Credit union to offer financial services to cannabis industry in March

Starting next month, cannabis business owners in Alaska will have access to financial services for the first time. Credit Union 1, an Anchorage-based credit union, expects to launch its pilot program serving licensed cannabis businesses in March. CU1 has been working on the details of the program closely with business owners for more than a year and announced the pilot program in November, said Joseph Martin, who manages the marijuana-related business program for Credit Union 1. “The whole plan all along has been to launch it sometime in March,” he said. “We announced it so early because we wanted to give the industry hope, because they’ve been struggling for awhile now.” Because cannabis is still listed as a Schedule I narcotic under the federal Controlled Substances Act, financial institutions have been skittish about serving the businesses. Banks are federally insured and inspected, and taking on the risk of serving a business technically still considered illegal by the federal government could present risk. Thus, cannabis business owners and customers to date have largely had to work in cash, with huge deposits of cash going in and out of businesses by hand. That’s something that’s both inconvenient to businesses and dangerous to the public. Martin said that was one of its concerns as a community credit union — business owners are taking on a risk by having to transport large sums of cash down the street to pay bills and holding their payroll in cash. Credit Union 1 is a relatively small player in the larger world of financial institutions, with about $1 billion in holdings — for comparison, JPMorgan Chase has about $3 trillion — but its nonprofit status and community orientation allows it to take on more risk, Martin said. “Credit unions typically take on bigger risks than banks to serve the underserved,” he said. “I think marijuana kind of fits into that. It’s a big community safety issue to have all this cash running around on the streets.” Essentially, the pilot program will hinge on improved software to serve the cannabis industry. Because of the nature of the business, the credit union has to keep close tabs on what is coming in and out of the accounts and file reports on every deposit over $10,000 — which is basically all of them, Martin said — to report them to the federal government. That helps CU1 prove to the federal government that everything is above board and the accounts are not laundering money, he said. The financial industry occupies a strange tidepool in the world of back-and-forth cannabis legalization legislation. After Obama-administration U.S. Deputy Attorney General James M. Cole issued a memorandum in August 2013 essentially telling all federal prosecutors to defer to states’ legalization laws on cannabis, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network developed its own guidelines for banks wishing to serve the cannabis industry. Even after President Donald Trump’s former Attorney General Jeff Sessions retracted the Cole memorandum, the Financial Crimes Enforcement Network let its banking regulations stand, as long as banks complied. For those looking to open accounts, there will likely be a significant charge, at least at first. The cannabis banking programs are expensive. For one, the additional burdens of tracking the industry to comply with the FinCEN’s guidelines require significant manpower. Credit Union 1, which usually files about 2,000 reports of transactions more than $10,000 per year, expects its annual reports to increase to about 15,000, Martin said. “When you’re thinking of (the service) from inside the financial institution, it’s not information that we have readily available,” he said. “It’s very invasive … we have to know their product lines, their normal customer base, we have to know all their owners, anyone tied to the business.” But the software improvement should help Credit Union 1 bypass some of the staffing increases other banks have had to take on. For example, other banks have developed cannabis departments in which individual employees handle specific cannabis accounts and know the ins and outs of each business. The software Credit Union 1 has been working on will help avoid some of that, Martin said. Over time, he said he thinks the program will get cheaper as CU1 onboards more businesses and the employees get better at serving the cannabis industry. The federal burdens of reporting may decrease, too, as bills move through Congress to change the regulations on serving the cannabis industry. The U.S. House Committee on Financial Services held a hearing on just such a draft bill on Feb. 13. The bill, which would encode safe harbor banking practices, is championed by the National Cannabis Industry Association and supported by the Marijuana Policy Project. Though it’s only a draft, a final version could be introduced shortly thereafter, said Morgan Fox, the communications manager for the National Cannabis Industry Association. “There’s a number of comprehensive bills being introduced that all approach the issue from different directions,” he said. “Almost all of them would basically solve the banking issue.” Since the midterm election, many of the “obstructionist” legislators have left Congress and the NCIA feels the banking bills have a better chance of passing, Fox said. The particular bill being discussed on Feb. 13 would carve out a safe harbor for banks, but he said he had never heard of a bank being prosecuted for serving the cannabis industry. There aren’t very many of them, though. Though FinCEN’s official tracking documents roughly 486 banks maintaining service for cannabis businesses, Fox said the true number is significantly smaller than that — something like 40 financial institutions nationally have cannabis departments, he said. Having access to banking services is important for cannabis businesses from an economic angle and for states from transparency and regulatory perspectives, he said. “Without access to banking, they have to institute much more expensive measures … even paying taxes, security,” he said. “I think it’s really important from a regulatory standpoint.” Martin said Credit Union 1 has plans in place to unwind the program if the federal government is uncomfortable with it, but they’re fairly confident in the plan they’ve written out. One of the core things the bank hopes for is to normalize the legal cannabis industry as members of the business community in the state. “We don’t have a political or moral sense about this. You’re not going to see us sponsoring (bills) … but because it is legal in the state of Alaska, we’re going to service it like a business like any other,” he said. Elizabeth Earl can be reached at [email protected]

Disagreements remain after on-site cannabis consumption approved

Though Alaska’s cannabis business owners have received the green light for on-site consumption endorsements, there’s still division on the Marijuana Control Board and in the public on the issue. The board members passed regulations for on-site consumption at the Dec. 20 meeting on a 3-2 vote. Industry representatives Brandon Emmett and Nick Miller and public safety representative Jeff Ankerfelt, the Sitka Chief of Police, voted in favor, while public health representative Loren Jones and rural public member Mark Springer voted against. It was a flip across the table for Jones, who helped draft the language of the regulations the board was considering. Last April, when the board first considered regulatory language, Jones told the Journal that he felt the regulation language covered public safety and health concerns well and included various voices in the process. During the meeting, he reversed and said he did not think the regulations went far enough and that to approve on-site consumption now would be a “terrible, terrible mistake for us to make moving forward on this.” “I worked on this with Mr. Emmett, and I was clear to him and clear to everybody else that if this were to pass, I wanted to have something that was enforceable and workable,” he said. “I think we went a long way … but I don’t think we’ve gone far enough.” Atop concerns about the definition of “public space,” Jones said he didn’t think the regulations as written would sufficiently protect people from the effects of secondhand smoke. Earlier in the meeting, he also raised concerns about the ability of citizens in unincorporated areas to protest on-site endorsements from being granted, as they do not have a local government to formally protest or opt out. Like commercial cannabis operations, local governments of cities or boroughs are allowed to opt out of allowing on-site consumption within their boundaries. Though much of the support came from the tourist industry, with business owners seeking a place for tourists to legally smoke cannabis, Jones said there were mixed feelings in Juneau about encouraging cannabis tourism. “We’re expecting 1.3 million tourists come off the cruise ships (in Juneau) next year,” he said. “About 90 percent of the tourists who come to Alaska come through Juneau. I don’t know that Juneau or the state of Alaska wants to be known as a cannabis tourist destination. Most of the people come up to us wanting the clean air, clean water. They want to do the wilderness … In my community, we have a very strong indoor air ordinance that we’re going to maintain.” Springer agreed with Jones, saying he gave weight to the comments of public health officials, joining Jones in voting against. While many hailed the vote as a victory for Alaska’s cannabis industry, which would be the first state to develop retail on-site consumption, there was broad opposition from public health professionals and from the public. Within the board, Miller and Emmett supported clarifying rules for retailers, who under the approved rules would not be able to sell more than a certain amount of marijuana to an individual per day. In a large retail setting, with multiple employees working, that will be difficult to track, he said. “We’re not allowed to keep customer data,” he said. “How do I know if someone came in this morning and came in at 3? I understand that that is not the intent … but is it still a violation? There’s just no way for the retailer to understand it at this time.” The board voted down Miller’s proposed amendment to remove the daily limit clause 3-2, with Emmett and Miller supporting it. Other members cited concerns that removing the language would allow people to buy too much in a single day. Under the current requirements, several of the areas that requested it — notably, downtown Juneau — most likely won’t see on-site consumption areas soon. The regulations the board passed require a retail store to be freestanding to apply for an endorsement, meaning there are no other establishments in the building, and have proper ventilation systems for the smoke. That likely won’t apply to anywhere in downtown Juneau, which is densely developed, Jones said. Springer agreed, saying there will likely be a small number of retailers who meet the requirements. “I think it will be a boon to a relatively small number of people who developed their original facilities with this in mind,” Springer said. “There are a lot of retailers that this is going to do nothing for. It’s not an across-the-board benefit.” The American Lung Association’s Alaska chapter, the Alaska Department of Health and Social Services’ Division of Public Health and the American Cancer Society Cancer Action Network wrote letters opposing the approval of on-site consumption, all citing concerns about the impact of secondhand smoke particularly and the recently passed smoke-free workplace law, which requires all smoking activity to occur outside of places of employment. “Secondhand smoke from combusted marijuana contains fine particulate matter that can be breathed deeply into the lungs, which can cause lung irritation, asthma attacks, and makes users more vulnerable to respiratory infections,” the American Lung Association’s letter states. “Exposure to fine particulate matter can exacerbate health problems, especially for people with respiratory conditions like asthma, bronchitis, or COPD. Secondhand smoke from marijuana has many of the same chemicals as smoke from tobacco, including those linked to lung cancer.” Advocates wrote that the public health studies cited are not reputable about the carcinogenic effects of marijuana smoke and that blocking on-site. Consumption areas just push smokers into their own homes, where they expose their families and roommates. Elizabeth Earl can be reached at [email protected]

Fee hikes proposed to cover workload at marijuana office

KENAI — Cannabis business owners may have to pony up more cash in the near future for their licenses. The Marijuana Control Board is considering raising license fees to support the operations of the office. At its Oct. 17 meeting in Kenai, Alcohol and Marijuana Control Office Director Erika McConnell presented the initial idea to the board members of raising the license fees in a variety of ways, leaving the decision up to them on how the members would like to pursue it. “The board may want to only consider the increased license fee at the time of renewal,” she said. “Should the board want to entertain raising license fees, that would be through a regulation project.” The Alaska Department of Commerce, Community and Economic Development — which houses AMCO and business licensing divisions — wants to see professional licensing programs and industries support the cost of regulating them through license fees. The Legislature kicked in about $4.5 million in unrestricted General Fund money to get the program going, but wants to see that paid back eventually, McConnell said. On top of that, cannabis business licensees have been raising concerns recently about the amount of time it takes for the office to review applications for a new license. The current waiting time is more than five months for a completed application to be reviewed. Some applicants have waited longer. However, AMCO doesn’t have enough staff members to speed that time up with all the other requirements placed on the office, and securing more staff is tricky with continuous state government cuts over the past four fiscal years in the Legislature. McConnell said the office managed to secure a regulations specialist this year between Legislative sessions, but will have to include the line item for the position in next year’s request to the Legislature and face the possibility that it will be cut out during the budget review process. To provide the services requested by the industry, the office needs enough money to support more staff, she said. Estimating revenue based on the rate of license renewal and current license costs, the office will bring in about $1.7 million in revenue, between the regular business licenses and the marijuana handling card fees. That may not be entirely accurate, though, she wrote in her report to the board. “That estimate may be high, as some licensees submit renewal applications and fees after the June 30 deadline, so their fees go into the FY20 revenue,” she wrote. In the report, she presented two ideas — raising the $500 license fee to $1,000 and the $5,000 license to $6,000, or raising the $500 license to $1,500 and the $5,000 license to $7,000. She also presented the idea of raising just the renewal fee for licenses, as the threshold of entry for people just getting into the industry is already high. The board took no action at the meeting, as that would require public notice and comment first. Cost to industry participants continues to be a major conversation driver, between trim taxes that business owners consider unfair to licensing and facility requirements. The board also shot down an AMCO staff proposal to lengthen the amount of time required for businesses to retain their security footage. Currently, businesses have to retain their high-definition security footage for 40 days, which requires a large amount of storage space and expense to maintain. For enforcement reasons, the staff had proposed requiring businesses to retain their security footage for 90 days. License holders objected, saying that would incur massive expense for the hard drive storage, and downloading that amount of footage when requested by the enforcement office would set them up to fail the deadline for turning it in because downloading footage of that length of time takes too long. The board unanimously declined the proposed regulation, agreeing that the requirement was too burdensome for businesses. Board member Nick Miller, an industry representative, said there was a section in code that allowed the AMCO enforcement division to require individual businesses to keep footage longer than the 40-day requirement if necessary. “We’ve heard a lot of discussions about how long it takes to download 40 days. I can’t imagine how long it’s going to take to download 90 days,” he said. “…I think they should (use that section of code) and not penalize the entire industry for one or two bad actors out there.” Brandon Emmett, the other industry representative, agreed, citing the other cost strains on business owners. Growers, especially limited cultivators, are struggling to make a profit on what they’re doing and adding more expense for everyone may push some of them under, he said. “I think that we have to weigh cost and benefit,” he said. “The cost to our growers who are struggling, there’s people going out of business, that adding this extra expense that they get no benefit from to potentially catch a bad actor or two is not prudent.” McConnell said the office had originally proposed 120 days, but reduced it to 90 after the board members rejected the 120 days. Oregon recently raised its video retention requirement to 90 days, while other states like Nevada only require 30 days’ retention, she said. This was the board’s first time meeting in Kenai. The board will return to Anchorage for its next meeting on Dec. 20-21. Elizabeth Earl can be reached at [email protected]

Growing pains: License delays, enforcement issues irritating marijuana businesses

KENAI — Two years after the state’s first cannabis entrepreneurs received their licenses, business owners are still wrestling with hangups in the regulatory system. Long waits for licenses, complex enforcement questions and expensive requirements are common in Alaska’s cannabis business, frustrating some entrepreneurs. For some, it boils down to what they consider unreasonable obstacles to commerce, and wasn’t what they pictured when Proposition 2 passed in 2014 to legalize recreational cannabis. As of Aug. 15, about 80 would-be licensees were waiting on review through the state Alcohol and Marijuana Control Office. Though state statutes says they should be granted in about 90 days, most of them will likely be waiting for three to five months to even be reviewed, according to a director’s report from AMCO Director Erika McConnell to the Marijuana Control Board for its upcoming Oct. 16 meeting. For Dollynda Phelps of Nikiski, who co-owns limited cultivation business Peace Frog Botanicals, that time is money. She’s been waiting on a standard cultivation license for six months now, and every one of those months, she has been paying rent on a facility for the standard cultivation business, which she’s required to prove she has as part of a complete application. “I put in my application in March and I’m still waiting, and the whole time I’m paying rent and insurance on a building I’m not using,” she said. “There are hundreds of us now, waiting.” The license wait is unacceptable, she said. After the first round of licenses were approved in June 2016, the wait time has steadily increased, occasionally topping a year. Some of that comes down to manpower. Both McConnell and her predecessor, former AMCO director Cynthia Franklin, have cited heavy workloads on a limited staff contributing to wait times. AMCO agrees that the wait is too long. In her director’s report, McConnell wrote that license examiners are spending “an inordinate amount of time” going back and forth with licensees to hammer out pieces of applications that are missing or incomplete. “This can mean that an examiner and an applicant go back and forth on their application documents multiple times,” she wrote. “Sometimes an applicant is resistant to the advice from the examiner, although the examiner is only trying to help the applicant be successful, as the examiners pay attention to what the board comments on in applications.” Staffing has been an issue since the very beginning for the marijuana licensing office, which was born out of the office and staff that previously only managed alcohol licenses and enforcement. A separate board was created, but the director and the staff remained the same with promises of future staff additions. Those staff members haven’t yet materialized, leaving the existing staff with double the work they had before, said Cary Carrigan, the executive director of the industry group the Alaska Marijuana Industry Association. Securing more staff for the office has been one of the association’s goals for a while, he said. Though the industry is raking in money and the program is supposed to cover the office and board’s expenses, the approximately $12.8 million in tax revenue collected from cultivators by the state goes to the general fund and has to be appropriated by the Legislature to the individual departments, so it doesn’t go specifically to AMCO for administering the marijuana program. So frustration mounts on both sides, with unreasonable workloads for the staff and compounding expenses for businesses still waiting on licenses, he said. “It’s my opinion and the opinion of the AMIA board that the (licensing wait time) is an undue burden,” he said. “But what’s the fix?” Licensing isn’t the only thing keeping AMCO busy, though. With the proliferation of businesses and activity, the enforcement side — which covers both alcohol and marijuana licensees — has been busy, too. At an industry meeting among Kenai Peninsula cannabis business owners and employees, many commented that current regulations are unclear, and enforcement agents award notices of violation for items the owners or employees may not have known were against the rules. Obtaining too many violations can result in penalty actions from the board or issues with renewing licenses in the future. The majority of inspections don’t result in a notice of violation, according to a report from AMCO Enforcement Supervisor James Hoelscher to the Marijuana Control Board for the Oct. 16 meeting. The number of them is declining as more business owners learn the rules and the board process, but the amount is still concerning, Carrigan said — if the federal government looks at those numbers and considers them a sign of an unruly cannabis industry, it could jeopardize the state’s control, he said. Cannabis has only been legal for recreational use in the state for a little less than four years, so public opinions are still changing, industry participants are still learning to trust regulators and enforcement officers after being illegal operators for decades, and regulators are still feeling out the best practices for monitoring the industry, Carrigan said. “(The industry members) just need to be sure we’re being heard with one voice,” he said. “A dozen people yelling form the rafters is just a cacophony … We’re trying to move incrementally forward.” The Kenai Peninsula operators have a small laundry list of other issues as well, including increased retention time for security footage, enforcement opposing the exchange of seeds — which cultivators want to use to expand their grow operations and diversify their strains — and plan to request a review of the board’s recently passed requirement for testing on all cannabis trim. The change increases costs for operators by requiring an additional testing fee. Most trim is reprocessed into another product that will also be tested for quality and safety, so the operators feel it’s unnecessary. Phelps said the burden will affect limited cultivation operations significantly, as they don’t have the economy of scale to absorb the cost. And when they can’t swallow the cost, they go under or pass the cost to consumers, which pushes prices up and may encourage them to go back toward the black market for cannabis, where it is not tested or tracked. The Marijuana Control Board will meet Oct. 16-17 in Kenai at 145 Main Street Loop. ^ Elizabeth Earl can be reached at [email protected]

Transport rules examined; pot event organizers fined

The director of marijuana law enforcement would like to see new requirements to tighten security for transportation via the road system including advice on locking products in a vehicle and where to store marijuana overnight. James Hoelscher gave a report to the Marijuana Control Board June 14 on possible revisions to current practices. A transporter now can have a backpack or duffle bag of marijuana or products in the back seat or trunk of their car as they travel on the road system. To differentiate them from black market operators, they travel with a manifest that is filed ahead of time with Metrc, the state’s tracking contractor. The printed manifest provides an address from point A to B and all the planned stops in between, even a bathroom break or gas fill-up. Notices of violation were issued to a Fairbanks grower this spring after the manifest didn’t contain all of the transporter’s expected stops. In transportation regulations, the board “has clearly stated marijuana needs to be sealed and locked inside the vehicle” and can’t be open during transport, Hoelscher said. The person driving the product from the cultivator to the retail store can’t make stops in between except as specified on the manifest. But what happens now isn’t safe, he said. The transport can be “one of the most vulnerable points in the chain.” If transportation is an extension of a business’ license to operate, then security measures along a highway need to be tighter by spelling them out in new regulations, he said. “It hasn’t happened yet, but suppose a vehicle gets stolen or a licensee is robbed?” Hoelscher asked the board. “Now that’s my concern.” If a car is broken into, not only the marijuana gets stolen. The cash does as well. Colorado and Washington both require strong boxes that are welded into the vehicle. “That box is secured and locked in Colorado and Washington,” Hoelscher said. “(A thief) can get to it if they have time. The purpose is to make it a deterrent and so difficult it’s not worth the effort. If there’s a report on the manifest that the product hasn’t arrived on time, we may have good idea of where it will be.” The vehicle then could be quickly located by law enforcement. Compared to a locked box, a gym bag takes away aspects of security and offers no deterrent, he added. Also, what happens when a transporter has to break for the night, sleeping at a hotel or a friend’s house? In that case, Hoelscher recommends the transporter take the marijuana to be stored overnight at a licensed marijuana facility. “Alaska is Alaska and there will be weather or mechanical issues,” he said. “But there are licensees and I hope they go by the golden rule to treat others as they want to be treated. If I got stuck in let’s say Sitka, I would hope a Sitka licensee would let me manifest the marijuana into their facility.” Retail stores and cultivators, any marijuana business operating legally, will have cameras and safe boxes for keeping overnight. Bringing it to a hotel room or into a friend’s house overnight raises too many security questions, Hoelscher said. Currently, the manifest that contains all the information pre-filed on Metrc helps with security because Metrc will notify AMCO if a package doesn’t show up after 12 hours. So far, Hoelscher said, transporters have been diligent in changing the manifest when they decide they don’t need to stop, or do need to schedule one. As for issuing violations for not following the manifest, Hoelscher said enforcement takes a look at the whole picture first. “We would look at all things. What efforts were made to update the manifest or contact with AMCO, and what were their efforts to secure the product?” he said. AMCO wouldn’t necessarily write a violation notice. Chairman Mark Springer saw all these as legitimate concerns. “I wouldn’t be adverse to seeing a new regulation project to flesh out these out,” he said. Festival organizers fined A couple who sell “judgeships” for a marijuana competition they put on annually called the Alaska Cannabis Classic was fined $10,000 by state regulators after people lit up at their event and then posted the activities on Facebook. They were also fined $10,000 for illegally selling marijuana without a license. But the combined $20,000 fine was reduced to $5,000 after $15,000 was suspended on the condition that the Cory and Kendra Ray do not commit similar offenses in the future. Alcohol and Marijuana Control Office Executive Director Erika McConnell told the board June 14 that she had a lot of dialogue prior to the May 19 Cannabis Classic with the event planners, who are Oregon residents who hold similar events at various west coast locations. The couple advertised the classic as an event meant to increase the quality of marijuana products through education and competition. About a week prior to the event, McConnell learned that the Wrays were advertising a bake-off competition. It asked for bakers to submit a minimum of 100 servings in one of the six categories and advertised that judges would evaluate the appearance, tastes, aroma and “effect.” McConnell contacted the Wrays to let them know this event was not legal and the state would seek a restraining order of they moved ahead. The Wrays changed the bake-off rules to exclude cannabis infusion. McConnell said she also warned the Wrays in writing that public consumption of marijuana is illegal, and it is illegal to sell marijuana without a license issued by AMCO. Yet, at the event, from 6 to 9 p.m. at 420 W. Third Ave., participants were clearly seen smoking pot and posting photos of the event on Facebook. One of the two civil fines McConnell wanted imposed was for allegedly selling marijuana without a license. The contention by AMCO is that the Wray’s competition, which involves selling judgeships for $350 to people who pass a test of written questions on marijuana, allows participating judges to pick up samples they “must consume and rate the products before the Cannabis Classic.” “Essentially, the Wrays are selling marijuana to individuals through their website,” McConnell wrote in her memo to the board. Then, despite being clearly informed that there could be no onsite consumption at the Cannabis Classic, the “Wrays made no apparent effort to prevent public consumption of marijuana at the event, and allowed a vendor, Bushwackers, to light joints and hand them to consumers,” McConnell wrote to the board. State law allows less than an ounce of marijuana to be given away. The location where the event was held is owned by Robinson Garcia, who was also recommended for a $10,000 fine by McConnell. The violation reads that Garcia should be fined for allegedly “knowingly allowing, on his property, violations of the (statute) which prohibits public consumption of marijuana.” The Third Avenue building formerly housed a marijuana social club called Pot Luck that closed on April 21, 2017, after McConnell and state Attorney General Jahna Lindemuth declared to be operating illegally. Garcia told the board he had specified “no consumption” in the rental contract signed by the Wrays. “I did what I was asked to do,” Garcia told the board. “I don’t see the justification for this.” In the end, the board agreed not to fine Garcia after board member Nick Miller, a marijuana business owner, noted that it’s not so common to fine “landlords after those renting his venue went out of control.”

Board ponders tax changes as $1M per month pours in

A million dollars per month in marijuana taxes paid mostly in cash to the Alaska Department of Revenue is creating a few headaches. About 76 percent of all taxes are paid in cash, Tax Division Director Ken Alper said, and the rest comes in money orders. The Department of Revenue made a presentation June 13 before the Marijuana Control Board at its meeting in Anchorage to address the issue of taxes. The board is pondering a recommendation to the Legislature to change the tax structure on the industry to a retail tax from the current flat excise tax on cultivators, but wanted input from Revenue before making its proposal. That led to an in-depth discussion about what’s currently going on in the cash-only industry. Chairman Mark Springer asked if collecting taxes in cash “stinks as much as you thought it was going to?” “Yes,” said Revenue Audit Supervisor Kelly Mazzei, who made the presentation to the board with Alper and Deputy Director Brandon Spanos. Large volumes of cash necessitated the recent purchase of a new money counting machine at the Department of Revenue. The new machine, similar to what banks use, cost $20,000. “We’ve had one since we started accepting cash,” Spanos said. “But it had only two trays. One tray for cash and two for the money to come out. We needed to separate it by denomination and it takes more time. We’ve lost bodies in the Tax Division due to budget cuts so we’re doing more with less people. In order to continue to process the same amount of cash, we’ve purchased a larger machine with nine output trays.” Over the past four years, the Revenue Department lost 22 positions to budget cuts and is down to 107 positions to handle the different taxes the state collects. Meanwhile, the number of taxpayers continues to grow as new marijuana cultivation licenses are granted. That wasn’t a bad problem to have when the state began collecting incrementally more in taxes per month, Revenue officials said. “It’s been a big headache over the past few years,” Spanos said. “We’re pleased that we are able to accept the payments and process them, but it would make things easier if Congress did something to help banks feel more comfortable taking the cash. And it would be safer for everyone, not only for our employees.” Revenue hires an armored truck to take the money to the bank, Spanos said. The cash counting activity goes on almost daily, he said. The many questions from business owners also resulted in spending a considerable amount of time on the phones, Spanos said. “We talk with every new licensee on the phone. We’re getting welcome packets to everyone and issue instructions on how to pay in cash. We’ve done more FAQs. Then the almost daily processing of cash and the cost of transporting the cash,” Spanos said. “And it’s not slowing down.” Other states such as Colorado, California and Oregon have also been struggling with the cash-only nature of the business. Board member Brandon Emmett found, while attending an industry conference in Washington, D.C., that Washington state has adapted by having the taxpayers make a deposit at a specific bank. “They have worked out that 97 percent of their tax payments are made through Salal (Credit Union of Seattle) to alleviate safety concerns,” he said. “Have you explored doing something like that?” Alper responded that yes, they’ve explored establishing a bank account that the industry taxpayers can use to make direct payments to the Revenue Department. “The problem is that no bank or credit union is willing to work with the industry. If one were to step forward, we would work with them,” Alper said. The fear is that, given marijuana’s continued listing as a Schedule I drug in the federal Controlled Substances Act, banks could be charged with breaking the law by accepting money from the industry. But these smaller credit unions, such as Salal, have worked out ways to remain in compliance with state laws and early on received the guidance of the U.S. Treasury’s Financial Crimes Enforcement Network, or FinCEN. In February of 2014, just as Colorado and Washington were setting up their recreational marijuana markets, FinCEN released guidance saying that they would not charge a bank with federal crimes for accepting weed money if the financial institution made sure that the business was following all state laws and the directives of a previous memo from the Department of Justice, according to an industry publication called The Stranger. As for progress made proposing a shift in how the Alaska industry is taxed, the board is still in the fact-gathering mode, Springer said. At the June 13 board meeting, discussion was also tangled up in what voters intended in supporting the initiative that made marijuana legal. Board member Loren Jones noted that the $50 per ounce tax at the cultivator level was put to the public as part of the initiative when they voted to make marijuana legal in the state. “Now we’re going to come back and say it’s not right. Now we’re saying it’s killing the industry,” Jones said. “Every industry says it’s overtaxed.” But board member Emmett countered that there’s shame in admitting they “got it wrong.” “It was palatable to voters at the time, but it’s not working. If we had a black market on the ropes, almost stamped out, then it wouldn’t be an issue,” Emmett said. As it is, the legal industry has a hard time competing on prices to customers when they must calculate in $800 in taxes per pound of marijuana. Growers in California and elsewhere are making illegal shipments to Alaska that continue to fill the black market niche. To be more competitive, prices at the counter for marijuana sales need to be lower, matching with the high supply available from Alaska’s 90 cultivators, he said. Considering the industry brings in about $10 million monthly in revenue and pays $1 million a month in taxes, the tax is working out to be 10 percent, Alper pointed out. “That’s not a gigantic tax when you look at the whole picture,” he said. Only the Alaska Legislature can change tax laws. Alper said the Department of Revenue will be running various scenarios for a report for the board in the coming months to help it decide on what to recommend to the Legislature. Naomi Klouda can be reached at [email protected]

Bill to recognize states’ rights on marijuana gets Trump support

Sens. Lisa Murkowski and Dan Sullivan joined a bipartisan group of lawmakers in Congress June 8 to support legislation that ensures states the right to regulate marijuana and allow banking services for the industry. Murkowski said the new legislation “brings the policy swing to an end, by saying unequivocally that the states have supremacy when it comes to marijuana regulation.” President Donald Trump told a group of news reporters in Washington, D.C., the same day as the STATES Act was introduced that he will likely support it. The Strengthening the Tenth Amendment Through Entrusting States Act, or STATES, doesn’t legalize marijuana in states that haven’t passed their own measures. But it works to address conflicts between state and federal marijuana laws. The bill was co-authored by Sens. Cory Gardner, R-Colo., and Elizabeth Warren, D-Mass. Sullivan said it’s important for this bill to advance in light of confusion cast over states with legal marijuana when the so-called Cole Memorandum was rescinded by Attorney General Jeff Sessions in January. The memo authored by former Deputy Attorney General James Cole under the Obama administration outlined guidelines that amounted to nonenforcement of federal marijuana laws in states where it had been legalized. Rescinding it created uncertainty of whether Sessions, an opponent of legalization, would begin enforcing federal law that classifies marijuana as a schedule one substance under the Controlled Substances Act, along with heroin, cocaine and LSD. “When the Cole memo was rescinded, it created a lot of additional confusion,” said Sullivan spokesman Matthew Shuckerow. “It was already out there, particularly in states that have it legalized and that created confusion as well.” Marijuana businesses have achieved a level of industry acceptance, he noted. Sullivan has heard from bankers saying they would not mind doing business with the industry. Credit unions and banks signed on as endorsing the bill. “This (act) would in many ways address those concerns,” he added. “By stating that bank transactions do not constitute illegal trafficking. It would pave the way to do business with banks and for banks to accept dollars from the operations.” One of the biggest problems facing cannabis business owners is the cash-only nature of transactions. Even to pay their state license renewals, they are taking cash to the bank and purchasing money orders that then are sent into the Alcohol and Marijuana Control Office, said Jana Weltzin, an attorney specializing in Alaska cannabis regulations. She analyzed the STATES Act to see how it might impact her clients. “If it goes through, and it looks like it has some likelihood, it would exempt marijuana businesses from being subject to the CSA (Controlled Substance Act) as long as they are in full compliance with the state regulatory process,” Weltzin said. Banks and credit unions could open accounts for marijuana business owners after going through their own due diligence to make sure the business is in compliance with state laws, Weltzin said. Weltzin has spoke with officials from Key Bank, answering questions about what forms should they ask for in determining if a potential client is operating under state regulations. “If this passes, and a company owner comes in and says he want to open a bank account, the bank will look at all his documents from AMCO. If there are notices of violations, then he is not within the exemptions,” Weltzin said. “This (law) would not be a change on prohibition. It’s a deference to the state laws and trusting the compliance and regulatory system to the state.” Alaska’s congressional delegation has seen the federal-state divide on marijuana legalization as a states’ rights issue. Rep. Don Young, a founding member of the Cannabis Caucus, has long taken this position and has repeatedly introduced bills in the House of Representatives to reconcile the conflict. “We’ve come together — lawmakers from both sides of the aisle — to offer a state-based solution to areas where state and federal marijuana laws are in conflict, including issues relating to production, sale, distribution, enforcement and longstanding challenges surrounding banking and the lack of access to financial institutions for marijuana-related businesses,” Sullivan said in a statement. Months ago, he stated that the repeal of the Cole Memorandum could be the impetus necessary for Congress to find a permanent legislative solution to these issues. The STATES Act should be an effective vehicle and its strength comes in terms of broad support from diverse groups. The act would amend the Controlled Substances Act so that its provisions would no longer apply to people in compliance with state or Tribal laws relating to marijuana activities as long they comply with a limited number of basic safeguards. On the banking front, it would clarify that state-compliant financial transactions do “not qualify as trafficking and do not result in proceeds of an unlawful transaction.” It would remove industrial hemp from the list of controlled substances under the CSA and prohibit the distribution of marijuana at transportation safety facilities such as rest areas and truck stops. The bill emphasizes no-distribution or sale of marijuana to persons under the age of 21, other than for medical purposes. Certain criminal provisions under the CSA would continue to apply such as prohibiting endangering human life while manufacturing marijuana and prohibiting employment of people under age 18. Supporters of the legislation include the American Civil Liberties Union, Americans for Prosperity (founded by Charles and David Koch), and a cross section of advocacy, law enforcement and financial organizations. Where other legislation addressing legal marijuana has fallen by the wayside, this bill holds promise of passage because of Gardner’s prep work on the bill, Shuckerow said. Gardner, a Republican, represents Colorado, one of the first to legalize recreational marijuana. He threatened to hold up judicial nominees if something couldn’t be resolved in the federal-state conflict over legal marijuana after Sessions rescinded the Cole Memo. According to the Denver Post, Gardner succeeded in holding up 11 nominees from getting a Senate floor vote between January and April, the last step before they can be seated on a bench. In early April, Trump and Gardner struck a deal that ended the deadlock: Trump would support “legislative solution(s) to fix this states’ rights issue once and for all,” Gardner told the Washington Post. In the end, Gardner achieved broad bipartisan support for this bill. “We’ve seen steady momentum building,” Shuckerow said. “The tide is switching. Now two-thirds of Americans live in states where there is some kind of legal marijuana.” Since the bill was just introduced, it’s difficult to tell when it will come to a vote. “The reality is there’s a shrinking calendar left this session. But there’s a sincere bipartisan effort,” Shuckerow said. “The legwork is already done. It’s been negotiated and discussed, and that is very helpful.” Naomi Klouda can be reached at [email protected]    

State smoking ban could force revision to proposed pot cafes

The Marijuana Control Board anticipates newly-passed legislation that would ban smoking in all public workplaces statewide could throw a monkey wrench into plans for legalizing onsite consumption. Current law already bans smoking in many workplaces across the state, such as schools, government spaces and health facilities. Senate Bill 63, awaiting the Gov. Bill Walker’s signature, would expand the ban to include private businesses as well. At the board meeting set for June 13-15 in Downtown Anchorage, the board is asking for guidance from Harriet Milks, the assistant attorney general who advises the Alcohol and Marijuana Control Office. Board chairman Mark Springer said the board needs to incorporate the smoking ban, which will go into effect Oct. 1 once it’s signed, into its present proposed onsite consumption regulations. Local governments including those in Anchorage, Palmer, Juneau, Bethel, Barrow, Nome, Petersburg, Dillingham, Haines and Skagway already have a smoking ban in private businesses. The new law would be a uniform ban throughout the state, but it allows local governments to opt out. Nevertheless, the board’s proposal to allow smoking, if the newly-designated onsite consumption regulations are approved, rested on the assumption that proper air ventilation and measures to protect employees would be in compliance with local laws.   “I know there’s a lot of interest, pro and con, in onsite consumption,” Springer said. “We will need to tie the proposal to the new smoking regulations. In the new smoking law, it specifies a separate building, which implies to me four separate walls disconnected from the retail store. It raises a heck of a lot of questions.” The newest onsite draft regulation was co-written by Brandon Emmett, an industry representative on the board, and Loren Jones, the public health representative. It won’t be voted on until the Aug. 15-16 meeting, Emmett said, because he plans to pull the project from the June meeting. He wants a full five-member board present for the vote, and at the August meeting, new public safety member appointee Sitka Police Chief Jeff Ankerfelt will be present. Onsite consumption has been debated by the board since its inception in July 2015, but each measure failed or was postponed. The current proposal would allow marijuana products to be sold to patrons in a retail shop, then consumed in a separate area of the shop. Once licensed, the premises would need to confine activities to a designated area. It would be separated from the remainder of the premises by a secure door and a separate ventilation system or located outside. Now, the question requiring Milks’ guidance is just “how separate” the onsite portion needs to be, Springer said. “It could become an expensive deal to try to open one of these (onsite consumption bars) if it’s now in a separate building,” Springer said. “How will it impact the cruise ship market? How do you accommodate them if you have a little pot shop in Skagway, and all of a sudden you have to do something additional?” Along with Springer’s plan to open public testimony to onsite consumption — perhaps in a special meeting — he wants to hear ideas on how the board can incorporate SB 63 into new onsite regs. “I anticipate we will see some creative attempts at solutions, such as jointly sharing among licensees who go into together,” Springer said, meaning one establishment of multiple shop owners.   He’s not sure how that would fly in terms of gaining the board’s approval, but it’s worth looking at various possible solutions ahead, he said. Taxes revisited  The board agreed to flip its regular agenda order in order to handle regulations and other businesses earlier in the meeting, board Chairman Springer said. The agenda June 13 starts with an executive session to handle an appeal from Frozen Budz, a Fairbanks cannabis manufacturer whose license was suspended in December 2017. The board found the licensee in violation for failing to properly test products, producing unauthorized edibles, allowing onsite consumption, improper labeling and violating waste notification requirements. The company, the first to have its license revoked in the burgeoning marijuana industry, was also fined $500,000. After public comments, the agenda calls for a presentation from the Department of Revenue on how the present taxation structure is working. The board has asked for more information about any possible impacts of a tax shift to the retail end.   Currently, the state taxes $50 per ounce of marijuana flower and $15 for stem and leaf trim at the cultivation end, but doesn’t impose a sales tax at the retail level, although municipalities do. Cultivators and others have advocated for a change, contending that the current tax artificially keeps retail prices high even when supply is also high. Only the Alaska Legislature can change tax law, but the board is still trying to figure out what to recommend, Springer said. At the April meeting in Nome, the board was advised that local communities already have sales tax collection at the retail level that could be anywhere from 1 percent to 7.5 percent. State marijuana sales taxes on top of those could become a burden at the local level, necessitating possible staff increases to municipal governments for collecting the tax, according to AMCO Executive Director Erika McConnell. Since the first legal sales began in October 2016, the state has collected $10.4 million in excise taxes. “We would like to see if Revenue can come up with a strategy, because taxes aren’t our role,” Springer said. METRC briefing The board will also hear from representatives of Florida-based Franwell, a tech innovating company that developed the Marijuana Enforcement Tracking Reporting Compliance, or METRC, services to focus on supply chain solutions and regulatory integration. Executive Director Scott Denholm and Kelly Jenkins, an account manager in the Denver office, will make a presentation to the board on June 13 explaining how the system works.   Alaska awarded METRC a five-year contract to handle the marijuana industry’s supply chain tracking process from 2016 to 2021. Colorado, Oregon, California, Nevada, Michigan, Massachusetts and Alaska all use the METRC system. Alaska’s marijuana regulations require commercial growers, retailers, testing facilities and manufacturers to use the tracking system on all their products. Violations issued by the Alcohol and Marijuana Control Office at times indicates a discrepancy in the form of missing or untracked inventory. Springer said this is a chance for industry people to ask questions and for the board to get more familiar with how METRC woks. Springer wants to know more about how it operates because when there are violations, business owners have told the board that METRC messed up. “For a long time, I’ve asked for a presentation so that we can understand METRC, so we can all understand it better,” Springer said. “This will be the first presentation the board’s had on it. I’m also inviting licensees to ask their questions, and I think there may be a lot of them who want to do that.” Naomi Klouda can be reached at [email protected]  

Sitka Police chief named to marijuana board

The Marijuana Control Board will have its third police chief sitting in the designated public safety seat after the appointment of Jeff Ankerfelt of Sitka, Gov. Bill Walker’s office announced May 24. Walker appointed Ankerfelt to the seat that has been vacant since March. Ankerfelt volunteered to serve on the five-member board because he said he “believes it provides an opportunity for law enforcement to engage in the community and update” the understanding of marijuana. Travis Welch, who was appointed to the seat earlier this year, resigned in March after losing his job as North Slope Borough police chief. Welch was named to the seat following the January resignation of Soldotna Police Chief Peter Mlynarik. Walker’s office says there were two applications for the seat. Ankerfelt’s appointment is subject to legislative approval, but he will be able to serve until that vote in the 2019 session. The appointment, which was effective May 14, comes as the board is poised to once again debate proposed rules that would allow for consumers to partake of marijuana products on site at authorized shops. But Ankerfelt said he will not be able to attend the June 13-15 meeting in Anchorage because it falls on the same day as his daughter’s graduation from college. His first meeting attendance will be at the Aug. 15-16 board meeting scheduled for Denali National Park. Although it had a quorum of four members and a refined proposal after two years of work on the subject, the board decided to put off its vote over on-site consumption at its last meeting until it had all five members present. Ankerfelt was appointed police chief Nov. 1, 2016, after serving two years on the Sitka Police force. Prior to that, he was the deputy police chief of Brooklyn Park, Minn., where he served for 23 years. He’s also a graduate of the FBI National Academy. “While at the FBI academy I met the former police chief of Sitka. He would call every now and then and say he had an opening in the Sitka police department and would I like to come,” Ankerfelt said. “My wife and I talked about how you only live once. It’s been a great decision.” Since taking leadership of Sitka’s police department, Ankerfelt said he has kept a community and “customer service” focus to promote quality of life issues. “At the forefront, if there are people in community that suffer from substance abuse, mental health and homelessness, we get people the care they need from counselors or the medical profession,” he said. “It’s important to feel they are one and together with police. The more information we exchange the more we can change the future of crime and victimization.” According to the Sitka radio station KCAW, Ankerfelt launched a monthly or bi-monthly donut social he calls “coffee and donuts with a cop” as community outreach. This is an event “where people can come over and chat with us. We’re going to be focusing on problem solving, so when we do have a 911 call, we’re going to take a look at it and look at ways to prevent bad things from happening in the future.” Ankerfelt said his goal on volunteering to serve on the Marijuana Control Board is to help assist marijuana businesses in moving forward the “way the community wants.” Police departments lose an opportunity if they continue to fight marijuana, which is legal in Alaska, he said. “Law enforcement shouldn’t continue to stand in the way in terms of what a community wants in legalization. There’s an opportunity cost to our police department when they fight something that I don’t think needs to be fought. We have our hands full with heroin and other drugs. To fight marijuana gets in the way of benefits that marijuana has been shown to bring to people,” Ankerfelt said, citing seizure medicine, for example. “To the extent I can move that forward and challenge some of perceptions in law enforcement, I want to do that.” Sitka has been supportive of the marijuana businesses there, Ankerfelt said. Seven businesses operate in the town of about 9,500 population, including three retail stores and four cultivators. Ankerfelt joins a board that is required to be diverse in its make-up. The board is made up of representatives from rural Alaska (Chairman Mark Springer), public health (Loren Jones of Juneau), two industry members (Brandon Emmett of Fairbanks and Nick Miller of Anchorage) and a public safety member that is required to be actively working in the field. This is the third police chief in the position, Springer noted. “Someone actively involved in law enforcement is the description of the seat,” Springer said. “I can see how they might be conflicted given the federal look at it. At the same time, a police officer in Alaska is there to enforce Alaska laws. It shouldn’t be that big of an issue.” In light of Ankerfelt’s inability to attend the June meeting, the onsite consumption regulation will be postponed for voting until the August meeting. Emmett, the board member who crafted the latest onsite consumption regulation, with Loren Jones, said he had planned on the vote occurring in June. The proposal is to allow retail businesses to open an adjacent and separate area for people to consume marijuana products. Currently, it is illegal to smoke marijuana in a public setting and officials see an additional need to provide a place for tourists. “I want all five board members there when this thing gets voted on,” Emmett said. “It’s been such a topic of debate that I wouldn’t want it to fail on a tie. We owe the public a five-member vote. The government put together a board of five members, and I feel the public is relying on all five positions to make a decision for the state.” Even if the onsite consumption regulation were approved in June, businesses couldn’t open for customers until after the new year, he said. “Even if we were to approve it, there would not be enough time passed before final regulations to be signed for the businesses to have onsite consumption prior to Labor Day when the tourists leave. It’s still going to be next summer,” he said. The route toward signing it into law would go from passage, to public comment for 30 to 60 days, and then back to the board for either amendments or adoption, Emmett said. If there are amendments, it goes back out for public review for another 30-60 days. Once passed by the board at the end of that period, the new regulation would need the lieutenant governor’s signature. “It hasn’t taken very long for the lieutenant governor to sign these and they do get enacted quickly. If everything goes smoothly, we will be looking at January or February,” Emmett said. The next MCB meeting is June 13-15 in the Atwood Building in Anchorage. ^ Naomi Klouda can be reached at [email protected]

Board tables onsite consumption vote until June

A vote on draft regulations allowing onsite consumption of marijuana at retail businesses was postponed yet again Friday, when the Marijuana Control Board unanimously tabled the issue until the June meeting in Anchorage. Board member Brandon Emmett — the author or co-author of several draft proposals regulating onsite consumption — reluctantly brought up the motion for postponement. Emmett, who has one of two industry seats on the board, and Loren Jones, the public health representative on the board, drafted the latest proposal for the meeting held in Nome April 4-6. “As many of you know, this has been my baby for a while now. I’ve been working on this for three years,” Emmett told fellow board members. He referenced tourism as one of the major drivers of the effort to provide spaces for visitors to consume. “I don’t think that the onsite consumption regs, even if we put them out for public comment today, I don’t think the process is going to be complete soon enough before the last cruise ship leaves,” he said. “Because it has been such a contentious issue and we have worked so hard on it, it deserves a full vote of the board.” Although four members is a quorum, the board is missing its public safety seat member. The Governor’s Office of Boards and Commissions put out a 14-day notice on March 11 for applicants to fill the seat and presently is still working on sending the governor recommendations from a tiny pool of applicants. The seat is vacant after being temporarily filled by North Slope Borough Police Chief Travis Welch, who resigned from the board after he was fired by the new borough Mayor Harry Brower in March. Soldotna Police Chief Peter Mlynarik’s Jan. 6 resignation, which came after U.S. Attorney General Jeff Sessions rescinded the Obama administration guidance on nonenforcement of federal marijuana laws, created the vacancy. Welch was one of only two who applied for the board seat. Jones agreed to postponement for some of the same reasons, he said. “We came at it from different angles,” Jones said, referring to his work with Emmett as they drafted the latest proposal. “I also expected healthy debate among the four of us. I think we can also have a healthy debate in June with five members.” At the June meeting, the board could debate the regulations, make amendments and send it out for a 60-day public comment period. The board would also have time to schedule public testimony on this latest draft, said Alaska Marijuana Control Office Director Erika McConnell. The board meets June 13-15 in Anchorage. “The soonest we could vote on this would be October,” Chair Mark Springer said, referring to the 60-day comment period required after the June meeting. “Even if we adopted it today, nobody would be in the consumption business until Christmas.” If the newest draft regulation for onsite consumption is adopted, it will allow marijuana products to be sold to patrons much as a bar functions to legally dispense beverages. Once licensed, the premises would need to confine activities to a designated area. It would be separated from the remainder of the premises by a secure door and a separate ventilation system or located outside. The debate for and against allowing onsite consumption has been before the board since its inception in July 2015. Each time a measure was put forth to allow it, the board either postponed the matter or voted it down. Naomi Klouda can be reached at [email protected]

Marijuana board to take up onsite consumption Friday

The Marijuana Control Board will take up onsite consumption and make recommendations to change how the industry is taxed at its April 4-6 meeting in Nome. A hefty agenda is ahead over the next three days. The board is set to review 46 applications for new businesses and renewals. And it will tackle whether a moratorium on the number of new marijuana businesses might be warranted. There are currently just more than 189 cannabis cultivation, retail and manufacturing operations in Alaska. (The number was updated from 150 operations to 189 on April 4 at the MCB Nome meeting.) If the newest draft regulation for onsite consumption is adopted, it will allow marijuana products to be sold to patrons much as a bar functions to legally dispense beverages. Once licensed, the premises would need to confine activities to a designated area. It would be separated from the remainder of the premises by a secure door and a separate ventilation system or located outside. The debate for and against allowing onsite consumption has been before the board since its inception in July 2015. Each time a measure was put forth to allow it, the board either postponed the matter or voted it down. But this time board member Brandon Emmett hopes the contentious points are worked out to everyone’s satisfaction. Emmett is one of two industry representatives on the board. “We were all unanimous on the committee that this is the draft we will bring forward. We want to alleviate concerns and we want the industry to have a responsible rollout,” Emmett said. Emmett and board member Loren Jones of Juneau worked on the draft with input from staff and the board.  Jones, a Juneau resident who represents public health on the board, had a lot to say about potential hazards that need to be addressed, such as second-hand smoke that can be intoxicating for those who work in establishments. Clean air ordinances are already in place in many municipalities, he frequently reminded the board during discussions. “A lot of the changes are ones that staff and Mr. Jones had brought to my attention,” Emmett said. “Still, you never know what is going to happen with onsite consumption. The board was in disagreement on whether Alaska was ready for it.” Jones said he feels public health concerns were covered well. “We addressed ventilation and smoking, and the staff raised clarity and definitions. We worked well together,” Jones said. “I think the product — probably we’ll take it up on Friday — is a good one. It’s greatly improved. We’ll see if other members are willing to accept that, or if we make changes.” What entertainment is allowed — television, music, dart games or pool, etc. — wasn’t taken up in the new regulations. In past debates, some board members expressed disapproval of entertainment to prevent lingering and vagrancy. “That may end up being a non-issue,” Jones said. “If someone wants to make an amendment (on allowable entertainment) before it goes out or if it comes up through suggestions, it could come up at any time.” The proposed restrictions limit amounts to be sold at what’s been dubbed “bud bars.” Edible marijuana products can’t exceed 10 milligrams of THC per person per day or marijuana bud or flower in quantities more than one gram per person per day. The regulation prohibits employees from consuming marijuana products during a work shift and it doesn’t allow patrons to bring in their own marijuana. It has to be purchased from that retail store.   “These are not marijuana clubs,” Emmett said. “You can’t bring your own.” People being subjected to harmful smoke particulates proved key to the mitigation challenge, Jones said. To address those concerns, the regulation calls for a smoke-free area where employees can monitor the establishment. A venting system must direct air from the consumption area to outside of the building “through a filtration system sufficient to remove visible smoke… and adequate to eliminate odor at the property line.” But the outdoor area also has to be compatible with its neighborhood environment, including uses of surrounding buildings and the location of their intake vents. They’ll also need a wall or fence at least 6 feet high that cuts off any view of marijuana smoking from the public. And the licensee will need to consider objections from other property owners and residents within a 250-foot area, or whatever distance is required under local zoning codes. As in other licensing requirements, any applicant for onsite-consumption approval will need detailed diagrams plus depictions showing serving areas versus retail, employee monitoring areas, ventilation exhaust points and floor plans. Taxes A draft resolution asking the legislature to change how marijuana taxes are calculated is now before the board for a vote at the meeting. Board members at the last meeting agreed they want to request the Alaska Legislature to change the tax structure. The proposal shifts to a 12 percent retail sales tax structure to replace the “current inflexible cultivation tax structure that does not move with the market’s ebbs and flows,” the resolution states. More details are spelled out as spreading the 12 percent among nearly all products sold wholesale and across the counter: marijuana trim, marijuana flowers, immature plants, edibles, concentrates, extracts — even cannabinoid products meant for use on hair and skin. Under current law, only marijuana flower at $50 per an ounce and trim at $10 an ounce are taxed. Under the requested changes to state tax code, each marijuana retail facility would be sending monthly tax statements to AMCO as well as reports of quantities sold. The Alaska Department of Revenue has collected about $7.4 million in marijuana taxes since collections began in October 2016. The last month tabulated, January, proved a record surpassing the $1 million in taxes raised for single month. According to revenue’s numbers, 46 cultivators were active in Alaska, which currently pay the tax. Short a member The five-member board will be operating with just four until the vacant public safety seat is filled. Four is enough for a voting quorum in the meantime, said Chairman Mark Springer. The Governor’s Office of Boards and Commissions sent out a public notice March 13 inviting applicants for the public safety seat vacated when North Slope Borough Police Chief Travis Welch resigned. Welch gave his resignation to the Marijuana Control Board in early March after he was removed as police chief by Borough Mayor Harry Brower. As a political appointment, Welch said he was given notice only that the mayor wanted to “make changes.” An active role in public safety is a statutory requirement for this position on the board. The other four seats are designated for industry (two seats), public health (one seat) and rural Alaska (one seat). Welch briefly replaced Soldotna Police Chief Peter Mlynarik who resigned Jan. 6 after serving as chair of the board for more than a year and on the board since its July 2015 inception. Welch participated in the last board meeting in Juneau in February. Mlynarik resigned after Attorney General Jeff Sessions rescinded the so-called “Cole memo” written in 2015 that established a Justice Department policy of nonenforcement of federal marijuana laws in states that had legalized it for medicinal or recreational use. Lindy Irwin, deputy of Boards and Commissions, said they are actively interviewing to fill the vacancy. “For the past two days we have been interviewing candidates. We’re getting close to the edge of the Legislative session, so we’re hoping to get it done soon,” Irwin said. “It may be a difficult seat to fill because of the Cole Memo. There’s been some interest but it’s limited. “We’ve only had a couple of people apply,” Irwin said. Naomi Klouda can be reached at [email protected]

Another vacancy arises on Marijuana Control Board

The Marijuana Control Board needs yet another member for its public safety seat after Travis Welch resigned from the board before facing confirmation after losing his position as police chief of the North Slope Borough. The process next is an online call for applicants and a look-back at past applicants who have sought to fill the five-member board’s public safety seat. State law requires the person be employed in that sector, which could be a firefighter, paramedic, village public safety officer or police officer. The other four seats are designated for industry (two seats), public health (one seat) and rural Alaska (one seat). “We will review other applicants and online (new) applicants to try to fill the seat before the Legislative session ends, since they need to go through confirmation hearings,” said Shalome Cederberg, the assistant director of Boards and Commissions. Welch told the Journal he’s not sure why his appointment as police chief was rescinded by new North Slope Mayor Harry Brower, who was elected mayor this past November. According to his February letter to Welch, Brower said he wanted to “make changes” in the borough. “I was in Anchorage attending a conference. I’m a mayoral appointment, so all they had to do is send a release saying I’m no longer an appointee. That’s all I was provided, the letter,” Welch said. Welch served 10 years with the North Slope Borough Police Department after first traveling there with his family of four children and his wife after he graduated from Alaska State Trooper Academy. He advanced from officer to police chief over that decade. In the midst of figuring out what to do next after getting the borough’s letter of dismissal, Welch received another phone call. This came from an assistant to the House Community and Regional Affairs Committee asking if Welch could discuss the schedule for his legislative confirmation hearing to the Marijuana Control Board. It was set for March 15. “It was at that time I notified them that I was released,” Welch said. “I was told that you have to work in public safety in order to serve in that board position.” No public safety job means a person is not qualified for a public safety seat on the MCB, according to Alaska statute. “I really enjoyed the one meeting I was able to attend (in January in Juneau),” he said. Welch was already in the middle of reading the packet for the meeting in April 4-6 in Nome. “I really looked forward to serving. When the governor asks you to serve, you serve. For the past almost 10 years, I’ve been grateful to serve the people of the North Slope. Now I am looking at all the options,” Welch said. One is to consider keeping his family and career in Alaska, he said. The other is to move out of state. The Alaska Police Standards Council was also notified of Welch’s removal, said Executive Director Bob Griffiths. “That’s just procedural: we are notified anytime an officer separates from their agency — quits, retires, is terminated,” Griffith said. “We get a form and it usually has a check mark on it about why they left. It’s the way we track the personnel across the state.” It’s back to square one in the nomination process that began Jan. 4 when Soldotna Police Chief Peter Mlynarik resigned from the board after serving since its creation in 2015. He did so after the U.S. Department of Justice shifted its policy on marijuana enforcement, believing it removed protections of the state’s legal marijuana industry. Welch was chosen from two applicants at the end of a 14-day open application period to the Alaska Boards and Commissions Office. Prior to moving to Alaska and pursuing a master’s in criminal justice, he graduated with an economics degree from Brigham Young University. The only other nominee at the time was Leonard Wallner, a veteran Alaska State Trooper in the Mat-Su Valley, now retired. Among the cases he worked was the Robert Hansen murder case back in the early 1980s. “I threw my name in the hat; as far as I knew that was the end of it,” Wallner said of applying to the MCB. “I’m retired but I work part-time for a Native nonprofit, director of security at Chugachmiut. I work part-time on purpose because I’m full-time retired from the state.” If he gets the chance, Wallner said he’d be happy to fill the seat. ^ Naomi Klouda can be reached at [email protected]

Board hears concerns about crimes targeting cannabis industry

An uptick in burglaries targeting marijuana businesses has officials concerned, but no one seems to be tracking thefts and break-ins at Alaska’s cannabis businesses to get an idea on how safely the cash-only industry is faring. According to James Hoelscher, the chief enforcement officer at the Alcohol and Marijuana Control Office, or AMCO, the number of theft-related hits targeting these businesses is on the rise. He suggested the state agency may need to help out by providing guidance on security. At a presentation before the Marijuana Control Board Jan. 25, Hoelscher described finding hollow doors and simple locks on businesses that failed to fully analyze their security. “During inspections, we can and do give them pointers and help out by highlighting a potential problem,” Hoelscher said. Because AMCO doesn’t yet track crimes committed at the establishments, the information presented by Hoelscher at the last meeting was based only on what he has heard while working enforcement, Executive Director Erika McConnell said when asked for numbers of burglaries. “It seems like burglaries are on the uptick because of what we’ve heard anecdotally, but we have no official data to support that,” she said. The board passed a regulation in November that will require any crimes occurring on premises to be reported to AMCO. But that new regulation hasn’t yet made it out of the queue of an analysis by the Department of Law and then a signature by Lt. Gov. Bryan Mallot. Board member Nick Miller, a cannabis business owner, said he knows of two retail shops that were hit recently. One was an armed robbery that involved making off with both cash and marijuana. “I don’t know why the armed robbery wasn’t publicized,” Miller said. “It’s hard to sort out because there is no official reporting. Three other incidents I know of were two cultivations were broken into and product was taken, another was a retail shop but they didn’t get anything.” Anchorage Police reported 1,982 burglaries took place in 2017, up from the 1,822 reported in 2016, but they do not aggregate out any that took place at cannabis businesses, said APD Spokesperson Renee Oistad. One key aggravation to owners is the abundance of information that gets posted online about their floor plans and business layouts. When Danish Gardens was hit on Dec. 19, burglars made off with $150,000 in marijuana. Because the thieves, caught on video, weren’t owner Dana Wyrick’s employees or people he knew, he said he strongly suspects they were privy to his operations from gleaning the information online through his licensing application at AMCO’s website. To date, Wyrick said, AMCO hasn’t taken his cultivation operation’s sensitive information offline. AMCO is in the process of remedying that by removing certain information. “We are working on taking the floor plans off line but we are not finished yet. We focused first on those who showed camera placements,” McConnell said in an email. But floor plans are not eliminated from the application, she added. The application form was modified to state that applicants should not put placement of cameras on their diagram. A precaution on the form now reads: “For your security, do not include locations of security cameras, motion detectors, panic buttons, and other security devices.” This revised form is available on AMCO’s website and the older version of this form will no longer be accepted starting Feb. 1, McConnell said. What will not change is posted home addresses of business owners on both the AMCO and the Municipality of Anchorage websites. Assemblyman Christopher Constant said the municipality took the initiative before AMCO to scrub security information from its website. “We’re very interested in protecting these businesses, but we must still comply with public disclosure laws,” Constant said. “We won’t be taking off the home addresses of businesses because that’s public disclosure. The addresses show up on the tax (rolls). Everyone’s personal information is online, even the highest prosecutorial judges; everyone has their addresses online. There’s no way to shield them. We can’t make an exemption for cannabis businesses.” The Anchorage Assembly tasked the planning department to come up with specific recommendations for what other private information should be taken off line, Constant said. “What are we willing to protect? The kinds of things we’ve already made decisions to scrub are security plans in specific uses: cameras and safes, any of the basics of that nature that provide a road map to somebody with less than decent purposes,” he said. The planning commission’s recommendations for what else can come off should be coming in early February, he said. Another option is that information required under public disclosure laws can be taken offline and made available only to people who visit municipal or other government offices and show identification to access a public document. Attorney Jana Weltzin, whose specialty is cannabis law, made that recommendation at the Juneau board meeting when she gave public testimony urging the board to do more to protect cannabis businesses. Weltzin told the board thieves hit four of her clients’ businesses. “We always let enforcement know,” she said. “Danish Garden took the biggest hit. If you make their information publicly available, do it by requiring they go through a public records request; then you would have their identity. Don’t make it online and make it so accessible.” Three of the burglaries were attempted but not successful, Weltzin said. The one at Danish Gardens caused a major hit in both income and its ongoing operation. “(Dana Wyrick) lost $150,000 that he was planning on using for the operation of his business. He had to lay off half his work force,” she said. Weltzin would like to see AMCO track the data on crimes that occur on business premises. “It’s important data we need to articulate intelligently how the regulations should be shaped,” she said. Still, any upswing in criminal hits on the marijuana businesses likely isn’t a matter of targeting, said Miller. “I don’t believe marijuana businesses are being targeted any more than convenience stores or banks. It’s just a part of business, especially in Anchorage,” Miller said. “Burglaries have gone up in the past 18 months and we’re just another business. Those that take extra precaution will be less at risk.” Miller recommends that businesses use the resources out there, such as free security inspections offered by the APD. Miller estimates 95 percent of cannabis businesses have invested in professional security installations. “Yes, it is a cash business but there are precautions and things you can do to protect your assets,” Miller said. “I would just recommend that any marijuana business out there review how they deal with cash and all their security practices. There should never be a domestic door in a commercial building.” Naomi Klouda can be reached at [email protected]

Marijuana board carries on with new member after federal shift

The Marijuana Control Board approved more than 22 new business licenses at its Jan. 24-26 meeting in Juneau, and continued to wade through public safety and new federal scrutiny on the state’s legal marijuana commerce. The board also voted in a new chair after former chair and Soldotna Chief of Police Peter Mlynarik resigned Jan. 4. Former Vice Chair Mark Springer of Bethel, who has the seat designated for rural Alaska, was voted unanimously as the new chairman, while Brandon Emmett, who holds one of two industry seats, was named vice chair. North Slope Borough Police Chief Travis Welch, who replaced Mlynarik, participated in his first meeting after being appointed by Gov. Bill Walker on Jan. 19. He still has to be confirmed by the Alaska Legislature. Solutions are still being sought to protect public health while the board gets a handle on inconsistent THC testing levels and the finding of hazardous aspergillus mold that showed up in some marijuana harvests. A committee is at work setting new testing standards after holding its first meeting on Jan. 17. Its task is to find a standardized way to ensure safe, accurately labeled products are sold at stores. One major change ahead is the introduction of new testing by the Department of Environmental Conservation Health Lab, Executive Director Erika McConnell told the board. “Part of the (lab’s) job is to audit various private labs around the state (such as drinking water labs) so they have trained lab auditors on staff,” McConnell said. CannTest and Steep Hill, both Anchorage marijuana testing labs, “have promptly provided information requested to the state lab,” McConnell said in her director’s report. The audit will be finished in a couple of weeks. The board on Jan. 2 issued a consumer alert that warned inconsistencies in testing meant the public needed to be aware that THC levels may not be what’s as labeled on products. In another case, one testing facility found a potentially dangerous mold on a product but the other testing facility failed to detect it, the alert stated. Neither testing facility is named. After that, the Alcohol and Marijuana Control Office, or AMCO, received a letter from Steep Hill’s attorney, Birch Horton Bittner &Cherot, telling the director they objected to wording in the PSA. The letter states that Steep Hill — part of a national consortium of labs — was concerned the PSA is “overly broad, lacks specificity, and is not a proper scientific or legal conclusion” that maligns the testing lab’s reputation. Steep Hill’s letter asks for AMCO to rescind its alert and issue a revised and clarified statement. McConnell asked the board for direction on whether to rescind and revise the alert, but the board took no action. Because the alert came from the board, approval to rescind and revise it needs to come from the board, she said. The board acknowledged the letter, but chose not to respond, Springer said. The board also gave McConnell permission to allow marijuana that is found contaminated by the aspergillus mold to be made into concentrates. The process of distilling kills the fungus and allows the cannabis to be used rather than destroyed. McConnell said the board’s action authorized her “to allow harvest batches that fail for aspergillus to be sent to a concentrate manufacturing facility to be used to make a concentrate, as long as the concentrate made from the moldy harvest is tested for microbials.” This could save entire harvests from needing to be taken off the market at potential huge revenue losses for the cultivator. This was the first board meeting to take place in the aftermath of U.S. Attorney General Jeff Session’s memo that rescinded previous federal policy toward legal marijuana operations in states. Sessions rescinded the “Cole Memo” written in 2013 that established a federal policy of non-interference in marijuana operations legalized at the state level as long as federal priorities were followed such as keeping drugs out of the hands of minors and protecting against involvement by criminal elements. In an early statement to the board Jan. 24, Alaska Deputy Attorney General Harriet Milks, who sits in on each meeting to provide legal advice, recapped the state’s intention to move forward. She quoted the Alaska U.S. Attorney Bryan Schroeder as saying current enforcement priorities will not change. “The U.S. Attorney’s Office for the District of Alaska will continue to use the long-established principles of federal prosecution to determine what cases to charge,” Milks quoted from Schroeder’s statement. “One of the key principals is to follow federal law enforcement priorities, both at the national and local levels. The highest priorities of the U.S. Attorney’s Office in Alaska are consistent with those of the Justice Department.” Milks also referenced a letter Alaska Attorney General Jahna Lindemuth and 18 other attorneys general from across the country sent to Congress Jan. 16 in the wake of Session’s memo. It seeks legislative action to expressly allow banks to provide services to marijuana businesses operating in compliance with state law. “Allowing banks to work with these businesses is good policy,” the letter states. Federal legislation allowing transactions to occur through the banking system is an important step to enabling state regulators to do what voters have asked, Lindmuth’s letter stated. The board then briefly discussed their support of such changes that would make the industry safer from black market and criminal elements. Regulations passed The board passed an amended regulation on revocation of handler permits in cases where the person committed a felony within the past five years or a Class A misdemeanor related to misconduct involving a controlled substance in the past two years. The handler’s permit can also be revoked if the applicant is currently indicted, on parole or probation. Thefts by a number of those holding handler permits have involved stealing from their employers, but there was no mechanism in place to revoke their permits, McConnell noted in proposing the change. Another problem that surfaced is people selling marijuana on the validity of their handler’s permit outside of a legal venue, McConnell said. Springer said he could see that problem unfolding as “a guy approaches you and says, ‘hey want some? I have a legal marijuana handler’s permit.’” Under the new regulation, the board could suspend or revoke a handler’s permit, refuse to renew a permit, or impose a civil fine if the board finds that a permit holder has acted in violation of the regulations. Affiliate definition The board unanimously approved adding in new requirements for those that will be required to be named on business application and removed the word “affiliate.” This is an attempt by the board to get a better handle on those who exercise influence and decision-making in a business. Alaska residents are the only ones allowed to be licensed, McConnell noted. Yet, the office has no way except through licensing to enforce that requirement. Now each business application has to include names of each general partner, manager, officer and director. This means each will be undergoing background checks. Inspections If businesses aren’t ready for their inspection at that stage in their application process when an appointment is made, they will be charged $500. “In our large state and with a limited enforcement staff, visiting a facility for a second or third time can be costly and time-consuming,” McConnell said. “This regulations project adds a repeat inspection fee for those licensees who request an inspection but, due to not having completed all items on the pre-inspection checklist (e.g., not having plants tagged, not having premises set up consistent with board-approved diagram)” end up needing to reschedule. The director could waive the fee for good cause, however. Marijuana trade shows will be now be allowed after a unanimous board vote. The new regulation allows one plant, one ounce and sample products to be transported to trade show events and exhibited. Each product has to be tracked through METRC, the Marijuana Enforcement Tracking Reporting and Compliance Inventory Tracking System, and those handling the products must have a handler’s permit. The measure was brought forth by board member Emmett, who represents the marijuana industry. “We can now have tradeshows,” Springer said at the end of the vote. Smells Of all complaints, the most persistent from the public involves detecting odors emitted from marijuana cultivations, Enforcement Chief James Hoelscher told the board. Enforcement receives “a lot of passionate complaints about it and they submit to us logs of when they are smelling the strong odor of marijuana.” The board amended language to say the licensee “does not emit an odor that is detectable by the public from outside the cultivation facility except as specifically allowed by a local government approval through the approval of a conditional use permit or CUP, or other zoning permits. ^ Naomi Klouda can be reached at [email protected]

Walker names new member to Marijuana Control Board

North Slope Borough Police Chief Travis Welch has been appointed by Gov. Bill Walker to the public safety seat on the Marijuana Control Board. The position opened up on Jan. 4 when Soldotna Police Chief and board Chairman Peter Mlynarik resigned after U.S. Attorney General Jeff Sessions rescinded what’s known as the Cole Memo, which was the prior administrations official policy non-enforcement of federal marijuana laws in states that have legalized it for recreational use. Welch lives and works in the city of Ukpiagvik, formerly Barrow, and is from Bremerton, Wash. He earned an economics degree at Brigham Young University and completed a master’s degree in criminal justice/safety studies at Saint Joseph’s University. He also has an associate’s degree from Latter-day Saints Business College. Welch has worked for the North Slope Police Department since 2008, rising from the ranks of officer to sergeant, detective and then lieutenant before becoming Chief of Police in July 2015, according to his LinkedIn profile. According to staff at the North Slope Borough, Welch is currently traveling on business and was not available to comment on his appointment. Welch will go through the legislative confirmation process, along with current members Loren Jones and Nick Miller, whose appointments were renewed by the governor. Jones’ and Miller’s seats were to expire Feb. 28 but each of the men reapplied to be on the board. Welch’s first board meeting will be in Juneau Jan. 24-26. The 14-day application period ended Jan. 18. Staff in the governor’s Boards and Commissions Office did not provide a list of those who applied to the Journal. After Sessions withdrew the Cole Memo, Mlyarnik said the industry was no longer legitimate and he expected “changes ahead.” He drew criticism last year when he campaigned in favor of an ordinance to ban commercial cannabis operations in the unicorporated areas of the Kenai Peninsula Borough. The measure lost by a 2-1 margin. He also was upset about the board’s response to inconsistencies in testing results on marijuana at the only two labs in the state. In a 5-0 vote that included Mlynarik on Jan. 2, the board decided to issue a consumer alert rather than take his recommendation to suspend industry operations until the testing issue is resolved. Mark Springer, the board’s vice chair, said they will be voting on who will be their next chairman of the board at the Juneau meeting. They also will be looking at 52 cannabis business applications and several regulation projects. “We’ve got some work ahead of us, but a lot of the licensing can go pretty quickly,” Springer said. “At least we will do it all with a full board.” The U.S. Attorney for Alaska made a statement Jan. 4 that nothing would change as far as enforcement priorities in his jurisdiction after Sessions’ decision. Naomi Klouda can be reached at [email protected]

Young tries again with legislative fix to marijuana conflict

Rep. Don Young teamed up with California Democrat Rep. Barbara Lee on Jan. 11 to introduce one of the first measures of the year meant to protect states’ legal marijuana laws in the wake of the recent federal shakeup to the industry. House Resolution 4779 by Young and Lee, dubbed the REFER Act, seeks to provide certainty to financial institutions, patients, entrepreneurs, and other individuals by restricting federal funds regarding marijuana enforcement, he said. Young, now the “Dean” of the House of Representatives as the longest serving congressman, has co-sponsored about seven bills since 2015 that relate to protections for states that have legalized use of marijuana. None of them, however, have even received a committee hearing, though any of the bills could be brought back to help shape new laws, Young's spokesperson said. Though he didn’t support legalizing marijuana in Alaska, accomplished through a 2014 voter initiative, he has said it’s a matter of states’ rights to decide whether to decriminalize and/or commercialize its use. “(This) would keep the money appropriated to all federal departments and agencies from being used to crack down on these groups if they are operating within state and local regulations that permit the cultivation and use of cannabis,” Young said in a Jan. 16 statement. “(It) would be an expansion of current law, known as the Rohrabacher-Blumenauer Amendment, which prevents funds specifically appropriated to the Department of Justice from being used to interfere in states that have medical cannabis laws.” Young is a founding member of the Congressional Cannabis Caucus, along with Reps. Dana Rohrabacher, R-Calif., Earl Blumenauer, D-Ore., and Jared Polis, D-Colo. The caucus’ stated intention is to “increase medical research into cannabis and change regulations on banking and taxation for cannabis businesses.” States where marijuana is legal have relied on two measures to keep the federal government — which classifies marijuana as a Schedule I drug under the Controlled Substances Act — at bay. One was the memo written in 2013 by U.S. Assistant Attorney General James Cole that advised a hands-off policy in states that legalized recreational use of marijuana as long as they followed five conditions, including not allowing use by minors or letting in illegal drug operations. The other was an amendment attached to each federal budget since 2014, called the Rohrabacher-Blumenauer amendment (It was previously the Rohrabacher-Farr amendment but Rep. Samuel Farr has retired). The amendment prohibits spending funds on prosecutions against medical marijuana enterprises in states that have authorized it, which now numbers 29 including Alaska. A big criticism of both the Cole Memo — which was rescinded earlier this month by Attorney General Jeff Sessions — and the Rohrabacher-Blumenauer amendment is that they offered only temporary protection, Young noted. Congress hasn’t permanently protected state medical marijuana programs and adult recreational use from federal interference through direct laws granting states’ rights over the matter. Eight states plus the District of Columbia have legalized recreational use; and 18 states allow for the use of cannabinoid oil, also known as CBD, which is non-psychoactive. Young believes it’s Congress’ duty, in light of the recent rescission of the Cole Memo, “to provide certainty to these groups and respect the right of states to set their own laws.” The REFER Act would also prohibit the federal government from taking any punitive action against a financial institution involved in state-sanctioned marijuana-related activities. By withdrawing the Cole Memo, Sessions was basically forcing Congress to take action. “The federal government should respect the will of the voters in states that have voted to decriminalize cannabis. It’s time to stop wasting taxpayer money on the failed War on Drugs,” said Lee, co-sponsor with Young. “I’m proud to introduce the REFER Act, which would prevent the Attorney General and others in the Trump Administration from stifling the budding cannabis industry. If the federal government chooses to interfere in these state matters, it’s up to Congress to prevent this harmful overreach.” Specifically, HR 4779 bars federal funding for any efforts that seek to “detain, prosecute, sentence, or initiate civil proceedings against and individual, business or property that is involved in the cultivation, distribution, possession, dispensation, or the use of cannabis in accordance with the law or regulation of the state or unit of local government in which the individual is located.” It also prohibits the federal government from taking any punitive action against a financial institution “solely because the institution provides financial services to an entity” that is involved in state-sanctioned marijuana-related activities. Young has co-sponsored bills to require the federal government to respect state laws legalizing marijuana, to remove it from the Schedule I status, to allow financial institutions to do business with the marijuana industry, allow Veterans’ Affairs doctors to prescribe marijuana in states where it is legal, and to allow marijuana businesses to use the same tax deductions as other small businesses. Naomi Klouda can be reached at [email protected]

Marijuana board chair explains resignation after change in US policy

The Alaska Marijuana Control Board will still consider license applications at its next meeting but could be one member short after the Jan. 4 resignation of chairman and Soldotna Chief of Police Peter Mlynarik. The Alcohol and Marijuana Control Office, or AMCO, will continue to process license applications for new cannabis businesses, according to a release from the agency issued Friday morning. Those scheduled to have their applications considered at the Jan. 24-26 meeting will need to be available to answer the board’s questions as usual, meaning the status quo will hold after U.S. Attorney General Jeff Sessions rescinded the “Cole Memo” issued in 2013 that established a federal policy of non-interference in marijuana operations legalized at the state level as long as federal priorities were followed such as keeping drugs out of the hands of minors and protecting against involvement by criminal elements. Mlynarik’s resignation was effective immediately and vice chair Mark Springer of Bethel, who holds the seat designated for rural Alaska, will be the acting chair until a full five-member board chooses its chairman after a replacement is named by Gov. Bill Walker. A 14-day application period is open until Jan. 18 for applicants who want to fill the vacant seat. Anyone with a background in public safety is encouraged to apply, said Austin Baird, the governor’s spokesperson. This gives another week for the governor to name an appointment, if he choses to do so, by the next board meeting. The Sessions action on Jan. 4 proved to be the tipping point for Mlynarik, who held the public safety seat and served on the Marijuana Control Board since its formation in the summer of 2015. “When the memo was rescinded by Jeff Sessions, I felt that is what legitimized the states to go with legal marijuana, and when that was removed, it pushed me over the edge,” Mlynarik said Jan. 5. “As a member of law enforcement, I couldn’t go with that.” Mlynarik served 22 years as an Alaska State Trooper, including as a detachment commander, prior to being hired as police chief by Soldotna in 2012. He said he’s always been in a position that upholding laws isn’t distinguished between whether they are federal and state laws. “You are still responsible for public safety. I’m not going to go contrary to the federal government and what their intent may be. If changes weren’t ahead, memos would have stayed in place. It’s no secret that AG Sessions is no fan of marijuana,” Mlynarik told the Journal. Inconsistent testing Another source of concern for Mlyarnik was a conclusion he reached after an unscheduled Jan. 2 board meeting that was called to discuss the proper response to emerging issues with product testing. The board debated for 45 minutes on what to do after receiving problematic news on inconsistencies at the state’s only two commercial testing labs. In one example, the labs differed by more than 4 milligrams on an edible product, which are limited to 5 milligrams of THC per serving by state regulation. Yet more troubling, Mlynarik said, was the dangerous Aspergillus mold detected during testing at one lab. That the same sample, tested at the other facility, failed to spot the mold. The board broached the topic of whether to shut businesses down until resolving the testing issue or to issue a consumer alert, and it ultimately voted unanimously to issue the alert. “I felt more should be done,” Mlynarik said. “Having labs that are accurate and what is given to the public is more important, and I felt it deserved a more proper response than a committee to look into it when the amounts of THC aren’t known and there’s mold in their products.” Mlynarik thought the board should halt the entire marijuana industry until they figure out how to obtain accurate tests. “(Cannabis) probably shouldn’t be allowed to continue to be tested through there. In my opinion, it was a public welfare issue, and we should put that first rather than the industry. It’s not the intent to hurt the industry, but the main reason is to protect the public,” he said. If the state’s marijuana businesses were shut down, he said, “you would get answers more quickly. If there’s no exigency, then who knows how long it will take?” Mlynarik’s said his overall experience on the board was satisfying. He volunteered to serve on the board after Alaskans approved marijuana for recreational use in a 2014 ballot initiative. “I wanted to be involved because I felt it was necessary to have a voice in the public’s safety and welfare on the marijuana board,” he said. But Mlyarnik’s dual role in law enforcement and as a rule-maker for the marijuana industry didn’t always sit well. When he helped push a petition on the October 2017 ballot that would have banned marijuana businesses outside the Kenai Peninsula Borough, it upset Soldotna and Kenai owners whose licenses had been approved while Mlynarik served on the board. The ban, if voted in, would have put them out of business. Tina Smith, owner of a marijuana education business called Midnight Greenery, testified to the board in November that the affirmative votes opposing proposed bans in Fairbanks and the Kenai Peninsula Boroughs spoke “loudly” in favor of the industry. Smith complained trust was eroded when Mlynarik “spent time trying to prohibit the industry instead of solidifying the public’s safety, as you were chosen to do.” In an email to the Journal, Smith wrote that she feels like “he is jumping ship, one that he never wanted to be on once it actually started to be a success.” What’s next for the MCB? The Alcohol and Marijuana Control Office issued a statement a day after Sessions’ decision to address industry concerns, but the office won’t be able to answer legal questions. Micaela Fowler, special assistant with the Department of Commerce, Community and Economic Development said AMCO is issuing this public statement to all business owners: “(We) cannot provide legal advice to applicants or licensees, nor can we advise whether you should continue your application or alter your business practices. The Department of Law is still working to evaluate what the impact of rescinding the Cole memorandum will be for Alaska. “AMCO will continue to implement state law in close conjunction with the Department of Law, and as new information is available, will make every effort to inform licensees and the public.” A significant number of new license applications are already being poured over by the board for the Jan. 24-26 meeting in Juneau, Springer said. They will continue to process those, he added, and work on regulation projects such as onsite-consumption. But the biggest issue is the testing inconsistencies. “We’re going to ride that pretty hard,” Springer said. “I completely respect (Mlynarik’s) decision and I understand his reasons. I think it says a lot for his personal and professional integrity that he would chose to resign in the face of the removal of the Cole Memorandum. He’s also concerned about testing inconsistencies.” The next new board member will also come from the public safety sector. But that doesn’t mean it has to be a police officer, Springer said. The member could come from the Department of Corrections or a local fire department, for instance. “But I don’t think any other law enforcement officers would argue with Chief Mlynarik’s reasons for resigning,” Springer said. The professional conflict Mlynarik felt “was always one of the mines he was stepping over. “ Almost every meeting, Mlynarik would remind everyone in the room: “‘Look we are dealing with something that is still federally illegal,’” Springer said. But Springer said he feels no such conflict. He watched the back and forth of news debates after Sessions’ announcement. “What he issued was strictly a prosecutorial guide to U.S. attorneys,” Springer said. Nevertheless, Springer and other board members said they will miss the Soldotna police chief. “He was fair to all comers,” Springer said. “Careful on applications. Asked good questions. Voted yes more than no. I will miss him very much.” Naomi Klouda can be reached at [email protected]

US Attorney: No change to enforcement priorities after Sessions’ decision

Alaska’s U.S. Attorney and state marijuana regulators vowed to continue business as usual after Attorney General Jeff Sessions changed the previous administration’s enforcement position on Jan. 4. Sessions rescinded the “Cole Memo” written in 2013 that established a federal policy of non-interference in marijuana operations legalized at the state level as long as federal priorities were followed such as keeping drugs out of the hands of minors and protecting against involvement by criminal elements. The Sessions memo notes marijuana is still illegal as a Schedule I drug under the Controlled Substances Act, and instructs U.S. attorneys to follow existing “well-established” principles that govern all federal prosecutions. Those principles include “federal law enforcement priorities set by the Attorney General, the seriousness of the crime, the deterrent effect of criminal prosecution, and the cumulative impact of particular crimes on the community.” Given those principles, Sessions concludes, “previous nationwide guidance specific to marijuana enforcement is unnecessary and is rescinded, effective immediately.” Alaska’s U.S. Attorney Bryan Schroder said current enforcement priorities will not change. “The U.S. Attorney’s Office for the District of Alaska will continue to use the long-established principles of federal prosecution to determine what cases to charge,” Shroder wrote in a statement. “One of the key principals is to follow federal law enforcement priorities, both at the national and local levels. The highest priorities of the U.S. Attorney’s Office in Alaska are consistent with those of the Justice Department nationally: combating violent crime, including as it stems from the scourge of drug trafficking. Consistent with those priorities, the U.S. Attorney’s Office released an Anti-Violent Crime Strategy in October of the past year. We will continue to focus on cases that meet those priorities.” A similar statement was issued by Colorado U.S. Attorney Bob Troyer, who said he will continue focusing on the national priorities by Session that are topped by prosecuting violent crimes. The Anchorage Daily News reported Thursday afternoon on the resignation of board chairman Peter Mlynarik, who is also the Soldotna Chief of Police and campaigned for a ban on commercial cannabis businesses on the Kenai Penisula this past fall. Another member of the board was unfazed by the memo. “We have our direction,” said board member Loren Jones of Juneau, who holds the designated public health seat. “We’re moving ahead until we see some action. As I look at the news he (Jeff Sessions) is saying, ‘I will tell our U.S. Attorneys in various regions to enforce as they will.’ We’ll use our state regulations and our state laws until such time as that changes.” Named for Assistant Attorney General James Cole who authored it, the 2013 memo rescinded by Sessions followed legalization of recreational use of marijuana in Washington and Colorado in 2012. Several states, including Alaska in 2014, subsequently had successful voter initiatives to legalize recreational use. Others have voted to legalize medicinal use of marijuana, which has been legal in Alaska since 1998. The right to possess and grow small amounts of marijuana for personal use was established in a 1975 Supreme Court decision based on the Alaska constitution’s privacy clause. Overall, 29 states have legalized medicinal marijuana; eight states plus the District of Columbia have legalized recreational use; and 18 states allow for the use of cannabinoid oil, also known as CBD, which is non-psychoactive. Federal prosecutions for state-authorized medicinal marijuana use are already prohibited under the current fiscal year budget. Alaska has collected $5.5 million in revenue since it first began collecting marijuana taxes in October 2016. There may be a period of uncertainty for the 149 legal cannabis operators at work in Alaska, but there’s also support from the state’s top officials. State Attorney General Jahna Lindemuth said she is looking at specific actions to clarify what this means for the state businesses. “This creates uncertainty for those states with legalized marijuana. We are still evaluating exactly what this means for Alaska. But we have a duty to uphold and implement state law, and that is what we will continue to do,” Lindemuth said in an official statement. Gov. Bill Walker said the State of Alaska relied on federal assurances in crafting the regulatory framework on legal cannabis that now exists. “Alaskans voted in 2014 to legalize the commercial sale of marijuana. I remain committed to upholding the will of Alaskans on this issue and maintaining our State’s sovereign rights to manage our own affairs while protecting federal interests,” Walker said in a statement. “Today’s announcement withdrawing the Cole Memorandum is disappointing. I will continue to work with the U.S. Department of Justice and our Congressional Delegation to prevent federal overreach into Alaska.” Sen. Lisa Murkowski sent out a message on Facebook expressing disappointment with Sessions’ decision. “My office can confirm that we received notification from the Justice Department this morning that they intended to withdraw the ‘Cole Memorandum,’” she wrote. “Over the past year I repeatedly discouraged Attorney General Sessions from taking this action and asked that he work with the states and Congress if he feels changes are necessary. Today’s announcement is disruptive to state regulatory regimes and regrettable.” Because Congress makes the laws, the question now becomes whether the Republican-controlled branch of government will take action regarding marijuana enforcement to replace the Cole memo guidance. Rep. Don Young, a founding member of the Cannabis Caucus, has filed bills that require the federal government to respect state laws legalizing marijuana, to remove it from the Schedule I status, to allow financial institutions to do business with the marijuana industry, allow Veterans’ Affairs doctors to prescribe marijuana in states where it is legal, and to allow marijuana businesses to use the same tax deductions as other small businesses. Sen. Dan Sullivan, along with four other Republicans, was in a meeting with President Donald Trump Thursday morning. “President Trump himself had said on a number of occasions that this is a states’ rights issue,” noted Sullivan spokesperson Matt Shuckerow. The former aide to Young, who has long classified the issue as one of states’ rights and did so again in his official statement on Thursday, added that the Alaska delegation is “united in the cause to protect the rights of Alaskans to operate in their own borders and boundaries.” But support of declassifying marijuana as a Schedule I drug isn’t seen as the main route for aligning state and federal laws on marijuana, Shuckerow said. “There are numerous legislative efforts out there to bring in line or align state and federal law on marijuana in some shape or form,” Shuckerow said. “Rescheduling marijuana is one avenue that in many cases is seen to some as extreme — some don’t believe in legalizing it entirely on a federal level.” Sessions’ move may be the impetus that pushes legislation and debate to the forefront, which Sullivan acknowledged in his official statement. “Today’s action by the Department of Justice — which contradicts previous statements by the president that this is an issue best left to the states, and adds new confusion and uncertainty for numerous states and communities — could be the impetus necessary for Congress to find a permanent legislative solution for states that have chosen to regulate the production, sale and use of marijuana,” Sullivan said. “As we move forward, I will be examining new and existing legislative proposals and working to ensure the rights of Alaskans and the State of Alaska are protected.” During Sessions’ confirmation hearings, he told members of the Senate who pressed him on marijuana enforcement that, “If that’s something that’s not desired any longer, Congress should pass a law to change the rule. It’s not so much the attorney general’s job to decide what laws to enforce. We should do our job and enforce laws effectively as we’re able.” In a letter Walker wrote to Sessions last summer, he addressed “marijuana regulations and criminal prosecutions in Alaska,” in answer to questions raised by Sessions. In that letter from Aug. 14, 2017, he assured Sessions that the state’s regulatory framework governing state-licensed marijuana businesses addresses federal interests. But he also noted that Alaska’s resources are going toward addressing the severity of an opioid epidemic gripping the state. “State law addresses risks of diversion by requiring all marijuana to be tracked from seed to sale, requiring all marijuana waste to be rendered unusable, and ensuring marijuana businesses do not have associations with criminal organizations,” Walker wrote. Alaska’s Marijuana Control Board addresses “public health and safety concerns by controlling advertising practices, encouraging responsible consumption, and working to ensure the public is aware of the risk of marijuana,” he said. Other hallmarks of Alaska’s legal operations restricts access to retail establishments, prohibits retail stores from locating and advertising in proximity to child-centered facilities, and bans advertisements targeting youth. But the state also continues to refine laws and remains open to accommodating federal concerns, Walker assured Sessions.

Marijuana board issues consumer alert amid testing issues

Testing inconsistencies in marijuana show it may be anyone’s guess just how much THC comes in those edibles and joints. The information prompted the Marijuana Control Board to hold a quickly-scheduled telephonic meeting Jan. 2 to figure out whether to shut down the industry until testing for THC can be more consistent or to issue a public consumer alert. The board voted unanimously to put out the public notice, which warns consumers about a dangerous mold and inconsistent THC levels in products. Chairman Peter Mlyarnik contended he doesn’t have confidence in the commercial labs “because there is such a large swing” in their THC content results. He thought stronger actions should be taken than a public notice. Loren Jones, the Juneau board member who represents public health, said he didn’t feel the board was in a position to shut down the businesses. And there didn’t appear to be significant public health threat to justify shutting down the industry. “We need to give the consumer alert and move forward as quickly as we can,” Jones said prior to the vote. The alert issued by the Alcohol and Marijuana Control Office states: “AMCO is vigorously investigating these inconsistencies and has already initiated actions to identify and correct the processes or deficiencies that have resulted in these reporting inconsistencies. In the meantime, all consumers of marijuana and marijuana products are urged to exercise care and good sense in choosing and consuming marijuana. Inspect the products you purchase. Limit consumption to the appropriate serving size. Read and heed the warnings that are on every package. Your welfare is our highest priority.” The topic has been dogging the board for months now. Products that were sent to the only two commercial labs in the state — Steep Hill and CannTest, both in Anchorage — allegedly contain different amounts of THC. A difference of 7 percentage points between the two labs might be acceptable, Member Brandon Emmett told the board. But a difference of 50 percent “just isn’t.” Enforcement Supervisor James Hoelscher recently sent different batches of cookie crumbs, capsules and buds to be randomly tested. A chart he showed to the board indicated the products tested at higher concentrations of THC at one lab than at the other. Edible products are limited by regulation to 5 milligrams of THC per serving. One lab’s test results showed THC content as 4.4 milligrams. The other measured 8.8 milligrams. Nailing down whether it’s the testing procedure in the labs that tilt the variations or something in the cooking process form two of the biggest questions, Emmett said, who represents the industry on the board. In the meantime, a consumer alert should let the public know that some products may be much stronger than they think and to exercise caution. Hoelscher said he checked with labs in Colorado, Oregon and Washington to see if they too saw such wild variation between testing facilities. “They too are wrestling with how to get it to test out what they claim on the products,” Hoelscher said. But the variation spread is much smaller between labs in those states than Alaska’s, he added. There seems to be a larger testing crisis going on in Alaska than those other states, Hoelscher said. Mold was identified in a marijuana flower by one lab but wasn’t detected by the other lab, according to their public alert. A few of Alaska’s marijuana growers and manufacturers are facing a crisis after random testing turned up mold and enforcement officers removed their products from store shelves. One business received a clean bill on healthy plants when a lab tested the marijuana flowers. But state enforcement officers — sweeping through shops to do their own random testing — found that same growers’ weed was contaminated by Aspergillus mold, said Emmett. Aspergillus is a group of molds broadly found when autumn turns to winter in the northern hemisphere. Exposure can trigger asthma or bronchial problems, according to information provided by the Alcohol and Marijuana Control Office. It strikes local marijuana harvests as a soil microbe that can become airborne. “Aspergillus is quickly becoming problematic,” Emmett said prior to the meeting. “The Aspergillus problem is further reaching than we anticipated. It’s a soil microbe so it’s ubiquitous.” In early December, marijuana enforcement officers shut down a Fairbanks business, Frozen Budz, after Aspergillus mold was found in its cookies and other products. A series of violations by the company, which included failure to test products for potency and mold, producing edibles not approved by the board, and using untraced marijuana to make the products, led to the revocation of its license and a $500,000 civil fine. A significant amount of inventory sold to retailers by Frozen Budz was yanked immediately from shops to protect consumers, leaving the shops’ owners suffering revenue losses. The loss of inventory varied between $2,000 and $10,000 per store, according to figures from the enforcement office, Emmett said. Frozen Budz products were available at many marijuana retail stores from Fairbanks to the Kenai Peninsula. In addition to not being properly tested, the cookies, tea and dessert drops may have had inaccurate THC amounts per serving, said Erika McConnell, director of the Alcohol and Marijuana Control Office. “The products are labeled as having 5 mg of THC per serving, but in reality, each serving may have a great deal more THC,” McConnell wrote in a consumer alert. “Additionally, the products have not been tested for contaminants such as bacteria, fungus or mold. Consumers who have purchased products made by Frozen Budz should be aware.” Mlynarik said the board found the acts of this licensee “especially egregious” for the significant health risk posed in selling “products that were not safe, tested or tracked.” Frozen Budz owner, Destiny Neade has said she is looking at what her options are to appeal the board’s ruling. Given there are just two marijuana testing labs in the state, the variations between the two can’t be checked by another lab, Emmett said. That’s soon to change with testing facilities to open in Wasilla and Fairbanks. About 100 of the state’s 149 cannabis businesses utilize the labs as growers or product manufacturers. “This (meeting) is related in that the testing that was done on Frozen Budz products revealed inconsistencies between the two labs and in results for a particular batch,” Emmett said. “So the state tested samples of marijuana flower on the shelf in various stores. Some of those samples may have had different test results.” Why the variations? Plants themselves can carry differing potency strengths between buds on the higher elevations of the plant and those produced lower down, Emmett said. But having only two labs in the state isn’t providing enough back-up checks on potency and microbes. Another problem in Alaska is that in this new industry, there’s no history from testing marijuana like there is in Oregon and Colorado where potency tests on medical marijuana form a foundational knowledge, Emmett said. “If there are two, and slightly different results, it begs the question about who’s correct or who is not. If you had three or even five labs, it’s a lot easier to say this is the range you get between testing procedures,” Emmett said. “That’s one thing we want to address with this testing committee. What are the testing ranges? What are the procedures that they have to use? I’d like to see that standardized. There’s an accepted procedure for each and all have to be tested in the same way.” A committee to look at all matters around testing was established at a board meeting in November. It is made up of Emmett, AMCO staff, five industry members and 15 science and health professionals from around the state, including a biochemistry professor from University of Alaska Fairbanks and a chemist from the state crime lab. The committee will seek out a way to bring a more empirical uniformity into the testing process. Harvesters face a potential devastating set of losses when their marijuana is pulled for administrative reasons after testing. A typical harvest of 10 to 16 pounds is valued at $40,000 to $72,000; at $4,000 per pound, the loss of an entire harvest found tainted by Aspergillus can bring economic trouble to growers. Naomi Klouda can be reached at [email protected]

YEAR IN REVIEW: Onsite consumption decision delayed; voters reject bans

The advocates of allowing onsite cannabis consumption gained some ground this year, but no final decision was made. After running out of time in its two-day meeting in Anchorage Nov. 14-15, the Marijuana Control Board postponed action on the issue until next April. In the closing minutes of the meeting at the Dena’ina Civic and Convention Center, board member Loren Jones made a motion to postpone the previously scheduled onsite consumption vote. This third attempt to pass a measure, brought forth by industry representative Brandon Emmett, would allow businesses patterned on bars to open for the public to allow people to socialize and legally consume marijuana products. The board voted 3-2 in July to approve sending Emmett’s measure out for 60 days of public comment. But Jones put the brakes on, recommending that a new subcommittee be appointed to take up regulations deciding how the public facilities would function. “I don’t want to do this on the fly,” Jones said. “We received 550 pages of public comment that I haven’t even been able to read yet. There are fiscal implications with enforcement staff.” Board member Mark Springer of Bethel, representing rural residents, agreed that it would be better to concentrate on what’s involved in passing the new regulations when there is more time to go through the finer details. But Emmett expressed disappointment that was echoed by business owners. “We’ve debated this for a couple of years. It’s been out for public comment, and motions have been approved,” Emmett protested. “We should no longer waste public resources on this issue. If this is something that’s not in the public interest then let’s vote on it. If the board’s not interested in approving it, then we need to vote it down. We need to settle it.” After reviewing comments and further work on how the public facilities would be regulated, the board likely will take a vote again at its April meeting, Emmett said. No. 2: Prohibition votes fail Voters on Oct. 3 rejected propositions to ban commercial marijuana operations on the Kenai Peninsula and in Fairbanks, where most of the state’s cultivation farms are located. Voters on the Kenai Peninsula went against the prohibition 5,232 to 2,941, or 64 percent to 36 percent. In Fairbanks, voters sent two ballot proposals to defeat. The Fairbanks North Star Borough results were 9,488 against to 4,080 in favor, or 70 percent to 30 percent. The votes weren’t close in any of the voting jurisdictions, noted Cary Carrigan, the executive director of the Alaska Marijuana Industry Alliance. In the City of Fairbanks, voters cast 2,912 against the ban prop and 1,313 votes in favor, similar to the borough at 69 percent to 31 percent. At stake if the measures passed was a significant portion of the state’s cultivation facilities. When the Marijuana Control Board met in Nome in September, it approved 27 new licenses in the Fairbanks and the Kenai Peninsula boroughs. More than 30 businesses in Fairbanks and another 20 to 25 on the Kenai Peninsula were believed to be in line to shut down if the measures passed, according to a count of businesses licensed with the Alaska Marijuana Control Office. In the state and on the peninsula in 2014, the question of legalizing marijuana held narrow margins. The statewide ballot proposition that legalized it in 2014, known as Proposition 2, passed by six percentage points, while voters in the Kenai Peninsula’s four districts rejected it by about two percentage points, according to the Peninsula Clarion. The strongest rejection came in the district containing Kenai and Soldotna, where voters were 4,169 to 3,558 against legalization. Two of the peninsula’s voting districts, however, voted yes — the district roughly south of Kenai, Soldotna and Cooper Landing, and the district south of Kachemak Bay. In Fairbanks, part of the effort to ban cannabis businesses involved community concerns that there were “too many” retail shops and cultivators in the Fairbanks area. After voters in Fairbanks upheld legal operations, Fairbanks Mayor Jim Matherly announced that part of the next chapter would potentially involve limits on the number of marijuana businesses in the city of Fairbanks through a city ordinance. No. 3: Tax revenue closes on alcohol Total taxes collected on the new Alaska industry of marijuana cultivators and product manufacturers was $4.7 million from the first legal sale in October 2016 to this past November, according to the Alaska Tax Division. Numbers from a budget report by Alcohol and Marijuana Control Office Director Erika McConnell to the Marijuana Control Board Nov. 14 showed that the state still takes in more from alcohol taxes than marijuana tax, but the two were growing closer; she showed figures indicating that for the same time period in 2017, alcohol taxes tallied $2.2 million while marijuana taxes came to $1.5 million. She gave these figures when it met in Anchorage for the second time this year, at the Dena’ina Civic and Convention Center. Statewide annual tax collected on marijuana buds and trim steadily climbed between October 2016 and November 2017. The new industry contributed just over $10,000 in taxes its first month when a handful of newly licensed cultivation facilities began paying $50 per ounce for the bud and $15 per ounce for other parts of the plants. From October 2016 to October 2017, $3.7 million in taxes total was collected from marijuana growers. Tax division numbers from fiscal year 2017 report $1.75 million in taxes from 44 marijuana operations. In fiscal year 2018, which began July 1, $2.9 million in taxes was collected from 75 operations. The state also recorded that 76 percent of the facilities paid in cash, said Kelly Mazzei, a supervisor in the Tax Division. This is because marijuana is still illegal on the federal level, so banks are not handling transactions from the Alaska businesses, she said. Naomi Klouda can be reached at [email protected]


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