

In a unanimous vote, board members turned down applicants Carol Bold, Dave Mullis and Kerri Mullis who wanted to open Raven Buds.

“I can guarantee if someone wanted to put a marijuana operation in a YKHC (Yukon Kuskokwim Health Corp.) duplex, there would be objections,” said member Mark Springer of Bethel, who holds a seat designated for rural Alaska. “I’m going to vote no.”

Emmett also objected.

“Those most vulnerable to drug abuse are nearby,” he said. “I don’t think I can support that.”

Another objection came from the City of Ketchikan over a license application for Northern Lights Cultivation. The Ketchikan City Council voted on Sept. 7 to protest the license on the grounds that the owners haven’t yet complied with all fire and safety codes.

In a letter to the board, the Ketchikan City Council also said such a business is “not in keeping with public interest of the surrounding neighborhood,” because it would be located in a multi-residential building.

The applicants Jesse Hoyt and Jacob Rodriguez answered questions for the board, contending they are addressing the city’s concerns and are due for a fire inspection in the coming days.

The application was tabled until they comply with the city’s concerns, the board decided, in a unanimous vote.

The board denied or tabled three other licenses over residency issues linked to their Permanent Fund dividends. The board had adopted regulations that define a resident according to whether they received a permanent fund dividend the previous year. Those denied a PFD based on residency would also be denied a license.

But there are problems with using that definition, McConnell alerted the board earlier in the day when she recommended the board give the matter its attention as a new regulations project.

Three applicants, High Tide Distributors of Nikiski, the Green Pearl LLC of Big Lake and The Connoisseur of Wasilla were all impacted by the PFD residency definition.

One was denied a PFD because he was out of state the previous year for six months, but has lived in Alaska since 1971. Another checked a box stating he was out of town during the time of filing, but is also a resident. A third also claimed a clerical error that made his Alaska residency go unacknowledged by the PFD determination.

McConnell wrote to the board that the PFD definition is confusing for two reasons.

“The residency requirement that is evaluated through the PFD is for the prior year and (secondly) license applicants who apply in January through May would not know their PFD application status for that calendar year,” she told the board.

To make the process less confusing, McConnell recommends changing the regulation language to “currently” meets residency requirements.

In the meantime, those who were postponed due to the PFD difficulty will have to wait until the regulation is changed before they can resubmit an application, Program Coordinator Sarah Daulton Oates told the board.

Seven other licenses were tabled until the next meeting Nov. 15 in Anchorage.

Smell complaints

Advertising violations continue tripping up cannabis businesses. This time, Stoney Moose was on the list after enforcement alleged the company claimed 13 items as having medicinal benefits online.

State law restricts marijuana businesses from using statements or illustrations to say marijuana has curative or therapeutic effects.

The Ketchikan owner found that its website developer had used Leafly, a subscription based mobile phone app that shows the location of the store. A specified type of strain then auto-populated to the Stoney Moose’s website.

“Unbeknownst to me, that wording contained ‘Medical Benefits.’” The owner then was able to have the web developer remove the product descriptions, Mark Woodward, the co-owner, wrote to the board.

Weed Dudes of Sitka also was cited for violation under advertising restrictions, this one for having a sign in the public right-of-way rather than attached to the building or storefront window. The owner, Michelle Cleaver, said she removed the sign.

Smells emitted from commercial greenhouse marijuana facilities are bringing out neighborhood complaints and resulted in three of the five violations issued between July 15 and Sept. 13.

Danish Gardens and Great Northern Cannabis Inc., both located on Anchorage’s Cinnabar Loop, were notified of violations based on the stinky smell complaints.

In Danish Garden’s case, three neighbors wrote to AMCO enforcement about detectible odor of marijuana outside the premises. The law cited says the business “does not emit an odor that is detectible by the public from outside the cultivation facility except as allowed by a local government conditional use permit process.”

To solve the problem, attorney Jana Weltzin said Danish Gardens installed a robust odor control system that includes commercial grade air intakes, exhaust fans, carbon filtration, air scrubber systems and de-ionization systems.

Because they have a special land use permit, the law states the smell has to be contained within the property lines, not immediately outside the building, Weltzin wrote in the response to enforcement staff.

She also complained that a licensee does not get a chance to address the accusers, yet the violation follows the business licensee through the process of municipal and state renewal and could mean a shut-down of the business.

“We do not believe that AMCO Enforcement did their due diligence in determining just where these odors in question were coming from and we do not agree that unknown and unnamed accusers can willy-nilly cause substantial stress and damages to licensees of this new industry. People making complaint should be required to give their names and contact information,” Weltzin contended.

What may underlie complaints is the attitude “we just don’t think weed should be legal,” she wrote.

In the case of Great Northern Cannabis Inc., enforcement also received three complaints of detectible odor.

Birch Horton Bittner &Cherot attorney Jason Brandeis responded that GNC management conducted a thorough review of the facility’s HVAC system and identified the source of the odor as a vent that emitted directly out the door. GNC then hired contactors to investigate and propose a mitigation plan that resulted in sealing off air that vent.

The internal ductwork was relocated to pass through multiple filters before exiting a roof stack vent. They also doubled the number of filters associated with the vent, according to Brandeis.

Parallel 64 was issued a violation notice for failing to tag marijuana plants taller than eight inches. This is in violation of the marijuana inventory tracking system.

Parallel 64, located in Anchorage, responded that an internal misunderstanding led to the violation. They have since changed protocol to educate all employees about compliance.

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Naomi Klouda can be reached at naomi.klouda@alaskajournal.com.

Updated: 
09/20/2017 - 10:23am

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