Cannabis

Voters reject return to pot prohibition

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. With 23 of 24 precincts reporting results, the Kenai Peninsula Borough’s unofficial election results show an overall majority voting against the prohibition 5,232 to 2,941 or 64 percent against and 36 percent in favor of the ban. In Fairbanks, voters faced two ballot props that also went down in defeat. The Fairbanks North Star Borough reported unofficial results from 40 of its 40 precincts on its Proposition 1 as 9,488 nay votes to the 4,080 in favor of the ban, margins showing overwhelming rejection of a ban at 70 percent to 30 percent in the 7,444-square mile borough. In the City of Fairbanks, voters cast 2,912 against the ban prop and 1,313 votes in favor of it. That showed margins of 69 to 31 percent, another strong showing in support of the cannabis business operations. Many voters on the Kenai Peninsula got a surprise when they took their first look at the ballot ticket and saw no Prop 1 listed for them to express a preference. Borough Mayor Mike Navarre said that was a reflection of the 2014 legalization of marijuana laws that went into effect. “Each city has its own jurisdiction to decide,” Navarre said. “All the voters within the boundaries of Homer, Soldotna, Kenai, Seward and Seldovia weren’t asked that question. It just applied to areas outside the cities that are in the borough.” The mayor said he wasn’t surprised the ballot measure nonetheless failed. The “no” vote people were well organized, he said. “The ‘Vote Yes’ got the signatures to put the question on the ballot but then, didn’t mount a strong effort. It was a one-sided effort where the ‘Vote No’ people were able to make a case for the medical and regulatory benefits of it being legal and regulated so you know what you’re getting,” Navarre said. Robert Mikol, whose business cultivator license was approved at the last Marijuana Control Board meeting in September, said he watched both Fairbanks propositions with some concern. “A lot of people told me how they were going to vote – people who are not even consumers, some fairly conservative – who said they were going to vote no,” Mikol said on Oct. 4. He had invested $50,000 to $70,000 in a grow operation that took a year of planning and two appearances before the board before he was approved. “It would have been such a huge blow if the prop had passed. I would have had to figure something out; maybe move to Delta Junction,” Mikol said. “But now the question is settled and we see the support here.” Cary Carrigan, president of the Alaska Marijuana Industry Alliance, said he felt education was the key particularly on the Kenai Peninsula were he felt the industry was depicted as a “boogie man.” “That was a moving target but we really worked it, a lot of people worked extremely hard,” Carrigan said. As votes filtered in Tuesday evening, Carrigan said he was noticing a 60-40 split against the ban community-by-community. “I felt pretty good to see that but I wasn’t sure if that would hold,” he said. In the end, even members of the Alaska Marijuana Control Board got involved in the proposition debates. In Kenai, board chairman and Soldotna Chief of Police Peter Mlynark helped draft the petition and gathered petition signatures on the proposition that ended up on the borough ballot. In Fairbanks, board member Brandon Emmett participated in rallying calls to vote “no” on making commercial marijuana illegal. Public members on a call-in radio show, KSRM, questioned whether that constituted an ethics violation. But such activities aren’t in violation of state law, said Cori Mills, an assistant attorney general in the Alaska Department of Law. “There is no prohibition against a board member participating in this process, and exercising their freedom of speech to voice their opinion on a local issue,” she wrote in an email to the Journal. In analyzing for potential violation, the state oversight of boards and commissions would analyze for financial rewards for activities related to commission work. None was found in either Mlynark or Emmett’s activities, she said. Bethel alcohol tax hike passes Bethel voters agreed to raise taxes on alcohol sales at its two liquor stores from 12 percent to 15 percent in a vote of 372 in favor to 257 against in the Oct. 3 City of Bethel election, giving that western Alaska hub city the highest sales tax in Alaska. The Bethel City Councilman who sponsored the petition, Leif Albertson, said voters agreed that alcohol sales are taking a toll on social services in the community. “They were reading it accurately that we have a huge cost associated with alcohol sales here. A lot of times in rural Alaska, people are more concerned about the sense of community and public safety when you’re out of the larger metro area,” Albertson said. “Everyone has someone affected by alcohol and so it feels a little more personal.” Both anecdotal and actual statistics bear out that since more-easily available alcohol became legal in Bethel in May 2016, costs have gone up, Albertson said. “People have seen more problems with domestic violence, theft and homelessness,” he said. “We’ve also heard from non-profits, such as at Winter House those running it say they are experiencing increased burdens from the increased sale of alcohol.” Yet, those same nonprofits don’t have access to an increase in funding to pay for serving the extra people. “They get no help in terms of a tax benefit,” Albertson said. To solve that, Albertson’s plan included making grants available from the $1 million anticipated in tax revenue from a 15 percent sales tax. An additional 3 percent is projected to add $200,000 to the $800,000 in annual tax revenue, he said. Those who didn’t support the tax hike expressed concern about illegal bootlegging getting the advantage, Councilmember Thor Williams said during the debate on putting the petition out. But in the end, the council voted in favor of placing the petition on the ballot. Bethel has long been a “damp” community, meaning it is legal for people to order alcohol to be shipped into Bethel for use in their homes. Naomi Klouda can be reached at [email protected]

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

The Marijuana Control Board renewed 21 cannabis business licenses and approved 25 new businesses at its Nome meeting Sept. 14-15, but concerns were expressed that more than half of these license holders face a shutdown from Oct. 3 municipal elections. The Kenai Peninsula Borough, the Fairbanks North Star Borough and the City of Fairbanks all have upcoming votes to ban retail shops and marijuana grows. Of the 45 licenses approved, 27 are in those jurisdictions. The Alaska Marijuana Industry Alliance has campaigns on the Kenai Peninsula and Fairbanks carrying the message that a vote against the legal industry is a vote for the black market, said Cary Carrigan, the group’s executive director. “I’m worried enough to tell you that I am investing in this process,” Carrigan said. “If marijuana is made illegal, it will immediately enhance the black market.” Residents of Alaska voted in 2014 to legalize marijuana, but local governments were granted the right of opt-outs in their communities. So far, only North Pole has banned legal pot sales in an election last fall. Voters in Valdez decided against a proposed cannabis prohibition in May and the Matanuska-Susitna Borough voted to keep it legal in October 2016, just as the new businesses were licensed to operate. The state tax revenue raised to date is $2.3 million. One of the key arguments in favor of keeping marijuana legal is the revenue raised for the State of Alaska, Carrigan said. Yet, even Marijuana Control Board members are siding with opposite camps on the Kenai and Fairbanks ballot props. Soldotna Police Chief and board chair Peter Mlynarik is campaigning for a ban on the Kenai Peninsula. On KSRM Radio, he announced that he was involved in efforts to organize Prop 1, an ordinance “to prohibit the operation of any commercial marijuana establishment in the Kenai Peninsula and the Kenai Borough.” Though questions of conflict arose from callers during the KSRM talk show, “Sound Off,” Mlynarik responded that his position chairing the board is to represent public safety. He pointed out that among the five-member board “there is also two other positions … both occupied by industry and both of those individuals have marijuana licenses.” One of those is board member Brandon Emmett from Fairbanks, owner of Good Titrations. Emmett is working on the campaign to keep marijuana legal in the borough and city. The other industry board member is Nicholas Miller of Anchorage, who is president of the Anchorage Cannabis Business Association. Among the action items taken up, the board voted to extend the timing of public objections on licenses beyond the 30 days currently granted. Now a person or agency can bring up objections at any stage in the process. The board did not take up the agenda items put out for public comment from the July meeting in Fairbanks. One of those was the question of whether a cannabis business can offer a percentage of revenue to a landlord in lieu of rent. Executive Director Erika McConnell said the matter will be taken up with the board meets in Anchorage Nov. 16-17. License denials With few action items on the agenda, for two days the five-member board went through license applications and renewals. Though accused early on in public comments of “rubber stamping” licenses by a Talkeetna man who is against a new marijuana business opening there, the board turned down or postponed nearly a dozen license applications. One Fairbanks cultivator was denied a license based on objections and a technicality: Raven Buds on Lawlor Road in Fairbanks would be located too close to a juvenile drug rehabilitation facility. Tanana Chiefs Conference wrote to the board saying they would “revoke permission to use the access road running across their property if the license is approved,” McConnell advised the board. In a unanimous vote, board members turned down applicants Carol Bold, Dave Mullis and Kerri Mullis who wanted to open Raven Buds. “I can guarantee if someone wanted to put a marijuana operation in a YKHC (Yukon Kuskokwim Health Corp.) duplex, there would be objections,” said member Mark Springer of Bethel, who holds a seat designated for rural Alaska. “I’m going to vote no.” Emmett also objected. “Those most vulnerable to drug abuse are nearby,” he said. “I don’t think I can support that.” Another objection came from the City of Ketchikan over a license application for Northern Lights Cultivation. The Ketchikan City Council voted on Sept. 7 to protest the license on the grounds that the owners haven’t yet complied with all fire and safety codes. In a letter to the board, the Ketchikan City Council also said such a business is “not in keeping with public interest of the surrounding neighborhood,” because it would be located in a multi-residential building. The applicants Jesse Hoyt and Jacob Rodriguez answered questions for the board, contending they are addressing the city’s concerns and are due for a fire inspection in the coming days. The application was tabled until they comply with the city’s concerns, the board decided, in a unanimous vote. The board denied or tabled three other licenses over residency issues linked to their Permanent Fund dividends. The board had adopted regulations that define a resident according to whether they received a permanent fund dividend the previous year. Those denied a PFD based on residency would also be denied a license. But there are problems with using that definition, McConnell alerted the board earlier in the day when she recommended the board give the matter its attention as a new regulations project. Three applicants, High Tide Distributors of Nikiski, the Green Pearl LLC of Big Lake and The Connoisseur of Wasilla were all impacted by the PFD residency definition. One was denied a PFD because he was out of state the previous year for six months, but has lived in Alaska since 1971. Another checked a box stating he was out of town during the time of filing, but is also a resident. A third also claimed a clerical error that made his Alaska residency go unacknowledged by the PFD determination. McConnell wrote to the board that the PFD definition is confusing for two reasons. “The residency requirement that is evaluated through the PFD is for the prior year and (secondly) license applicants who apply in January through May would not know their PFD application status for that calendar year,” she told the board. To make the process less confusing, McConnell recommends changing the regulation language to “currently” meets residency requirements. In the meantime, those who were postponed due to the PFD difficulty will have to wait until the regulation is changed before they can resubmit an application, Program Coordinator Sarah Daulton Oates told the board. Seven other licenses were tabled until the next meeting Nov. 15 in Anchorage. Smell complaints Advertising violations continue tripping up cannabis businesses. This time, Stoney Moose was on the list after enforcement alleged the company claimed 13 items as having medicinal benefits online. State law restricts marijuana businesses from using statements or illustrations to say marijuana has curative or therapeutic effects. The Ketchikan owner found that its website developer had used Leafly, a subscription based mobile phone app that shows the location of the store. A specified type of strain then auto-populated to the Stoney Moose’s website. “Unbeknownst to me, that wording contained ‘Medical Benefits.’” The owner then was able to have the web developer remove the product descriptions, Mark Woodward, the co-owner, wrote to the board. Weed Dudes of Sitka also was cited for violation under advertising restrictions, this one for having a sign in the public right-of-way rather than attached to the building or storefront window. The owner, Michelle Cleaver, said she removed the sign. Smells emitted from commercial greenhouse marijuana facilities are bringing out neighborhood complaints and resulted in three of the five violations issued between July 15 and Sept. 13. Danish Gardens and Great Northern Cannabis Inc., both located on Anchorage’s Cinnabar Loop, were notified of violations based on the stinky smell complaints. In Danish Garden’s case, three neighbors wrote to AMCO enforcement about detectible odor of marijuana outside the premises. The law cited says the business “does not emit an odor that is detectible by the public from outside the cultivation facility except as allowed by a local government conditional use permit process.” To solve the problem, attorney Jana Weltzin said Danish Gardens installed a robust odor control system that includes commercial grade air intakes, exhaust fans, carbon filtration, air scrubber systems and de-ionization systems. Because they have a special land use permit, the law states the smell has to be contained within the property lines, not immediately outside the building, Weltzin wrote in the response to enforcement staff. She also complained that a licensee does not get a chance to address the accusers, yet the violation follows the business licensee through the process of municipal and state renewal and could mean a shut-down of the business. “We do not believe that AMCO Enforcement did their due diligence in determining just where these odors in question were coming from and we do not agree that unknown and unnamed accusers can willy-nilly cause substantial stress and damages to licensees of this new industry. People making complaint should be required to give their names and contact information,” Weltzin contended. What may underlie complaints is the attitude “we just don’t think weed should be legal,” she wrote. In the case of Great Northern Cannabis Inc., enforcement also received three complaints of detectible odor. Birch Horton Bittner &Cherot attorney Jason Brandeis responded that GNC management conducted a thorough review of the facility’s HVAC system and identified the source of the odor as a vent that emitted directly out the door. GNC then hired contactors to investigate and propose a mitigation plan that resulted in sealing off air that vent. The internal ductwork was relocated to pass through multiple filters before exiting a roof stack vent. They also doubled the number of filters associated with the vent, according to Brandeis. Parallel 64 was issued a violation notice for failing to tag marijuana plants taller than eight inches. This is in violation of the marijuana inventory tracking system. Parallel 64, located in Anchorage, responded that an internal misunderstanding led to the violation. They have since changed protocol to educate all employees about compliance. ^ Naomi Klouda can be reached at [email protected]

First Western Alaska marijuana licenses to be taken up in Nome

Though illegal marijuana sales continue to show up as arrests in the police blotters of rural Alaska, not many applicants have stepped up with requests to open legal dispensaries in those towns. Two Nome businessmen want to change that on Norton Sound. Robin Thomas’ application to the Marijuana Control Board to open Gudlief and James Fejes’ application for Tundra Fire LLC are up for review before the board at its meeting in Nome Sept. 14-15. City Manager Tom Moran said the Nome City Council has debated and granted approval for the two applications, with certain conditions. “I don’t think public participation in the discussions has been enough to knock your socks off in either direction,” Moran said. “We’ve heard testimony from people giving more pros than cons. Usually supporters have tried to sway the planning commission and the council and there hasn’t been a lot of opposition.” The commercial marijuana industry is authorized under an ordinance passed by the Nome City Council, Moran said, but they didn’t set zoning rules or a separate tax for it yet. “We’ve taken a wait-and-see approach about those issues,” he said. Thomas, a retired commercial fisherman, wants to open the first licensed cultivation facility in Nome this winter, figuring it could be the first in western Alaska. Kotzebue has seen no license applications move forward from that hub town, said Tom Adkinson, a city official who operates the town’s only legal liquor store. Dutch Harbor/Unalaska doesn’t have one and neither does Dillingham, said City Manager Shawn Gilman. Cary Carrigan, executive director of the Alaska Marijuana Industry Association, said there aren’t any legal dispensaries in western Alaska yet, “but there are plans.” “A number of people are working on this, how to create their own supply so they can develop the retail for the rural demands through a legal system,” he said. “And that’s something I try to tell people: ‘By supporting legal growing businesses, you’re fighting against the criminal element. You’re fighting crime.’” Thomas began the process in February for a grow operation in a 600-square foot building next to his home, and changed course to now add a retail license to open a facility, he said. He plans on cultivating 10 plants per week. “I have a retail space 8-by-10 (feet) in my foyer, and it will be simple,” Thomas said. “There will be a menu for the customer to look at, and from there they can purchase. Everyone’s been waiting for over a year for me to get up and running.” Fejes, an Anchorage resident and owner of Jimmy Blaze Entertainment, is planning on opening a dispensary on the historic Front Street in Nome. The Nome City Council took up concerns about his license application at an August meeting to decide whether it complied with keeping the required distance from the Check Point Youth Center. The council found that it did comply. Both are now approved to open, pending the Marijuana Control Board’s approval, Moran said. “There’s a bunch of wait-and-see going on that makes it difficult for people in rural Alaska: how to test by a lab, how to bring it in; there isn’t a lot of expertise out there,” Thomas said. “But I think there’s probably room for 10 more legal businesses like mine in the Norton Sound area.” The rest of the agenda In addition to renewing or approving licenses, the Marijuana Control Board will be looking at key measures after items were put out for public comment from the July 13-15 meeting in Fairbanks. After that packed agenda, they sent out about a dozen measures, but don’t expect debate over onsite marijuana consumption to be among them. The onsite consumption matter — whether to allow public space for smoking and eating marijuana products — won’t be back for the board’s vote until its November meeting in Anchorage. It was set for an extended 60-day public comment period to allow for hearing from municipal governments. Direct or indirect financial interests: Should landlords be able to take a percent of sales in-lieu of rent? Public comments are in and the board should be able to vote on the measure in Nome. At the last meeting, by a 3-2 vote, the board settled on a proposal to prohibit future license applicants from lease arrangements that include a percentage of revenue in exchange for rent. Alcohol and Marijuana Control Office Executive Director Erika McConnell estimates at least 25 percent of the nearly 200 marijuana businesses across the state have this sort of lease arrangement. Some landlords take 5 percent to 20 percent of revenue in the grow operation, dispensary or other cannabis businesses in exchange for decreased rent, which is said to help because banks cannot loan money to the new business owners and many tenants occupied space for months before they were able to open. McConnell asked the board to make a decision based on two proposals. One asked to eliminate percentage lease or rent agreements from “direct or indirect financial interest.” The other option would have allowed a financial interest limit of 5 percent or less, and the landlord would then be required to undergo the same licensing review as the business owner. After lengthy debate, the board agreed to adopt the first version prohibiting any percentage of sales agreements and sent the measure out for 30-day public comment. Now the board could amend it or adopt it as is. If the board amends the proposal it will have to go out for comment again. Ad watch: A dispensary’s ability to promote its facility is being refined in regulations. Currently, many of the violations are related to advertising, said Enforcement Supervisor James Hoelscher in his last report to the board. One of the intents of all advertising regulation is to avoid advocating or encouraging youth consumption of marijuana products, rural board member Loren Jones said. But not being able to sponsor public events as a marijuana business “demonizes the industry so that they can’t participate in community-building events,” industry board member Brandon Emmett said in July. The new regulations will specify that all promotions must take place inside the licensed business, not in a park or at a public event. New regulations also would separate business advertisement rules from product advertisement rules, if approved by the board. Local control: Questions about local government jurisdiction also will be considered. Currently, cities must be notified each time a license is granted to an operation in that jurisdiction. But the land-use authority may be a borough government and in rural Alaska, the local government in authority might be a Tribal entity. A new regulation would require notification to go to all relevant local entities that have separate duties over authorizing land use and taxes. The board will vote on whether to approve the new notifications. Timing: The board looked at extending the amount of time for public comment on new or renewing marijuana license matters. They will vote at the Nome meeting on whether to remove the 30-day period and give no deadline to the objection or comment time period allowed. The agenda for the Sept. 14-15 meeting is not posted yet, but check for its status at:  https://www.commerce.alaska.gov/web/amco/MCBMeetingDocuments ^ Naomi Klouda can be reached at [email protected]

Homer City Council to consider marijuana business on the Spit

HOMER — The Homer Spit, once excluded from the commercial cannabis narrative in the city, has been brought back into the conversation. Members of the Cannabis Advisory Commission voted unanimously at their Aug. 24 meeting to recommend the Homer City Council open the Homer Spit to commercial marijuana businesses. The Spit had previously been excluded from the areas those businesses are allowed through the city’s zoning process when it adopted regulations for cannabis. Currently, marijuana businesses are permitted in Homer’s central business district, general commercial districts one and two, and the East End mixed use district. The council would have to make an amendment to the city code to allow marijuana businesses on the Spit, and any business would probably have to be on private property. Commission Vice Chair Carrie Harris brought the recommendation up, saying she has heard from people in town expressing a wish to see cannabis allowed on the Spit. There are a few private land owners on the Spit interested in getting into the marijuana industry, Harris said. “We’re not here to be a roadblock,” she said. “We’re here because the voters asked us to be.” City Planner Rick Abboud said leasing city land for any commercial cannabis use raises federal legal issues. “We have advice from the city attorney that we would not want to support a marijuana enterprise on our property because of the implication it might affect our relationships with the federal government and federal funding,” Abboud said. According to the Alcohol and Marijuana Control Office list of license applicants, one business, Homer Spit Cannabis Company, has initiated an application for a retail store on the Spit on a city lot leased to Billy Sullivan near Fish Dock Road. Sullivan said his son, Nils, filed the application. “He’s just tire kicking, I guess,” Sullivan said. AMCO administrative office Craig Douglas said any license application would have to go to the city for review that it complied with zoning regulations. Sullivan’s application still isn’t complete. Harris said after the meeting that, accounting for the areas designated as wetlands within city limits that overlap with the areas commercial cannabis is allowed, there aren’t many spots in town where the businesses are easily established. Commissioner David Lewis, a council representative, supported the motion to make the recommendation but said he doesn’t think it will make it past the council. “At this time I really don’t think the council would approve it, just because I feel it would be a 4-3 vote,” he said. Lewis said it might be better to wait until a cannabis business gets established in town to see how it goes before trying to open the Spit to them as well. One retail pot shop, Uncle Herb’s on Ocean Drive, could open in time for the holiday season if its application gets approved by the Marijuana Control Board and the city, and it passes state inspections. Lloyd Stiassny, a former Homer resident, owns another Uncle Herb’s in Anchorage. The Homer shop would go in Stiassny’s building at 1213 Ocean Drive in an office now rented to a bear viewing company. When it opens, it will be the city of Homer’s first commercial cannabis enterprise. Three farms already have licenses outside city limits. “We’re kind of excited,” Stiassny said. Homer Police Chief Mark Robl, another commissioner, brought up the concern that having marijuana available on the Spit could increase the likelihood of consumers bringing product onto charter fishing boats, which could lead to problems for charter owners since the waters they travel are federal and governed by the U.S. Coast Guard. Lewis countered that the chance of that happening would always exist, no matter where a cannabis business was located in town, since it depends on the personal responsibility of the buyer and how they use the product. “It’s like bringing booze on a cruise ship, which is not allowed,” he said. “That’s up to the cruise ship and the individual as to what laws they are going to follow I would assume. It’s not the responsibility of the (marijuana) business and or the council as to what a person does with their product after they purchase it.” The commissioners also voted to recommend the council not allow smoking marijuana on-site in cannabis establishments. The state’s Marijuana Control Board has proposed allowing on-site consumption, and would be the first state to do so if the proposal is successful. The board is currently taking public comments on the measure. Robl objected to the smoking aspect of on-site consumption, saying it would pose a risk of intoxication to officers if they ever had to respond to a call in a marijuana establishment. If an officer entered a cannabis business and was exposed to smoke, that officer would have to be taken off duty for however long it took for the THC to leave his or her system, Robl said. This is not an established state or federal standard, but based on the practices Robl has researched of police departments in Lower 48 states where cannabis is legal. “If there’s a police officer exposed for more than a few minutes, they send that officer home,” he said. While Robl said this situation does not happen very often, this kind of policy is something the Homer Police Department would have to adopt if on-site smoking in marijuana businesses was allowed. An officer would automatically have to be sent home if exposed to marijuana, but would not automatically have to be tested for THC levels. That would only happen if an officer responded to a call where on-site smoking was allowed, and immediately after had to respond to a serious incident like a shooting or a bad vehicle crash. The likelihood for lawsuits if it was found the officer was intoxicated while responding to that kind of event would necessitate blood and urine testing, Robl said. There is a company currently working on developing a portable blood testing device to test for marijuana intoxication, Robl said, which would come in handy for testing officers if on-site smoking ends up being allowed. Officers in the state of Alaska are not allowed to use marijuana recreationally or be involved in the marijuana industry; if they do, their certification is threatened. At the meeting, Lewis questioned whether on-site smoking could be allowed if establishments used smoke eaters to clear the rooms of intoxicating smoke. Soldotna Police Chief Peter Mlynarik, chair of the Marijuana Control Board, said that in their research on on-site smoking, the board found a study that said there are no filtration systems currently that can adequately clear the air of smoke. “That’s what that source said. That there wasn’t a way to remove all the particulates or chemicals from smoke with a filtration system or a ventilation system,” Mlynarik said. Air cleaning devices like the Smokeeter can remove 90 percent of the particulates in air, said Dan Schroeder of Air Cleaning Specialists, which represents Smokeeter and the Clean Leaf and Blue Ox air cleaners, systems used on commercial indoor marijuana farms. The problem is that the Smokeeter can’t clean the air in a room before it gets to the filter. “There’s no way of completely eliminating any chance of second-hand smoke for first responders,” Schroeder said. Robl said that, if an officer became intoxicated, he or she would be safe if they could prove the intoxication came from second-hand smoke. He said he hopes the council will take the commission’s recommendation and that his department won’t have to deal with the on-site smoke. “I’m not opposed to other types of on-site consumption,” Robl said. “It’s just the smoking.” Reach Megan Pacer at [email protected] Michael Armstrong also contributed to this story.

Medical marijuana amendment has little impact on Alaska

States that have legal medical marijuana programs will remain free of federal law enforcement efforts if an amendment makes it into the final budget as it has for the past three years. The Senate Appropriations Committee on July 27 approved what is known as the Rohrabacher-Blumenauer amendment to prohibit federal funds from being used against businesses in states with legal medical marijuana programs. Sen. Lisa Murkowski sits on the committee and supported the amendment. Sen. Patrick Leahy, D-Vt., brought forth the amendment and it passed by a voice vote with broad Republican support. Because Alaska didn’t develop a body of regulations around medical marijuana dispensaries, as other states did, the Rohrabacher-Blumenauer amendment doesn’t have as much relevancy here, said Bruce Schulte, the former chair of the Alaska Marijuana Control Board. Since 1998, when 58 percent of Alaska voters approved Ballot Measure 8, Alaska law has removed state-level criminal penalties on the use, possession and cultivation of medical marijuana. But no medical marijuana dispensary infrastructure was developed. A study released by the national Marijuana Policy Project showed 1,042 medical marijuana cardholders in Alaska as of February 2017. That was down from the 1,132 counted the previous year in 2016 and 1,178 at the end of 2015. It wasn’t until after the 2014 Ballot Measure 2 legalizing recreational use passed that the Alaska Marijuana Control Board was created by the Legislature in 2015 and the process of developing regulations began. Shaping regulations for the first licenses took until June 2016 when the first businesses to be licensed were the cultivators. Over the next few months, dispensary and testing applicants were licensed and retail shops began opening in October 2016. “A lot of states came about medical marijuana as an incremental step toward full legalization,” Schulte said Aug. 1. “Alaska did have a medical dispensary bill that was passed, but the Legislature chose not to implement it. That incremental step simply failed.” Alaska Statute 17.37 addressed medical marijuana, a law that was never fully implemented, Schulte said. The new AS 17.38, dealing with legal recreational marijuana use does not make a distinction between medical and recreational and prohibits promotions claiming medical properties of cannabis. “It’s always been a point of confusion. Some people were outright angry that we didn’t have medical marijuana dispensaries. My answer to that was that we didn’t need it if we could get full recreational use legalized,” Schulte said. “I would put it on the Legislature.” The need for medical supervision over people who use THC or cannabis oil to treat chronic illnesses remains a part of the picture in today’s marijuana market. For every one person on the registry, Schulte surmises, four or five more should be but chose not to go that route. “Some are afraid to be listed on the medical marijuana registry. It might impact their ability to get a job. There are all sorts of stigma, social and legal. From a practical perspective it doesn’t do them a lot of good,” Schulte said. Having a medical marijuana card doesn’t give a person any advantage when they walk into a dispensary. Alaska law specifies a limit of 5,600 milligrams of THC products per purchase, though there is no limit on the amount of cannabis oil that can be purchased at a time. “To this extent they are friendly to the medical consumer. But then there is also in our regulation that a retail sale can’t promote the health benefits of marijuana,” Schulte said. In the year after medical marijuana was approved by voters in 1998, only 24 people registered for medical marijuana cards. In the past 19 years, just more than 1,000 people per year obtain or renew medical marijuana cards. An estimated 2.3 million Americans are registered as medical marijuana patients, according to the Marijuana Policy Project. The Rohrabacher-Blumenauer amendment protects the patients and the physicians by prohibiting the use of any federal funds for prosecutions targeting legal medical use. As part of the 2018 fiscal year budget, the amendment now moves to the full Senate. The amendment, first enacted by Congress in 2014, is in effect for the current fiscal year. In a June 13 letter to Senate President Mitch McConnell, R-Ky., June 13, Attorney General Jeff Sessions argued that the amendment inhibits the Justice Department’s “authority to enforce the Controlled Substances Act. … It would be unwise for Congress to restrict the discretion of the Department to fund particular prosecutions, particularly in the midst of an historic drug epidemic and potentially long-term uptick in violent crime. “The Department must be in a position to use all laws available to combat the transnational drug organizations and dangerous drug traffickers who threaten American lives.” But lobbying groups working to change public policy such as NORML say Sessions’ stand places medical marijuana patients on footing with “illegal drug cartels.” Further support of the legal medicinal use of marijuana came from the courts. Last August, the Ninth Circuit Court of Appeals unanimously ruled that the language in the amendment bars the federal government from taking legal action against any individual involved in medical marijuana-related activity if evidence that the defendant is in clear violation of state law is absent. Sen. Cory Booker, D-N.J., introduced a bill Aug. 1 to decriminalize marijuana by removing it as a Schedule One drug in the same category as heroin. Both Murkowski and Rep. Don Young introduced bills to protect the 46 states that have legal medical marijuana or cannabidiol derived products. They introduced parallel bills in the Senate and House titled the Compassionate Access, Research Expansion and Respect States Act, or CARERS. The bills would amend federal law to allow states to set their own medical marijuana policies. Like Booker, Young has also introduced a bill to remove marijuana from its listing as a Schedule One substance in the Controlled Substances Act. Meanwhile, since 1998, Alaska marijuana patients — though small in number — have seen progress in acceptance. ReLeaf Alaska, an Anchorage company that offers “professional and confidential medical cannabis evaluations and education” for patients who wish to acquire a medical marijuana card — claims on its website that some insurance companies in Alaska now cover the cost of a medical marijuana card. It costs $25 for new medical marijuana card applicants and $20 for renewals. To receive the card, conditions must meet the state’s medical marijuana authorization eligibility requirements, according to the Alaska Department of Health and Human Services’ website. But physicians who treat medical disorders with the plant’s extractives believe there are more who want the card and medical guidance for use than are applying for it, according to an interview in Northwest Leaf with Dr. Michael Smith, a longtime cannabis activist who holds clinics in Alaska, California and Montana through Healing Center Medical Clinics. A list of health conditions that are approved for medical marijuana on the state level that issues the medical cards are cancer, glaucoma, HIV/AIDS, or treatment for “chronic or debilitating disease or treatment of such diseases, which produces chronic or severe pain, nausea, seizures, including those that are characteristic of epilepsy and spasms such as those characteristic of multiple sclerosis.” Doctors willing to talk on the record for news reporters in Anchorage are not plentiful. Only one physician responded to phone questions, recommending that people who have specific illnesses on the “list of conditions” approved by the state shouldn’t try to go it alone. But he refused to let his name be used for the article because of the “repercussions” to the traditional portion of his Anchorage practice. One of the fears for physicians is any trouble that would damage their reputation with patients biased against marijuana use of any kind, said the physician who wished not to have his name used. In some cases, there is a concern about federal prosecution. ReLeaf of Alaska and the Healing Center, which help patients obtain medical cards and give them examinations for $225 to $275 per visit, use a machine answering service. When finally reached by phone, the person answering at ReLeaf of Alaska hung up upon learning the call came from a Journal reporter. The Healing Center didn’t return phone calls. “People are terrified of enforcement,” Schulte said. “One of the next things that has to be done is to unblock (the industry) from talking about the healing properties of cannabis.”

Marijuana board moves to prohibit common lease arrangement

Should a landlord be allowed a percent of sales in lieu of charging rent to a marijuana business? That’s a current practice of concern to the Alaska Marijuana Control Office. Such arrangements has the potential to allow a landlord — who is not a licensee — “to exert influence on the operation.” Addressing the issue was among the 12 agenda actions sent out for public comment after the Alaska Marijuana Control Board met in Fairbanks July 12-14. By a 3-2 vote, the board settled on a proposal to prohibit future license applicants from lease arrangements that include a percentage of revenue in exchange for rent. Alcohol and Marijuana Control Office Executive Director Erika McConnell estimates at least 25 percent of the nearly 200 marijuana businesses across the state have this sort of lease arrangement. “We see the arrangement on the license applications as they come across,” said Chairman Peter Mlynarik said. Some landlords take 5 percent to 20 percent of revenue in the grow operation, dispensary or other cannabis businesses in exchange for decreased rent. McConnell asked the board to make a decision based on two proposals. One asked to eliminate percentage lease or rent agreements from “direct or indirect financial interest.” The other option would have allowed a financial interest limit of 5 percent or less, and the landlord would then be required to undergo the same licensing review as the business owner. After lengthy debate, the board agreed to adopt the first version prohibiting any percentage of sales agreements and sent the measure out for 30-day public comment. They will take up the measure again Sept. 14-15 at the next board meeting in Nome. At that point, the board could amend it or adopt it as is. Brandon Emmett and Nick Miller, who are the industry representatives on the board, argued that such arrangements can lend financial support as the owner gets his or her business off the ground. Regulations spell out that only Alaska residents can own an interest or work in a cannabis business. “All Alaskans and only Alaskans, I understand that,” said Emmett, who had argued in favor of allowing a percentage-take of revenue. “I also understand the state needs new industry and more revenue. Only the old guard has money and either you have to be a part of that club or beg those people to give you money. Businesses are caught between a rock and a hard place. That’s why you see deals like this.” Miller argued to “let people use the tools that are available. If we shut those tools off, there will be less tools and less investment.” But the board’s attorney Harriet Milks of the state Department of Law said there is no intent to deprive new businesses of adequate investment. The idea is to keep out unwanted influences that could put a criminal element into legal operations. She also brought up the Cole Memo, a 2013 document by former U.S. Deputy Attorney General James Cole that outlines guidance for states’ legal, adult use cannabis industries. Under the Cole Memo, which is under review by the new leaders of the Department of Justice but is still the operating policy, as long as states maintain strict regulation that doesn’t leave open loopholes for criminal activity, the federal government would not look to enforce federal marijuana laws in those states. “We don’t want to attract unwanted federal attention,” Milks said. Those that already have a percentage-of-revenue in exchange for rent would be handled during the license renewal process, Milks said. “Licenses wouldn’t be revoked because of it,” she said. “We would have to discuss that.” Ad watch While on-site consumption proved the most hotly debated agenda item for the five-member board and that too will go out for public comment, a dispensary’s ability to promote its facility came in a close second. Currently, many of the violations cited by enforcement are due to advertising, said Enforcement Supervisor James Hoelscher in his report to the board. One of the intents of all advertising regulation is to avoid advocating or encouraging youth consumption of marijuana products, board member Loren Jones said. But not being able to sponsor public events as a marijuana business “demonizes the industry so that they can’t participate in community-building events,” Emmett said. The new regulations going out for public comment would specify that all promotions must take place inside the licensed business, not in a park or at a public event. New regulations also would separate business advertisement rules from product advertisement rules. Local control Questions about local government jurisdiction also will be going out for public comment. Currently, cities must be notified each time a license is granted to an operation in that jurisdiction. But the land-use authority may be a borough government and in rural Alaska, the local government in authority might be a Tribal entity. A new regulation would require notification to go to all relevant local entities that have separate duties over authorizing land-use and taxes. Board member Jones objected to notifying Tribes, which may own the land, saying it would open a can of worms and the legislature hasn’t yet “detailed ‘local’ government as much as maybe they should be.” Milks said Tribal notification is more complicated. “But I want to assure the public that the Department of Law is on it,” she said. “The question of Tribal government and jurisdiction is complicated, but the public can be assured we are working on it.” Handlers’ permits This measure would have amended regulations to say that an individual would be prohibited from obtaining a handler’s permit if they had committed a felony in the previous five years. This was amended to read two years after board members said smaller communities offer fewer employment opportunities and the businesses need to be able to hire as many employees as they need. The permit is necessary for all employees of a cannabis establishment, including cashier sales and janitors. Other matters taken up by the board related to industry quality control, plant count for new cultivators, removing the time limit on public objections, notification of crime on the premises within 24 hours, kief and testing trim and requirements for testing equipment failure. The matters sent out for public comment will be taken up at the next meeting, Sept. 14-15 in Nome. To comment on drafts of each regulation proposal, go to aws.state.ak.us/OnlinePublicNotices/Default.aspx

Board makes call about on-site cannabis consumption

A proposal that would allow on-site consumption of marijuana is now open for public comment after the Alaska Marijuana Control Board endorsed a measure opening the way July 14 during its meeting in Fairbanks. Working from one of three draft proposals, the board looked at a number of restrictions in lengthy debates before approving the on-site consumption measure. The public will be able to weigh in on these and other aspects of the concept: • The facility needs to protect employees from second-hand smoke by offering a screened off viewing area to monitor the floor where consumption takes place. • It also needs to be screened off from public viewing just as current regulations keep shop windows blocked from outsiders looking in. • Local governments would have the right to prohibit such facilities from allowing smoking if they chose. • Applicants would need to submit operation plans for addressing security, separation from the retail area and employee protections from second-hand smoke. • Smoking marijuana concentrates, known as “dabs,” would not be allowed. • Entertainment such as television, music or games would be allowed. The board voted 3-2 to give the public 60 days to comment rather than the minimum of 30 in order to allow local governments time to respond. The votes against came from Chairman Peter Mlynarik, the Soldotna Chief of Police, and Loren Jones of Juneau, who holds a public health seat. Rural Alaska member Mark Springer of Bethel and industry members Brandon Emmett and Nick Miller voted in favor. After the 60-day comment period, the measure will come back to the board for action to amend the proposal, adopt it or reject it. The longer comment period means it will likely be the November meeting in Anchorage before it comes before the board again. If they amend the proposal it will have to go out for comment again. If it is adopted, it goes to the Lt. Gov. Byron Mallott and becomes effective 30 days after he signs it. Should it be approved, Alaska would be the first state with legal recreational cannabis to allow on-site consumption. Miller, Emmett and Springer voted down Jones’ amendment to limit the amount of time a person could spend on-site to 30 minutes. That wouldn’t answer the request from the Anchorage Assembly and others for the board to come up with a legal place to consume marijuana products, they said. “It’s putting our police in the position of deciding low level marijuana crimes essentially against tourists,” Emmett said. Apartment renters also live under no-smoking requirements, and it’s against the law to smoke in a public park, though “green spaces” is where tourists are ending up, according to Anchorage Assemblyman Christopher Constant, who sponsored the assembly resolution. The Assembly passed it July 11, one day before the Fairbanks meeting, asking the board to establish a regulation for consuming in the dispensaries. “Why so overly strict and concerned about the amount of time a person would spend there?” Springer asked about the 30-minute proposal. “Tourists are looking for a place to go and consume,” Emmett said. “Going in and hurrying out is not an experience. Why not smoke in the park? It’s not realistic. (The plan) would place more restriction in a venue that’s generally safer than the currently legal bars where people tend to consume to get intoxicated, and get rowdy and crazy.” The hazards of secondhand smoke also hung the board up in long debate. Alaska’s law against it is meant to protect public health, Jones reminded the board. Even e-cigarette smoking is not allowed. A compromise was struck in the wording “unless otherwise prohibited by local ordinance” to allow governments their own say over smoking in a public facility, after the board’s attorney suggested the language. “We’ll find out if this is a concern through public comment,” Jones conceded. Separation between the retail portion of a dispensary and the on-site consumption portion received a thorough vetting. Bars typically offer open-air decks and yard space for smoking tobacco. Modeling an on-site consumption on that model may make sense, Springer suggested. Even “a plexi-glass shack out back” might answer the need for protecting the public from secondhand smoke, he said. They debated whether a separate structure should be required, but Emmett raised concerns this wouldn’t be necessary as long as a facility could create separate walled-off, well-ventilated space on the premises. Jones also wanted such facilities to keep to a minimal atmosphere of no music, television or games to discourage lingering. That also was voted down, making way for an on-site consumption site to offer entertainment within the social space. But there can be no smoking of tobacco or consuming alcohol on such premises, the board agreed. “Dab” use, the smoking of concentrated marijuana, also was deemed as “not for novices” and won’t be allowed on the premises due to its strong effect. The three-day meeting is the board’s longest since forming in 2015. The first day two days were dominated with taking up 42 license applications. One application was denied and another was postponed to the September board meeting after the board requested more information. A retail store application submitted by Carmen Perzechino called Alaska Native Cannabis Co. that was to be located on the premises of 37650 Ridgeway Street in Sterling was turned down due to a previous violation in that location. A second business, Goldhill Gardens, was told to resubmit paperwork for the September board meeting after the applicant did not present enough detail in the business plan, according to the board. Robert Mikol of Fairbanks was not turned down in his application, but was told to expand it to include more details about his plan of operations. Mikol had supplied brief answers due to objections that revealing sensitive details about plans makes business owners vulnerable. State law requires them to reveal where video equipment will be positioned, where the safe is located and floor layouts. The industry is cash-only because marijuana is illegal by federal law and businesses cannot access the regular banking system. “Mikol made the case, ‘I don’t want to give this out,’” said Emmett, who spoke to the board on Mikol’s behalf because he knows the former federal security contractor. “He feels it’s too much information. In his opinion, the application is too detailed. It gives away more information than it needs and invites criminals to check on you.” Mikol, reached later by the Journal for comment, said revealing information on the application — even Social Security numbers formerly were on forms that could be viewed by the public — creates unnecessary fears for the new businesses. “What if a bank were asked to keep only cash and reveal where it’s kept?” he said. “We’re asked to tell the layout and where the cameras are and where the back up to the video is located. It’s too much.” Some operations are in rural places, far from the closest responding Alaska State Trooper station. But Mikol said he went back to the application and filled out more details of his proposed operation for the board. It won’t be taken up until September at the Nome meeting, which will put him two months behind in opening, he said. At the end of the board meeting on July14, the board agreed they too are concerned about the amount of specific details revealed in the operation plans. They asked Emmett and Miller to give direction on what should be redacted from applications in the future to help protect the cash-only businesses. Two other businesses were not available when their names were called and so will not be issued a license: Raven’s Bud and Nature’s Relief, both of Fairbanks. ^ Naomi Klouda can be reached at [email protected]

Marijuana board set for marathon meeting in Fairbanks

Advertising attempts keep tripping up owners of the newly established cannabis shops and resulting in violations, and when the Alaska Marijuana Control Board meets in Fairbanks July 12-14, it will be taking a look at how to streamline ad messages that can be sent to the public. Owners cannot advertise health benefits of the bud or edibles; they can’t put prices next to products; and they can’t announce freebies. There has still been confusion, though, about what is legal. “That’s part of the reason we’re looking at advertising and we’re trying to clarify some of the regulations and addendums,” said board chair Peter Mlynarik. “We’re hoping the extra time will give us time to work on regulation projects we haven’t been able to before.” The three-day meeting will be the board’s longest since forming in 2015. It was a less expensive way to get an extra day’s work done than splitting into two meetings, Mlynarik said. Meeting time has been dominated with approving new licenses. At May’s meeting, for example, no regulations could be taken up due to the high volume of license applications. This time, 41 license applications are on the agenda. Among the 16 agenda items relating to regulations is an advertising matter on labeling and packaging that could “morph” into a broader discussion, Mlynarik said. “It is hard to say succinctly” what is legal and illegal in advertising, he said. “That’s part of the reason we’re interested in looking at an advertisement project.” So far, no one’s taken out a television ad and few try radio. Enlighten Alaska owner Jane Stinson will be airing a brief spot on KNIK Radio, preapproved by attorney Jana Weltzin, who specializes in the new Alaska marijuana laws. The 30-second spot was reviewed to make sure it carries the disclaimer required on all packaging and other regulations, Stinson said. “Advertising is tricky for us. We mostly have social media, and word-of-mouth is our best advertisement,” she said. No posters around town can announce sales or even talks about health and wellness associated with cannabis. Even pamphlets placed in offices are off limits as a way to get the word out. In May, an operation was cited for alleged advertising violations. High Bush Buds of Soldotna reportedly put on its website the CBD strain Skunk Haze “is appreciated for its medicinal value.” Another strain carried this description: “enjoy Pineapple Fields throughout the day to elevate mood, curb depression and stimulate motivation.” Those were illegal because they made “claims” about health, according to the citation. Facebook took down several business sites’ pages in early July with no warning and no explanation. Anchorage’s Enlighten Alaska, Arctic Herbery, Alaska Fireweed and Dankorage and two Fairbanks businesses — Frozen Budz and Pakalolo Supply Co. —all lost their pages, presumably to “not meeting standards” expressed in Facebook policies. “I did read about Facebook, and that didn’t have anything to do with our board,” Mlynarik said. The Facebook takedowns were likely due to federal laws, under which marijuana is still illegal. At the board meeting, two measures will look at advertising including labeling and packaging, and promotional activities. Another agenda item considering whether to allow on-site consumption facilities, similar to how bars function, also is back on the agenda. In Fairbanks, board member and marijuana license holder Brandon Emmett believes supply is an issue the board will be hearing about as it conducts the meeting there. “The industry is off to a crawl because we are still seeing shortages, reduced hours, high prices,” Emmett said. “One of the goals stated at conception of (the board) was to start to diminish black market influence. We’ve done that to a small extent, but there’s too much room for black market competition.” Shortages mean higher shop prices, Emmett said. Currently, it costs $65 for an eighth of an ounce and $75 for half grams of concentrates. On the black market, it costs $35 to $50 for an eighth of an ounce and $40 per gram of concentrate, he said. “As a board member and an industry representative, we need to get more businesses on line and capture the revenue, steal market share from the black market,” he said. One sign of the shortage is measured in tax revenue, he said. Predictions of $14 million in taxes were made for the first six months of operations. Instead, less than $2 million has been raised statewide, Emmett noted. “That’s a seventh of where we should be right now,” he said. Among other agenda items: • Handlers’ Permits: the proposals are two-fold. One would specify what criminal background convictions would prohibit an individual from obtaining a handler’s permit. The permit is necessary for all employees of a cannabis establishment, including cashier sales. The second part of this project, as the board calls its resolutions, is to allow a more convenient transportation between license classifications. If adopted, the new regulation would read: Marijuana or marijuana product may only be transported to a licensed marijuana establishment by a licensee or an agent or employee of a licensee. • Onsite Consumption Endorsement: Three proposals are up for consideration. The board can chose one of the proposals and amend it or put it out for public comment. Mlynarik’s proposal would permit establishments where eating cannabis products is okay but smoking is not. Board member Loren Jones’ proposal would limit the amount of time a person could spend in the establishment; smoking would be allowed, but there would be no entertainment sources such as television or pool tables. Emmett’s proposal would allow on-site consumption including smoking, and model regulations similar to bars. • Definition of “direct or indirect financial interest” The board will consider proposals to exclude a person’s ability to receive rental charges based on a percentage of the marijuana facility’s earnings when the landlord is not a licensee. The current exemption has the potential to allow a landlord, who is not a licensee, to be in a position to exert influence on the facility’s operations in a manner that is expected to be limited to licensees. • Local government regulation: The director of AMCO is required to give written notice of complete applications to “the local government with jurisdiction over the applicant’s proposed license.” This has been interpreted to be the most local form of government: the city. However, Title 29 of Alaska Statute grants planning and platting powers to the borough government, and with a few exceptions, that power is not delegated to city governments. The intention of the proposed draft is to allow the local government, whether it be city or borough, that has jurisdiction over a particular issue to be able to protest regarding that issue. For instance, a borough government may protest based on a land use issue but the city inside the borough may protest based on a tax issue. For a look at the complete agenda, go here. Naomi Klouda can be reached at [email protected]

Downtown cannabis shop gets green light; moratorium debated

Cannabis shops located in Downtown Anchorage were the subject of more than three hours of debate June 27 at the Anchorage Assembly meeting, this time the pros and cons of permitting what is considered the largest operation in Alaska. At the end of testimony from about 30 people, the assembly unanimously approved a marijuana license and special land use permit for Great Northern Cannabis Inc., in a vote of 9-0, with Assembly members Suzanne LaFrance and Fred Dyson excused due to illness. Great Northern Cannabis, or GNC, will open in mid-July at 541 W. 4th Ave., a 3,200-square foot historic building between Once in a Blue Moose and Kumagoro Restaurant. Bob Neuman, former owner of Rumrunners Old Towne Bar on E Street, brought the assembly a letter requesting to put a moratorium on downtown cannabis establishments. Members of the Downtown Partnership had signed it, including former Gov. Tony Knowles. “There are no regulations saying how many or where they can be located,” Neuman told the assembly. “Why can’t we put this on pause and plan?” Another downtown business owner, Wally Brooks, said he owns a building by the courthouse on West 4th Avenue, near the cannabis store Alaska Fireweed. For the past three years, he’s had a problem renting out office space largely because attorney tenants moved out due to “exorbitant parking fees.” He also blamed prospective tenant loss on the “pot shop” Alaska Fireweed nearby, which opened a few months ago in February. “When I show the space, they say ‘well I like your space but I don’t like your neighbors,’” Brooks said. “The last thing I need is another one.” Though testimony made it sound as if there are a lot of cannabis operations in Downtown, Jordan Huss, one of the 23 GNC investors and the company vice president, noted there’s only one cannabis business operating and it will be the second cannabis store granted a license in the area. Those opposing approval of the municipal permit to GNC were outnumbered by testimony favorable to the industry. Hillary Fischer, the granddaughter of May Jefford, who established a Downtown gift shop during World War II that is still in operation, said she helps out at Once in a Blue Moose during summer’s busy tourist season. “A lot of our tourists are happy to see (cannabis businesses) are open. Our elderly customers are curious, and they are more hip,” Fischer told assembly members. “They have their aches and pains, and ask ‘where can I get (cannabis) edibles?’ It might be illegal back home and they want to see a shop.” Steve Brashear, the CEO of GNC, detailed plans for the new store. “We don’t fit a stereotype. Our investors come from all professions, all walks of life,” he said. “We’ve already invested $3 million — $1.3 million to rebuild our facility.” The other $1.7 million is invested in a cultivation operation that will supply all of the retail shop’s cannabis products. They plan to employ more than 25 people in addition to the 10 employees working on cultivation. The 23 investors include two physicians, former Anchorage Assemblyman Patrick Flynn and former legislator and gubernatorial candidate Andrew Halcro. Well-established community members get involved in the industry for a variety of reasons. They bring different expertise, Brashear said. He is retired from the oil and gas industry where he was a longtime regulation compliance officer. He declined to say what company he previously worked for. “I’m not a cannabis consumer. I became interested in the business side. I’m comfortable with the regulations and compliance in this new industry because I’ve had a lot of experience following complicated regulations,” he said. “There’s still a stigma to this industry. A lot of companies may have a conservative view. I wouldn’t want to associate a previous employer with something they don’t advocate for and so I would rather leave them out of it.” Because the federal government has not legalized marijuana, banks cannot loan investment funds to cannabis businesses. The $3 million for GNC was raised through private investors. And those investors had to feel it was a good risk, Brashear said. Because it’s a new industry, all Alaska investors are essentially starting on the ground floor. No large companies have established a dominant hold on the market, Brashear said. “It’s a rare opportunity for people to start out on an equal footing. It’s an exciting time to be involved in a new industry,” he said. GNC is a vertically integrated business and therefore controls its own pricing from the point of cannabis cultivation to manufacturing its products such as oils and edibles, to cashier sales. “It’s a good business model. You have control over quality, quantity and pricing and you can pass good pricing on to the consumer,” he said. Assemblyman Christopher Constant, who represents Downtown, objected to testimony that erroneously stated multiple cannabis operators were open in the area. He asked numerous questions from his assembly seat of people who testified. “If you stretch the boundaries a bit, there are two Downtown, counting another business down by the Lucky Wishbone,” he said. “One person said (in an email to the assembly) there were three on one block. Another one said 17, and that simply is not true.” Some members of Downtown Partnership who signed the letter referenced by Bob Neuman withdrew their names from it after finding out the numbers it was based on were false, Constant said two days after the meeting. He also challenged the request for a “pause” or further vetting cannabis openings in Downtown before the assembly issues more land use permits. The Downtown Community Council has actively taken a part in hearing proposals, making suggestions and keeping communication open with future operations, he said. Each one must be licensed by the Alaska Marijuana Control Board in addition to other steps involved in meeting regulations. Tight state laws are already in place to monitor them, including the ability to shut one down in the annual license renewal requirement, Constant said. The assembly left issues such as limiting numbers of businesses in any given area of town to “market forces to sort themselves out,” he noted. One of the more conservative members of the assembly, Amy Demboski, also questioned those testifying. “If there is a negative impact, there won’t be a license renewal,” she assured those objecting to GNC’s permit. Jordan Huss, one of the investors whose expertise is in cannabis cultivation, worked through issues with the Anchorage Community and Economic Development Committee, of which Demboski is a member, to explain GNC’s plans. He credits the background work of these discussions to help bring even conservative members around. “Twice now we appeared before them. We had good discussions,” Huss said. “We listen, we’re available and we’re actively involved in the community. She (Demboski) saw through the moratorium request because we’ve made two appearances before the committee, and she knows what we intend to do, that we are going to be good operators and contribute to the community.” Assembly Chair Dick Traini, who represents Midtown, noted that most of the Anchorage cannabis businesses are in his area. “There is no reason to treat Downtown differently,” he said. Once renovations are complete on the building, GNC plans to have a “soft opening.” It’s taking longer and more money than expected to fix the former Alaska souvenir shop. “It was built in 1945, and went through the (1964) earthquake. When we took possession of the building, there was more damage then we realized,” Brashear said. When they lifted the building, they found the footings consisted of concrete poured into coffee cans. “How it stood all these years is a mystery,” he said. Architects and construction crews worked together to jack up the building and place a new foundation underneath. The building was gutted and rebuilt. When it’s opened, the design calls for a front retail area for accessories, t-shirts and glassware related to cannabis. The back half will be the cannabis retail area, separated by a glass wall, with security posted at the entrance to each of the two sections. “We’re on an aggressive schedule to capture some of the tourist season,” Brashear said. “We’re not done engaging with the community. That is part of being a good neighbor and we enjoy it.” ^ Naomi Klouda [email protected]

Alaskan delegation pushes parallel cannabis bills

Where will state and federal law collide when it comes to marijuana laws? That’s the question Sen. Lisa Murkowski put to Deputy Attorney General Rod Rosenstein June 13 during a Senate appropriations subcommittee meeting. Marijuana businesses largely cannot access the banking system, Murkowski noted, and another problem lurking on the horizon for states that have legalized marijuana and now collect taxes on cannabis businesses is that the “U.S. Postal Inspection Service has suggested that marijuana tax payments sent to the Alaska Department of Revenue are subject seizure,” she said. The Department of Justice also wants to eliminate the current fiscal year appropriations language prohibiting federal interference with medical marijuana laws. “So, I am concerned, and I’m speaking for a lot of people in my state who are worried about the inconsistency between the state marijuana laws as well as the federal policy,” she said to Rosenstein. Rep. Don Young also is focused on federal policy right now as a member of the Congressional Cannabis Caucus. Even though he doesn’t personally advocate for the use of marijuana, he views the matter as a states’ rights issue. Two days after Murkowski’s questioning of Rosenstein, she and Young introduced parallel bills in the Senate and House titled the Compassionate Access, Research Expansion and Respect States Act, or CARERS, would amend federal law to allow states to set their own medical marijuana policies. The Senate legislation was also sponsored by Democrats Kirsten Gillibrand of New York, Cory Booker of New Jersey and Al Franken of Minnesota, along with Republicans Rand Paul of Kentucky and Mike Lee of Utah. The CARERS Act would allow states to import cannabinoid oil, or CBD, which is currently prohibited and Alaska marijuana retailers ran afoul of the law in the form of state enforcement raids and seizures of products they believed had legally been brought into the state. So far, the Department of Justice has not taken the position that state marijuana laws are completely preempted by the Controlled Substances Act, or CSA, the laws that establish U.S. drug policy. Under that act, marijuana is listed as a Schedule One controlled substance, the same class as heroin, LSD and ecstasy. Murkowksi cites the Cole Memo, written by former Deputy Attorney General James Cole in 2013 that essentially states that jurisdictions with legalized marijuana are less threatening to federal priorities if they have implemented “strong and effective regulatory and enforcement systems to control marijuana growth and distribution.” She argues Alaska has enacted just such a set of laws. The Cole memo gives wide discretion on whether to prosecute state legal marijuana enterprises but hinted that it’s probably not a prudent use of federal resources to focus enforcement on state legal businesses. “I don’t know if you are headed in that direction — the Cole Memorandum suggests deference to strong state laws but we’re not seeing the federal government doing much to ensure that those strong state laws are enforceable,” Murkowski told Rosenstein. “So, the bigger question is, where are we heading with marijuana?” The first opportunity to vet that question occurred in a Commerce, Science, Justice Appropriations Subcommittee hearing with Rosenstein testifying. “It’s a difficult question because we do have a conflict between federal law and the law in some states,” he said. “…I’ve talked with Chuck Rosenberg, the administrator at DEA (Drug Enforcement Agency), and we follow the law and the science. From a legal and scientific standpoint, marijuana is an illegal drug. “It is properly scheduled under Schedule One. Jim Cole tried to deal with it in the memorandum and at the moment it is still in effect. Maybe there will be changes to it in the future, but we are still operating under that policy.” He concluded, “As (former) Attorney General (Loretta) Lynch said at her confirmation hearing in January 2015, she explained we’re responsible for enforcing the law, it is illegal, and that is the federal policy with regard to marijuana.” Murkowski wasn’t satisfied with the Rosenstein’s response, she said. She will be talking with other senators from states who have more broadly legalized marijuana as to whether legislation to put the federal government on the same page as states is viable. Nine states voted to legalize marijuana for recreational use, including Washington DC. Another 20 states have legal medical-only marijuana laws. The Cole memo states that the DOJ will not enforce federal marijuana laws against those compliant with strong state regulatory regimes, Murkowski aide Karina Petersen wrote in an email. “The (Attorney General Jeff) Sessions’ Justice Department has not withdrawn the Cole Memorandum although changes may be possible. The premise of Sen. Murkowski’s comment to Deputy Attorney General Rosenstein last Tuesday (June 13) was that the federal government is on the one hand supportive of state regulatory regimes and on the other standing as an obstacle to the effective administration of those strong state regulatory regimes.” Murkowksi believes a legislative response may be required to put the federal government on the same page. “But that legislative response would come more easily if the administration were working with states like Alaska rather than working against our state,” Petersen said. Murkowski was hoping that the deputy AG would make a commitment to work with Alaska and others similarly situated to make this all work. “Instead the federal government seems to be moving in the other direction. Not helping states like ours clear impediments like access to the banking system or ensuring tax payments can be sent through the mail,” Petersen said. “It is also trying to turn the clock back on the established congressional policy prohibiting federal interference with state medical marijuana regimes. The CARERS Act, which Sen. Murkowski has co-sponsored, establishes a clear policy of federal non-interference with state medical marijuana laws.” Through a staff level marijuana working group, Murkowski plans to discuss the problem with other offices to determine whether legislation fully eliminating federal obstacles to broader state marijuana laws is viable. At the moment, Murkowski doesn’t believe it is viable or advisable to pursue legislation completely legalizing marijuana on a federal level. A number of states don’t want to go where Alaska has gone and their decisions are also deserving of respect, Murkowski has said. There are numerous bills pertaining to wholesale marijuana reform in the House of Representatives this year and Young is involved in many of them. “I strongly believe in this issue as a matter of states’ rights,” Young said upon launching the Congressional Cannabis Caucus. “Because of the conflicts between Federal and State law, marijuana-related issues are no longer theoretical—they are real, and they are affecting real people in Alaska and across the country.” The issues in the House he is most focused on are banking, the intersection of legal marijuana, second amendment rights, and the effect on tribal issues. Young has sponsored bills to require the federal government to respect state laws legalizing marijuana, to remove it from the Schedule One 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. Perhaps the most immediate relief for marijuana-legal states is in the 2018 fiscal year spending bill. Language inserted there would bar the DOJ from using federal resources to prosecute individuals who are otherwise in compliance with their state laws, said Matt Shuckerow, Young’s spokesman. “It is extremely likely that the amendment will once again be included in the FY 18 spending bill, given that it has be enacted into law — in a bipartisan manner — since 2014,” Shuckerow said.

Marijuana board will revisit onsite consumption at July meeting

The Alaska Marijuana Control Board will discuss three options for onsite consumption proposed by board members at its next meeting July 11-14 in Fairbanks. • Scenario 1: You walk into an establishment where it’s okay to smoke marijuana. There are no pool tables, no dart games, no televisions. Just couches or chairs and coffee tables for a social ambiance. “This space is to try marijuana or a marijuana product and then to leave,” according to board member Loren Jones’ proposal. • Scenario 2: You walk into an establishment where it’s okay to eat cannabis products such as candy, cookies, brownies, etc. But it’s not okay to “inhale” or smoke marijuana on the premises under the proposal by Solodtna Police Chief and board Chair Peter Mlynarik. • Scenario 3: You walk into an establishment where it’s okay to smoke and eat cannabis products. Similar to rules governing bars, employees watch for people who over imbibe. Consuming marijuana not purchased at the location is prohibited. To mitigate second-hand smoke and odor the facility must invest in a good ventilation system under the proposal by member Brandon Emmett. Several businesses have filed applications for onsite consumption, indicating they are ready to go once licensing is in place, according to their applications: Pakalolo Supply Co., (Fairbanks) Alaska Fireweed (Anchorage), Remedy Shoppe (Skagway), Cannabis Corner (Ketchikan) and the Green Elephant (Juneau), Stoney Moose (Ketchikan) and the Rainforest Cannabis (Ketchikan). But an onsite endorsement by the board isn’t likely until 2018, said Emmett, an industry representative from Fairbanks. That’s because the matter won’t come up for vote until the August hearing at the earliest, following a 30-day public comment period. “The language must be put out for public comment,” MCB Executive Director Erika McConnell wrote in an email. “The board then sees the language and the comments. If the board makes substantive amendments to the proposal, it must go out for public comment again.” At the time when they make no substantive amendments, the board may adopt the regulation. Then it goes to the Department of Law for review. “Assuming it is all ok with DOL, it goes to the Lt. Governor’s Office for signature. The regulation change becomes effective 30 days after being signed by the Lt. Governor,” McConnell wrote. Emmett brought on-site consumption back to the drawing table in March, after it was tabled by a 3-2 vote at the February meeting. The March “aye” votes came from members Emmett, Mark Springer and Nick Miller. Back in February, when dropping the onsite regulation was approved, the “ayes” were members Mlynarik, Jones and Mark Springer. Jones, who suggested a two-year moratorium for onsite consumption in his proposal, cited what he called overwhelming public testimony opposed to such establishments. Springer spoke about “going slow” and staying out of the spotlight while seeing what happens on the federal level. “We have a new administration in Washington and a new attorney general who has made it quite clear that is more friendly with the KKK than he is with marijuana,” Springer said, according to the meeting minutes, referring to a joke by Jeff Sessions in the 1980s when he said he thought the KKK was OK until he found out they smoked pot. Members expressed concern that allowing onsite consumption would wave a red flag at federal officials who may be inclined to crack down on states that have legalized recreational use. “We don’t want a million people getting off of cruise ships in Juneau saying it’s great that they went to half of the stores and were able to smoke marijuana,” Springer said. Taking it off the table related to a technical error in the public notice process. After it was put back on, McConnell requested the board work from a single proposal after receiving three. “When people voted yes on Ballot Measure 2, they voted to regulate it similarly to alcohol, and consumption venues are part of that,” Emmett argues. In its newest incarnation, three board members proposed drafts for onsite consumption regulations. Jones, who holds a seat reserved for a member of the public on the board, wants clear delineation between retail and consumption. He also would disallow any TV, pool tables, darts, or the like in the consumption area. Mlynarik’s draft allowed on-site consumption but applied certain restrictions, including prohibition against smoking. He said he wanted to address concerns from the public about both second-hand smoke protections for employees and the public municipal laws that outlaw smoking in public places. Emmett’s proposed draft would allow on-site consumption separated from retail and carry myriad rules similar to bars. Local consent from authorities and annual renewal would be other conditions for monitoring the establishment. “We’re trying as a board to create a new regulation after the first project went by the wayside,” Emmett said. “There was a lot of comment by the people that wanted a smoke-free work environment. We’re trying to look at how we can craft legislation for those concerns and others that were expressed. Our goal is to come up with something — or nothing. “ The current “project” is essentially starting over. The public will not be able to comment on agenda items at the Fairbanks meeting in July. But they will be able to send in public comment between now and then, addressed to [email protected] Lengthy agendas According to the most recent tally, Alaska issued 198 marijuana licenses statewide between Oct. 5, 2016 and May 15. McConnell said there isn’t a backlog in new businesses needing licenses to operate. But the board runs out of time to deal with regulations such as putting onsite consumption to a vote because there are many licenses to approve at each meeting. To accommodate all the activity, the July meeting will be the longest since the board’s creation covering three days at the Fairbanks North Star Borough Assembly Chambers at 901 Airport Way. “The board opened almost a dozen new regulations projects at their May 15 meeting, and consideration of existing open regulations projects had to be postponed twice (April and May),” McConnell wrote in an email. The board’s addition of a third day to their July meeting is to make sure they are keeping up with both the applications and the regulations projects, McConnell said. Other matters considered by the board at the May 15 meeting: Handler permits and transportation regulations: Mlynarik sponsored a regulation meant to clarify cases where a handler permit cannot be issued: if a person had a felony conviction less than five years previous or if the person is on probation or parole for a felony. A permit would also be denied in cases where the applicant had a misdemeanor conviction of distributing marijuana, or is currently under indictment, or fails to disclose previous relevant criminal history. In the same regulation section, Mlynarik also seeks to simplify transportation transactions. Under current law, a licensee of one type cannot transport cannabis products to a licensee of another type. “We are trying to clean them up to allow more versatility for transporting product. Right now it’s pretty restricted,” Mlynarik said. “Right now (regulations) allow a cultivator to take marijuana to a retailer, but a retailer can’t take it back to the cultivator. The changes will allow more free flow between license types.” If it passes, all license types would be able to transfer to one another. Lowered tax on “shake” products: The board approved a measure asking the Alaska Department of Revenue to lower the tax currently applied to the shake, or flower of the cannabis plant. That measure is now awaiting approval by the Department of Revenue. If approved, a levied $15 tax per pound will drive down prices on concentrates, which also are often used for medical conditions and food items. Emmett, an industry representative on the board who has a manufacturing license, proposed the reduction. Currently, under the $50 per pound tax, the shake portion of the plant is often worked into stems and leaves mixtures because it’s not advantageous to sell. Ten pounds of flower make one pound of concentrate. At $50 tax per ounce, it adds up to a hefty sum, he said. “If you are already paying $8,000 for 10 pounds before you get any revenue, then it comes to a point that concentrate manufactures will destroy it (the flower) if its not up to the standard of the competing products on the market,” Emmett said. “A drop in the bucket is better than a dropout. If it’s not sold at all, it brings in no tax revenue.” Between now and the July public members can write to the Marijuana Mailbox to make comments on any proposed regulation or other matter related to cannabis operations. Naomi Klouda can be reached at [email protected]

Owner dies day after state shut down her Anchorage cannabis club

One of the flashpoints of the nascent Alaska marijuana industry and its founder are both gone. Pot Luck Events — the Downtown Anchorage scene of industry war meetings during the furious regulatory development stages of 2015 and unofficial social nexus for the cannabis industry — was shut down after the unofficial marijuana holiday of April 20 following pressure from the state. The next day, April 21, owner and founder Theresa Collins died after a yearlong bout with ovarian cancer. Collins was a prominent organizer and advocate both before and after the ballot initiative that legalized recreational cannabis in 2014. As a sendoff, Pot Luck Events is planning a memorial for her April 29. Attempts to reach other partners in the business were unsuccessful. Collins lived just long enough to see her passion project shut down by a state action long in the making. In an April 19 letter, newly minted Alcohol and Marijuana Control Office director Erika McConnell told Pot Luck Events that the time had finally come to close. The law, she wrote, is significantly more developed now than in the summer of 2015, when Pot Luck Events balked at similar notices that their business was illegal. “Today, I can say with confidence that your business model is not supported by the law and you must cease operating as you have been,” she wrote. “It is AMCO’s hope and expectation that you will use this as an impetus to redirect your vision and resources toward lawful operations.” Though the closure and Collins’ death sent shockwaves through Alaska’s cannabis scene, officials said the move is as much about preserving the industry as punishment. McConnell backed her order with most of the same arguments the state has used to oppose marijuana social clubs, including fear of a hostile White House. President Donald Trump’s administration has shaken the cannabis industry nationwide, with Attorney General Jeff Sessions and White House press secretary Sean Spicer both denying medical marijuana efficacy and hinting at increased federal drug enforcement. “(Pot Luck Events) is vulnerable to federal enforcement,” she wrote. “And unless the board uses its enforcement powers to issue violations for your business, Alaska’s entire regulatory scheme could attract unwanted attention from the federal authorities.” McConnell also referred to a September 2016 opinion from state Attorney General Jahna Lindemuth that social clubs are illegal. “When Alaskans voted in 2014 to liberalize personal use of marijuana and to allow a commercial marijuana industry, they also voted to prohibit public consumption of marijuana,” said Lindemuth in a statement. “Unlicensed marijuana social clubs are public places like any other place of business — such as cafes, movie theaters, or retail stores — where marijuana consumption is not allowed by law.” Up till now, Pot Luck Events, the State of Alaska and the Municipality of Anchorage lived in a kind of staring contest. The Marijuana Control Board batted back and forth on the issue of marijuana social clubs when it was crafting industry regulations in 2015. It eventually decided that it had neither the authority to ban them or to allow them. The business model did not fall into the four license types defined by Alaska law. The board asked the Legislature to define the clubs in statute, but lawmakers never spoke an official word about the issue. Getting either police or regulatory enforcement onto the issue never happened, though officials tried subtler attempts. Former AMCO director Cynthia Franklin threatened to withhold a holiday party liquor licensed from the real estate owner because of the club’s presence on his property. Collins, however, refused to close. She was convinced it broke no laws as the club depended on private memberships and therefore did not qualify as a public space where marijuana use is forbidden. McConnell made it clear that Pot Luck’s closure doesn’t mean the state won’t still consider the much-debated and long-delayed onsite consumption provisions. “As you know the MCB will be reviewing new proposals for onsite consumption—they were scheduled for the last meeting, but approving licenses was given priority,” she wrote. “They are on the agenda for May 15.” The closure rides a new wave of enforcement actions, and could be a sign of things to come. “Enforcement is getting busy,” said Cary Carrigan, executive director of Alaska Marijuana Industry Association. “They’re certainly being more proactive.” The first months of 2017 have been marked by an increased enforcement presence. Marijuana Control Board meetings more heavily involve extended discussions of violations centered around unclear regulations, including the statewide seizure of imported CBD products. Retailers are getting more warnings. On April 17, two days before the Pot Luck closure letter and just before the unofficial marijuana holiday of April 20, AMCO sent a letter to a cluster of cannabis businesses in the state warning them that the kinds of celebrations they were planning would land them in hot legal water. “Over the past week the AMCO Enforcement Unit has discovered an alarming amount of social media advertisements for 4/20 celebrations at marijuana retails stores that are in violation of 3 AAC 306.360 (d). Games, competitions, raffles, etc. are strictly prohibited at marijuana retail stores,” the letter read. “Please be advised that if a 4/20 event held on your premises includes activities that violate any section of 3 AAC 306 further enforcement action may be taken against your license.” Carrigan said he understands the impetus for enforcement, but that the industry is rankled that it seems more geared toward licensees. The state’s regulations, he said, are so often unclear that it seems like misdirected effort to go after otherwise law-abiding business owners while outright lawbreakers go unpunished. As in prior Marijuana Control Board Meetings, Carrigan mentioned cannabis delivery service ACDC and the several unlicensed dispensaries. “I just wish they were more stringent with people way outside the law, cracking down on the black market,” he said. Correction: The original version of this story incorrectly named Theresa Collins as Theresa Peterson. We apologize for the error. DJ Summers is contributor to the Journal and author the Business of Cannabis, set for publication in 2018. He can be reached at [email protected] or followed on Twitter @djsummers87.

Enforcement, industry members ask for cannabis rule clarity

Alaska’s cannabis industry needs to get enforcement off its back if it wants to develop quickly enough to take advantage of the summer tourism season, but that will depend in large part on the ongoing process of clarifying regulations. “I think these are the growing pains of the new industry,” said Alcohol and Marijuana Control Office chief enforcement officer James Hoelscher. “This is something we’re going to have to deal with. Regulations need changing after we see them in action, evaluate them from the beginning to the end…then we can bring it forward to the board for them to clarify. I don’t think there’s an easy way around that.” Hoelscher and industry leaders agree there is a vicious cycle at work. In response to short staff at the Alcohol and Marijuana Control office and foggy Marijuana Control Board regulations, business owners will sometimes interpret regulations to the best of the own ability — which often leads to violations, which can take anywhere from four hours to two weeks worth of time for AMCO to investigate, Hoelscher said. The already slowly developing Alaska industry gets set back even further when AMCO and the Marijuana Control Board take time sorting through the complications. The Alaska industry is slowly but steadily growing. There are now 72 operational cultivators, retailers, testers and manufacturers in the state, with more on the way. Explanations for the pace of Alaska’s cannabis industry development — which lags behind the booms of Lower 48 states that legalized marijuana — range widely, with a kernel of truth in each. Alaska’s unique geography and transportation hurdles contribute, along with a lack of easily accessed in-state capital, an understaffed AMCO and local opposition from towns and municipalities. At the most recent Marijuana Control Board meeting on April 5-6, stakeholders spent the first hours begging the board to hold a May meeting. The industry needs every supply advantage it can get, they said, or the black market will pick up the slack when tourists flood Alaska’s coasts and towns come June. Growers, many of whom are still sorting through kinks after the first growing cycle, need time to develop crops. Industry attorney Jana Weltzin even suggested waiving renewal fees for licenses not in an active status to spur growth. “When the tourism season hits, we’re going to leave a big gap for the black market,” she told the board. “There are black market actors who have no intention of slowing their operations …they are going to be putting in large orders from the United States.” Shortly after, Hoelscher spent several hours with the board sorting through a range of regulatory violations issued to businesses who seemed to misunderstand rules about transportation, manufacturing, and packaging. Regulations and interpretations Clarity is at the heart of much of the regulatory confusion. Getting people to follow the rules, Hoelscher said, means making the rules understandable. “What I’m talking about is making them easier to understand,” Hoelscher said. “Any regulations written by anybody should be easy to understand. We should not have the opportunity for people to operate in gray areas.” Cary Carrigan, executive director of the Alaska Marijuana Industry Association, said the industry simply hasn’t sorted through the regulations yet. “The process has moved so ponderously in the past two years” he said, “that we’re getting to a point where we have regulations and we have to make sure they’re workable. People rather than waiting are trying to interpret them to the best of their ability. The amount of time that went between when they made these regulations and now, there was no time for interpretation.” The board spent a fair deal of time of April’s meeting sifting through the regulations and proposing rewrites where needed. Transportation continues to be a problem for Alaska’s geographically disparate marijuana industry. Hoelscher mentioned several citations. Some manufacturers have picked up product from cultivators, which the regulations do not allow. Transportation through air cargo is still a problem, with companies using federal airspace, and federally-funded municipal airports like Juneau, to ship cargo throughout the state. Other regulations needed clarity following citations. Cultivators had been cited for selling keif — marijuana dust often produced in the trimming process — which the regulations say is reserved for manufacturers only. Packaging and advertising still needed clarity as well. AMCO has cited businesses owners for advertising through social media without appropriate warnings and for advertising free or discounted products. AMCO had also observed companies selling cannabis products in child-proof, re-sealable packages inside brown paper bags, which meets regulatory requirements, but only after a demonstration from retail shop Arctic Herbery and a discussion. Hoelscher made it clear that the enforcement staff’s job is to follow the letter of the law; interpretation is for the board and for legal counsel. “Unless the law is clear, many make the assumption that operation within gray areas without staff or board clarification is an acceptable practice, which it is not,” explained Hoelscher. “If licensees are unsure of the statutes or regulations, they should contact our office for clarification.” Contacting the office, however, is not a viable option in the thick of business operations, stakeholders said. Nick Miller, a board member, retail shop owner and president of the Anchorage Cannabis Business Association, said reaching AMCO staff for clarification isn’t always possible. “When I get into that situation, it’s because I’m in the middle of doing something and it’s unclear, and I need a timely answer,” he said. “I have nothing to do but go ahead with my plan. I relate it back to the staffing issue. If someone is planning something, or wants a clarification … there should be a hotline you can call.” A hotline, though, won’t likely come too soon. AMCO is already under budgeted for what it says it needs, and has repeatedly requested additional staffing funds from the Legislature. Until then, leaders are trying to put together help for business owners. Miller said ACBA recently established a committee to create a reference handbook for businesses, comprised of the lessons more experienced members have learned. Similarly, Alaska Marijuana Industry Association executive director Cary Carrigan said his organization wants to help with clarity. “If people have problem with interpretation of regulations, we ask them to contact us,” he said. “We’re trying to make sure all the corners of the state know what’s going on.” History of violations The Alaska cannabis industry has racked up a long history of stepping through blurry lines. The board and AMCO have spent arguably as much time dealing with controversies and regulatory violations as writing regulations or reviewing and issuing licenses. Before the Marijuana Control Board was even established, the state was faced with the alleged pot delivery services Discreet Deliveries and ACDC (which is currently advertising on radio for deliveries), along with former broadcaster Charlene Egbe’s alleged unlicensed dispensary Alaska Cannabis Company. Shortly after the Marijuana Control Board was created, a new gray area arose with cannabis social clubs like Green Rush Events and Pot Luck Events, where patrons pay a membership fee to bring their own cannabis to consume on site. This demanded a hasty rewrite of code, several board meetings and missives, and requests that the Legislature step in to help — which it has not done. Later, enforcement ran into more problems as green crosses started popping up across the state, allegedly signs of unlicensed pot dispensaries. More recently, Alaska gained national attention when AMCO enforcement seized several retail shops’ CBD oil products imported from Colorado, not tested or packaged or tracked in Alaska. Owners received violations and each claimed that they assumed the import and sale were legal, though none verified this with AMCO staff before importing or selling the products. Companies began selling pre-rolled joints, which again demanded board time and a regulation rewrite to determine whether they should be classified as a manufactured product. Summer fun The summer of 2017 needs to grease as many skids as it can not only in getting the industry up and running but in avoiding federal scrutiny. President Donald Trump’s administration sent shockwaves of fear through the industry when both press secretary Sean Spicer and Attorney General Jeff Sessions made comments hinting at increased enforcement of federal marijuana laws. In this light, enforcement officials say it’s probably better to err on the side of caution. “It is a heavily regulated industry, and it’s done that way for a reason,” said Hoelscher. “If they’re trying to rely on their own understanding … they might be doing more harm than good.” Alaska’s cannabis entrepreneurs do have support from their congressional delegation and from their governor. In an April 3 letter, the governors of Alaska, Colorado, Oregon and Washington addressed Sessions and U.S. Secretary of the Treasury Steve Mnuchin about the perceived threat of an uptick in federal marijuana prosecution in states where marijuana is legal. Together, the governors asked the Trump Administration to “engage with (them)” before changing the way the federal government enforces marijuana laws. “We understand you and others in the administration have some concerns regarding marijuana,” reads an April 3 letter cosigned by the governors of Alaska, Colorado, Oregon and Washington. “We sympathize, as many of us expressed apprehensions before our states adopted current laws. As governors, we have committed to implementing the will of our citizens and have worked cooperatively with our legislatures to establish robust regulatory structures that prioritize public health and public safety, reduce inequitable incarceration and expand our economies.” To date, 29 states and the District of Columbia have legalized either adult use or medicinal cannabis. Colorado and Washington legalized adult use of marijuana in 2012, while Oregon and Alaska legalized it in 2014. In 2016, another four states did the same. DJ Summers is a correspondent for the Journal currently working on a book on cannabis due out in 2018. He can be reached at [email protected] and followed on Twitter @djsummers87.

Marijuana board returns to onsite consumption regulations

The pursuit of retail onsite consumption of legal cannabis in Alaska is not going away. The Marijuana Control Board, which crafts all regulations for the state’s cannabis industry, voted to begin a regulation project for onsite consumption only a month after voting down a set of regulations that would have advanced it. Alcohol and Marijuana Control Office staff will review the regulations and post them for public comment before March 20, when Erika McConnell is set to take over the position of AMCO director. Onsite consumption provision for retail stores in Alaska would allow a separate, independently ventilated room for customers to purchase and consume product from only that store. For Alaska’s 2 million annual tourists, industry stakeholders say onsite consumption provisions are essential, as tourists will have nowhere to smoke without them. In February, the board erred on the side of caution and voted by a split of 3-2 not to advance a set of regulations. Though he supported the initial idea of onsite consumption, board member Mark Springer’s typical swing vote went against moving the idea for safety reasons. “It will draw a big spotlight on us,” Springer said. “We don’t want to be waving a red flag in front of federal law enforcement, at least not now.” Springer voted on March 7 to open it back up when member Brandon Emmett introduced the motion. Even though the board will consider a regulation package, it doesn’t mean Alaska shops will definitely be able to open pot cafes anytime soon. The board’s vote simply opens the plan back up to public comment. “What we killed in the last meeting was the standards which they must meet,” explained member Nick Miller. “I’m not sure it’s a reversal. They’re at least willing to talk about it for a regulations project. That doesn’t mean it’s going to pass.” Springer said he would never kill a discussion — even though he meant to kill the issue entirely in February. Like many industry members, Springer believes Gov. Bill Walker’s administration could have some antipathy to the developing industry. It isn’t certain he’d vote in favor of it next time, but he did say that next time could be different. “We voted to kill the regulations last time,” said Springer. “I’d never vote against a regulations project. We’ll see what it has in it, whether there’s been any change in the tide.” Emmett’s plan didn’t come easily. This marks the latest in a series of procedural issues with onsite consumption. Both the board itself and the Alcohol and Marijuana Control Office have flubbed regulations or misunderstood them. Prior to the February meeting, AMCO staff failed to send out a public notice on the onsite consumption regulations three times. Acting AMCO director Sara Chambers described these as “staff errors” and has apologized for the delays on several occasions. “I have only been with the agency since January 10, so I am not sure why the errors occurred,” wrote Chambers in an email. “However, they were purely administrative in nature, and we are working to ensure that systems are in place and proper training of staff is provided so similar problems are avoided in the future.” When it halted the regulations in February, the board itself overlooked the fact that it had already approved several business licenses that had plans to ask for an onsite consumption provision. In the end, the board had to take a vote that in effect clarified what it had voted to do during the February meeting. For much of the meeting, the board spun itself on a Robert’s Rules of Order hamster wheel, confused as to whether or not it had previously banned all onsite consumption for good, banned it only temporarily, allowed onsite consumption for five businesses, or allowed it later on for whatever businesses submitted an acceptable plan. Chambers and board members each clarified that their intent had never been to approve any onsite consumption applications until the board made a framework. Board member Loren Jones said he disagreed with the entire concept of approving onsite consumption licenses without a regulatory plan — which board staff said was the implications of its former vote. “This board cannot on an ad hoc basis, by default, approve something that has so much potential in the public and in an industry without a set of rules,” said Jones, the public health designated seat on the board. “I can’t accept that the staff would even think we would approve an onsite consumption outside of a set of regulations.” In the event that onsite consumption gets the go-ahead from the board, customers will have joints to smoke. To start the meeting, the board OK’d pre-rolled joints, or prerolls, to be sold in stores. Previously, the board had questioned whether prerolls were a manufactured project or simply a packaged product. The problem has to do with licensing. If prerolls were a manufactured product, they would have to come from a manufacturing facility, meaning there would have to be an extra step or transport, expense, and red tape between growing pot and selling it in a scrap of paper. “Based on those regulations, they can,” explained cannabis retail Miller. “It should be clarified that nothing can be mixed or included in that marijuana…then it becomes a product.”

Senators call for cannabis clarity

Whether or not a fear of federal marijuana crackdown is justified or overblown, Congress isn’t happy with the White House. Only days after remarking that “we don’t need to be legalizing marijuana,” Attorney General Jeff Sessions has evidently assured Congressional Republicans including legalization supporter Sen. Rand Paul that the Department of Justice will support states rights, according to Politico. Still, on March 2, a group of U.S. senators including Alaska’s Lisa Murkowski wrote a letter to Sessions asking for assurance that the federal government will not take any actions against those states that have legalized adult use cannabis. The senators come from both sides of the political aisle, both from states that have legalized adult use marijuana and some that have not, including Sens. Elizabeth Warren (D-Mass.), Lisa Murkowski (R-Alaska), Patty Murray (D-Wash.), Ron Wyden (D-Ore.), Jeff Merkley (D-Ore.), Maria Cantwell (D-Wash.), Ed Markey (D-Mass.), Brian Schatz (D-Hawaii), Catherine Cortez Masto (D-Nev.), Cory Booker (D-N.J.) and Michael Bennet (D-Colo.) "It is essential that states that have implemented any type of practical, effective marijuana policy receive immediate assurance from the DOJ that it will respect the ability of states to enforce thoughtful, sensible drug policies in ways that do not threaten the public's health and safety," the senators wrote. "This ensures that state infrastructure, including tax revenue, small businesses, and jobs, can be protected; DOJ resources can be used most effectively; and most importantly, that marijuana can be properly regulated to improve public health and safety." The senators point to the Cole Memorandum, a guidance letter which among other things told the Department of Justice to not prioritize marijuana enforcement where complies with state law. “We respectfully request that you uphold the DOJ's existing policy regarding states that have implemented strong and effective regulations for recreational marijuana use and ask that the Cole Memorandum remain in place,” the letter reads. “It is critical that states can continue to implement these laws under the framework of the Cole Memorandum. In addition, we request that state and local elected officials, and public health and safety officials, be afforded an opportunity to comment on any shift in policy from that expressed in the Cole Memorandum, to avoid disruption of existing regulation and enforcement efforts.” The letter comes during a bombastic time in the cannabis conversation. Trump’s press secretary Sean Spicer caused a panic attack in states where recreational marijuana is legal when he suggested last week that states would see “greater enforcement” of federal marijuana laws. Spicer said that even though Trump has been on record supporting both medical marijuana and states rights, the eight states that have legalized recreational marijuana may have crossed a line. “There is a big difference between that and medical marijuana,” Spicer said in reference to medical marijuana, which is currently legal in 29 states. Attorneys general and representatives from several states including Alaska were forced to take a “wait and see” approach to Spicer’s comment. A Congressional Cannabis Caucus committee responded to Spicer’s comments as well, hoping that they didn’t indicate a shift in policy. "The federal law is one thing and the state has the right to enact laws in this area and those are perfectly constitutional," Cory Mills, the Department of Law spokesperson, told the Associated Press. "Our law wouldn't be overturned. But there is a different federal law, and how they want to enforce the federal law is up to the federal government. We'll just wait and see what sort of actions they take." Only days later, Sessions denied some of the claims that medical marijuana helps curb opioid abuse and claimed that cannabis trade contributed greatly to violent deaths in the U.S.   DJ Summers can be reached at [email protected]

Bill to legalize hemp gains momentum

Senate Bill 6 which would legalize industrial hemp in Alaska, seems to have support as it passes through subcommittees, but lawmakers still need to iron out some particulars with how the potential industry will pay for itself. During a Senate Judiciary Committee hearing on Feb. 20, Sen. Shelley Hughes, R-Wasilla, explained that her bill takes up an issue brought to the Legislature by former Sen. Johnny Ellis, a Democrat who introduced a bill to legalize hemp last session. “I think the Division of Agriculture, they really want to welcome this industry,” Hughes said. Indeed, Rob Carter, a Division of Agriculture program manager, told the committee that the division sees great potential in industrial hemp, particularly as a forage crop for livestock. Hemp’s non-psychoactive fibers are also a source for textiles, paper, and a slew of other industrial products, as well as a food source. Hughes explained that the Declaration of Independence was written on hemp paper, and that the Pilgrims’s canvas sails and western settler canvas covered wagons were all hemp-based. Carter said Alaska’s long growing season is suited for the plant — pictures from 1916 Palmer-area show farmers with healthy hemp crops. Farmers in the Mat-Su have been looking for a way to grow hemp for some time. Larry DeVilbiss, farmer and former Mat-Su Borough mayor, has come out in strong support of the bill. The committee asked for Hughes to speak with staff and experts to develop a committee substitute to be reviewed later. Much of the hearing was spent differentiating hemp from marijuana. Senators wanted to know whether the crops looked the same, whether they would be taxed the same, and whether there was any potential that hemp could be used as a base for illegal drugs. “If someone is planting a crop of industrial hemp and let’s say there was a market collapse, and they say, ‘OK, I’ll just sell it as recreational hemp,’ could they do that?” asked Sen. Kevin Meyer. “There wouldn’t be much recreation,” said Hughes. “The person would probably be hacking and coughing if they tried to use it that way.” Agronomics experts said hemp wouldn’t be a market for synthetic drugs, either. “Could hemp be dried and laced with something?” asked chair Sen. John Coghill. “We just have to be continually suspicious, that’s all.” Rob Carter from the Division of Agriculture assured Coghill that dried hemp leaves would look no different and contain no more potential for abuse that spices. “There’s plenty of other product at Costco that could be adulterated with another product,” said Carter. The bill mirrors industrial hemp programs in other states. Famers growing industrial hemp would have to get a permit and report their activities. Like other hemp pilot programs, the state’s department of agriculture or a state research university would oversee all hemp cultivation. The bill would define industrial hemp as separate from marijuana in statute. Following federal standards, any cannabis testing less than 0.3 percent THC — cannabis’s psychoactive chemical — is hemp. Studies show that THC’s psychoactive properties don’t take effect in concentrations under 1 percent. Currently, the two are indistinguishable under Alaska law, which has led to some problems for marijuana vendors. The Alcohol and Marijuana Control Office seized thousands of dollars of imported hemp-derived products from cannabis retailers on Feb. 10, declaring them to be unlawful because they did not conform to Alaska regulations for production, packaging and labeling. Those products come from a similar hemp pilot program in Colorado. If the hemp bill passes in the Alaska Legislature, the products would fall back into legal status, according to an AMCO directive given on Feb. 17. “However, in light of Senate Bill 6, a proposal currently before the Alaska State Legislature that would legalize industrial hemp and modify the definition of marijuana in AS 17.38, the board voted to retain possession of the inventory until the end of the current legislative session,” reads a press release from the control office. In the 2017 Legislature, all conversations boil down to cost, and hemp is no exception. Senators wanted to know what kind of taxation and fee schedule would apply to the program. Hughes said farmers were adamant that the current $50 per ounce excise tax levied on commercial marijuana would not work for hemp, which as an industrial product carries a smaller price. The bill does establish that taxes and fees will have to fund the program’s regulation to break even, in such a way that farmers would not have to ask for funding from the Legislature. DJ Summers can be reached at [email protected]

Anchorage official tapped to head marijuana office, board

The Alcohol and Marijuana Control Office and the Marijuana Control Board have a new director with a reputation that is softer than her predecessors but still developing. Gov. Bill Walker appointed Muncipality of Anchorage planning official Erika McConnell as the new AMCO director on Feb. 21. Former director Cynthia Franklin resigned late last year, leaving Sara Chambers to fill the position in the interim. McConnell will start her new job March 20. Industry members and regulators seem to agree that McConnell’s demeanor and 14 years of experience in the Anchorage municipality will be a plus. McConnell both oversaw some aspects of alcohol licensing and wrote the city’s marijuana land use code. Recently, McConnell has gotten high marks for being engaged with industry and personally helpful, but there remains some suspicion due to the relatively slow rollout of Anchorage’s marijuana market. “Ms. McConnell is an exceptional fit to lead the Alcohol and Marijuana Control Office,” said Department of Commerce, Community and Economic Development Commissioner Chris Hladick in a press release. “She has over a decade of experience navigating the regulatory world, both drafting and implementing. In her time with the Municipality of Anchorage she worked closely with the AMCO staff on alcohol and marijuana matters in order to provide assistance to license applicants.” McConnell came into the cannabis world through the Anchorage municipality, where she has works as the marijuana regulatory expert in the Office of Economic and Community Development. In one position or another, McConnell has worked for the municipality since 2003. Board members say they’re hopeful about McConnell’s experience. “I think they made a great choice,” said Nick Miller, who is both a member of the Marijuana Control Board and the president of the Anchorage Cannabis Business Association. With a more bureaucratic history and temperament than Franklin, McConnell’s place on the board could have a calming effect. “Ms. McConnell has significant experience dealing with marijuana issues,” said board member Brandon Emmett, also an industry stakeholder. “I believe she will bring a balanced and thoughtful approach to her new position as director.” When first established, Marijuana Control Board meetings were turbulent. New industry entrants got introduced to the world of regulation, bureaucrats, attorneys and marijuana entrepreneurs without much business experience. Former board chair Bruce Schulte, a leader of the successful ballot initiative to legalize recreational use, and Franklin had plenty of barbed exchanges, and the overall relationship between Franklin and the industry was chilly at best. McConnell’s reputation among cannabis stakeholders has shifted as the industry has grown, but most said she has a better relationship with them than her predecessors. Some said McConnell has actively defended license applicants and taken up sides to move the process along more quickly. “She is one of the few people in the city of Anchorage to come to the (Anchorage Cannabis Business Association) meetings,” said Jack Tobin, owner of Famer Jack’s LLC, an Anchorage cultivation facility still in development. “She does care what our perspective is. I don’t feel that Cynthia nor Sara (Chambers) cared what our perspective was. I definitely feel McConnell is an improvement…but she doesn’t have to beat much.” During the early stages of the municipal regulatory process, many were suspicious of McConnell. Some claimed she had an obstructionist agenda and was actively trying to halt the industry’s progress. “She was kind of anti-cannabis in the beginning,” said Justin Roland, owner of Dream Green Farms. “53 percent of us voted yes (on Ballot Measure 2), and that means 47 voted no. You could definitely tell she didn’t vote yes. I got that from a lot of people at the muni.” Since then, that reputation has shifted and is now largely positive for McConnell. Industry attorney Jana Weltzin described the new AMCO director as “tough, fair, and honest,” and cannabis business owners have said whatever rocky first impressions McConnell gave in 2015 have largely disappeared. “Now,” said Roland, “that is completely gone.” McConnell’s absence from the city could potentially be a boon or a burden. Anchorage has a poor reputation among the Alaska cannabis industry as one of the most restrictive places in the state to do business. Anchorage has a far lower rate of state-approved active cannabis business licenses than Fairbanks, Juneau, or the Central Kenai Peninsula. Without McConnell to oversee much of the marijuana-related business in the Office of Community and Economic Development, some industry members worry that the city process could slow down from a glacial pace to a near stop. The city’s dreaded “change of use” requirement, which plagues marijuana shops trying to get up and running, did begin in McConnell’s office. However, Tobin, who works as a contractor, said the city was moving towards change of use requirements and similar measures independent of marijuana, and so he doesn’t lay that issue at McConnell’s feet. Further, Tobin speculates that McConnell could help the state process by revealing city problems. “One of the reasons I think there’s been some problems in Anchorage is that they don’t know what’s going on at the state level,” he said. “I think the state’s intent is to get us licensed. She does know what’s going on in Anchorage. They definitely don’t know what’s going on.” DJ Summers can be reached at [email protected]

Marijuana Control Board rules on CBD oils

Regulators ruled on Alaska's CBD seizures on Feb. 17, maintaining that the products are indeed marijuana, not hemp, and therefore under control of the Marijuana Control Board. The seized CBD products will not be destroyed, but rather the board will retain them until a hemp legalization bill moves through the Legislature. The owners of the shops from which they were seized will not be disciplined.  The Marijuana Control Board met with Alcohol and Marijuana Control Office enforcement officers and director Sara Chambers on Feb. 17 to invite representatives from each of the raided stores. Board members then called a closed meeting with legal counsel and Chambers to deliberate. "In a unanimous vote, the Marijuana Control Board determined the CBD (cannabidiol) oil seized last week by the Alcohol and Marijuana Control Office (AMCO) to be marijuana product, except that which is labeled as made exclusively from seeds and that does not also include the term 'CBD,'" reads a press release from AMCO. "However, in light of Senate Bill 6, a proposal currently before the Alaska State Legislature that would legalize industrial hemp and modify the definition of marijuana in AS 17.38, the board voted to retain possession of the inventory until the end of the current legislative session. Otherwise, in accordance with 3 AAC 306.830, the board would be forced to destroy the seized items. The board also elected not to pursue further action on Notices of Violation that were issued by AMCO staff."  Each company was issued a violation for activity not allowed in a marijuana store, and having product that is manufactured outside the state of Alaska, not in the state tracking system, not tested in state, and not packaged or labeled as required by Alaska regulation. Company representatives either apologized and pled ignorance or stuck by their claim that industrial hemp products are perfectly legal and not under the control of the Marijuana Control Board, an argument firmly dismissed by AMCO director Sara Chambers. “Just so we’re all clear, we all know that hemp products aren’t marijuana products, right?” said Craig Aglietti, co-owner of Dankorage, during an interlude. “Yes, according to state statute, they are,” answered Chambers. Several had issues with how marijuana enforcement handled the seizures. “These were not seized from a licensed company,” claimed Aaron Ralph, owner of Alaska Cannabis Exchange, through which many of the raided stores received their CBD products. Though cited for violating regulation, Alaska Cannabis Exchange did not have their products seized from their licensed store, though they may have intended eventually to receive and sell them. U.S. Postal Service workers alerted AMCO when boxes of CBD product were leaking. The products were addressed to Geneva Cowen, owner of ACE Holdings, which has a licensing agreement with Alaska Cannabis Exchange for CBD products. Cowen herself is the wife of an affiliate of an Alaska Cannabis Exchange licensee. Enforcement officers acknowledged that the violation letter, which was a boilerplate letter sent to each company, was an “oversight” on the part of AMCO and could have been worded better. Others claimed a similar scenario applied to them, in which officers seized product for a non-marijuana store. Kerby Coman’s seizures happened in a non-marijuana business, Green Degree, that was attached to a licensed marijuana facility. Coman’s non-marijuana business markets itself under the name Green Degree but is owned under a separate LLC name. Many of the testifiers were apologetic to the board, claiming they would not have sold the products if they had known they were under MCB control. “We no longer sell any CBD or hemp containing products, and will not do so,” said Caleb Saunders, co-owner of Green Jar. “It was never our intention to violate any of the regulations. We were fully under the impression that the hemp products did not fall under the jurisdiction of MCB.” Saunders explained that he bought the product from a Colorado industrial hemp pilot program through ACE Holdings by way of Alaska Cannabis Exchange.  “These products have been available at health food stores for many years, so we did not assume there would be a problem,” said Craig Aglietti from Dankorage, an Anchorage retail store. “We will not stock this product again until is it enforced through METRC (the state’s cannabis tracking system).” “This was unintentional,” said Jane Stinson, co-owner of Enlighten Alaska. “We didn’t realize hemp grown CBD products were not allowed in the system we’re in.” Others like Coman, said AMCO’s actions were “morally and legally wrong.” Kerby claimed to prove that CBD is legal, and then asked to get his products back. “Legal opinions have told me I have a lawsuit. But that’s not the route I want to go,” he told the board. Ralph, a member of the Hemp Industries Association, stood by his original claim that nothing illegal happened with his company or the others involved. The seized products, he said, are firmly in line with federal regulations that authorize industrial hemp products and their interstate transport. “There is a legal and defining difference between hemp and marijuana,” said Ralph. “In my opinion, nobody has broken the law here or should be deserving of a notice of violation.” CBS oils and extracts have been hurtled into national morass of confusion after the U.S. Drug Enforcement Administration added them to the Schedule I controlled substances category in January. Though widely available as hemp oils online and in department stores, CBD products are as illegal as marijuana under federal law unless obtained through a licensed pilot program. In Alaska, Chambers says the matter is clear cut becuase Alaska statute does not make hemp legal or distinct from marijuana. “As defined in statute and regulation products derived from the marijuana plant are regulated under AS 17.38,” reads a release from AMCO following the seizures. “There is no separate provision under state law that allows oil with any particular composition of CBD or THC to be regulated outside of AS 17.38 and 3 AAC 306.” The definition in statute does include certain parts of the plant, but also does not make a distinction between hemp and marijuana as it does in federal code. “’Marijuana’ does not include fiber produced from the stalks, oil, or cake made from the seeds of the plant, sterilized seed of the plant which is incapable of germination, or the weight of any other ingredient combined with marijuana to prepare topical or oral administrations, food, drink, or other products,” reads statute. DJ Summers can be reached at [email protected]

Young to co-chair Congressional Cannabis Caucus

Republicans and Democrats now have cannabis as a bipartisan tie that binds. On Feb. 16, a group of U.S. House representatives from several Western states announced the Congressional Cannabis Caucus. The group is spearheaded by two Republicans and two Democrats: Alaska Rep. Don Young, California’s Dana Rohrabacher, Oregon’s Earl Blumenauer, and Jared Polis of Colorado. “People are suffering,” Rohrabacher said. “The law is wrong. We have a bipartisan caucus, and we’re going to change it.” The conflict between federal and state laws inspired the caucus, with one overarching objective: have federal law enforcement respect state laws that have legalized cannabis in some form. At the federal level, cannabis is still listed as a Schedule I controlled substance, the most restricted group. Meanwhile, eight states have legalized recreational use and and 29 states have legalized medical cannabis. Following the November 2016 election, 95 percent of Americans now live in states or territories that permit adult use or medical cannabis or CBD oils. One-fifth live in a state with legal recreational use. “I’ve been deeply concerned about the gap between where the public is, what is rational policy, and what federal policy is,” said Blumenauer. The congressmen said the caucus grew out of an informal cannabis working group formed in 2013. After the November 2016 election cycle saw eight more states pass either recreational or medical cannabis legalization measures, they said the issue became bigger on Congress’ radar. They underscored several main issues to address, namely research, access for veterans and medical users, and business needs. Federal finance laws bar marijuana businesses — a $5 billion industry in 2016 — from routine tools such as banking access. Young, who said he has never used cannabis, said the banking issue needs a solution for commerce to continue. “I’m also interested in the banking part of it,” Young said. “As they do this business, they can run it as a business. I think that’s crucially important to make it work correctly.” The Republican Party has to date had little involvement with cannabis legislation, but the issue now seems to stitch the two parties together. Only days earlier, Young and Polis had a bitter House Rules Committee exchange regarding Young’s bill to overturn a U.S. Fish and Wildlife Service final rule that gives the federal government authority over game management in the state. Polis clarified at the Cannabis Caucus rollout that he indeed called Young’s bill a “puppy killer.” The two Republican caucus members, Young and Rohrabacher, emphasized that cannabis law reform should be in line with Republican beliefs, not counter with them. Traditionally conservative ideals like individual freedom, limited government, constitutionalism should synch up with cannabis’s state-by-state trend. “Our Founding Fathers meant criminal justice to be at the local and state level,” Rohrabacher said. “Our founding fathers did not want the federal government to be involved in that kind of thing at all. We’re going to have battles in which the Republicans will be saying ‘we’re going to leave this up to the states.’ Republicans are being held to live up to their own values and principles.” “I think we can make a lot of progress this session and next session,” said Young. Marijuana legalization advocates have feared newly minted U.S. Attorney General Jeff Sessions will bring a federal hammer down on cannabis businesses, but the caucus appears to think the fears are overblown. “On the campaign trail President Trump indicated he would defer to states,” Polis said. He and the others emphasized that regardless of Session’s past or personal views, he exists only to enforce the administration’s policies. “At the end of the day,” Young said, “Congress is the one that passes laws.” Each of the Congressmen have been marijuana supporters from one angle or another, sponsoring or supporting a slew of cannabis-related bills between them. Young has long been an advocate for state’s ability to “determine the nature of criminal activity within their own jurisdictions.” He does not make an exception for cannabis. In a May 2016 forum, Young said marijuana legalization was “is very frankly dear to my heart, because I do believe in states’ rights and individual rights,” and that, “Either you’re for states’ rights or you’re against it. You can’t have it both ways.” Young introduced the Compassionate Access, Research Expansion and Respect States Act in March with Tennessee Democrat Rep. Steve Cohen in 2015, one of several pieces of legislation with bipartisan support in the House — eight Republican and eight Democrat co-sponsors — that would let banks and credit unions service marijuana businesses in legalized states without fear of the feds. Young and Cohen’s bill and others would also make cannabis a Schedule II drug, lift other federal restrictions and allow Veterans Administration doctors to prescribe medicinal marijuana. Rohrabacher successfully passed an act that prohibited federal funds from being used to prosecute marijuana businesses in states where they are legal. Blumenauer described marijuana policy as “failed” and calls for Washington D.C. to “to face the facts surrounding marijuana” as states continue adjusting laws. He has introduced, cosponsored or supported a slew of bills that would do everything from expunge marijuana-related criminal records to descheduling cannabis from the Controlled Substances list. DJ Summers can be reached at [email protected]

Inaction, CBD raids and Sessions fuel suspicions within cannabis industry

Former Alabama Sen. Jeff Sessions’ confirmation as U.S. Attorney General contributes to, or coincides with, reenergized fears that national, state, and local authorities are slowing Alaska’s cannabis industry growth and could even halt it in its tracks. Several regulators and industry members have expressed a sharp concern that the Gov. Bill Walker administration has held up the process through the Alcohol and Marijuana Control Office, an executive branch function under the Alaska Department of Commerce. Walker’s office did not return a request for comment. The state has some obvious reasons for delays. The Alcohol and Marijuana Control Office is woefully understaffed and has asked on several occasions for the Legislature to kick them more money for new staffing. However, the Legislature hasn’t yet responded, as the state is in a recession that economists say will not end for another three to five years and produce a “smaller, poorer Alaska.” Alaska’s industry is developing more slowly than its Lower 48 counterparts, though some of that can be explained by a more limited market size and the challenges of Alaska’s small capital pool, large geography and the lack of an established medical marijuana cultivation and distribution network. In the first three months of legal sales, Colorado businesses sold more than $50 million worth of recreational and medical cannabis. Oregon sold an estimated $27 million in the first two months. Washington sold just less than $12 million — a comparatively slow start with only 18 licensed stores. In Alaska, exact figures are harder to come by in terms of actual amount of product sold. Rather, the $50 per pound excise tax levied against cultivators is the most accurate measure. In the first two months of sales, Alaska collected $226,000 from cultivators, and expects the total tax revenue in 2017 to climb as high as $12 million, according to state estimates. The slowdown is pronounced in Anchorage, which has 30 percent fewer active businesses in relation to completed state licenses than any other major population center. The Marijuana Control Board has made big strides in advancing the industry’s regulations, but some of the hottest items from 2015 are still up in the air. The state has still not tried Rocky Burns, Larry Stamper, and Charlene Egbe, each of whom allegedly ran unlicensed cannabis delivery services and retail shops before regulations were in effect. Social clubs and onsite consumption are still unresolved, and the state rounded up and seized thousands of dollars worth of cannabidiol oils from retailers of Feb. 9. Onsite consumption At its most recent meeting, the Marijuana Control Board cancelled an onsite consumption provision package — which has been a high-profile part of Alaska marijuana regulations since late 2015. Industry leaders took it as the latest sign that they’re being stymied by an element from somewhere within Alaska government. “I think this was incredibly driven by the administration,” said Jana Weltzin, an Alaska cannabis business attorney and board member of the Alaska Marijuana Industry Association. Weltzin highlights the fact that the attorney who reviews regulatory items before they go out for public review takes administrative direction. “That attorney was the one who made the final decision on that,” she said. “They get guidance from above.” Weltzin was referring to errors made in the Alcohol and Marijuana Control Office. During the meeting, interim director Sara Chambers told the board that AMCO had made administrative errors in releasing the draft for public notice. This is the third time the draft was incorrectly noticed. This time, however, rather than kick the package back to a later date, the board opted to drop the subject entirely with a 3-2 vote. Public member Mark Springer of Bethel, who had supported the concept since 2015, said he would rather drop it than risk newly appointed Sessions’ scrutiny. Beginning in mid-2015, public consumption came to the forefront of the state’s developing regulations when several clubs around Alaska popped up that offered a bring your own marijuana venue. After batting back and forth and a whole lot of legal haze that included an opinion by Alaska Attorney General Jahna Lindemuth that the clubs are illegal, the Marijuana Control Board decided it had no authority to outlaw the clubs. Anchorage’s club, Pot Luck Events, is still operating. Though it acknowledged it had no authority to ban the clubs, the Marijuana Control Board did introduce the concept of an onsite consumption provision. This would let retail shops offer an area where buyers can consume what they just bought. Since 2015, Alaska cannabis businesses have eagerly waited for onsite consumption provisions. Without them, they reason, tourists won’t have a place to legally consume what they buy from Alaska’s shops. Alaska: the exception to the recreational rule Nationally, cannabis legalization advocates have noted differences in how states set up their respective programs. “One has to believe that the sole difference between a successful rollout and an unsuccessful rollout is probably more than just a lack of competence,” said Paul Armentano, deputy director of the National Organization for the Reform of Marijuana Laws. “One can certainly speculate, and it certainly looks as if the rollout of these programs are delayed or done in such an ineffective manner that it would be by design.” Lawmakers and officials have long cited the fact that Alaska had no preexisting medical industry to explain Alaska’s slow progress with developing marijuana regulations and developing a full industry. Armentano said he doesn’t believe that rationale. “That rebuttal would be wrong,” he said. “Washington did not have a medical industry to fold into anything. I think there was a desire on the part of Washington lawmakers to get this done. It took about 18 months. Unlike in Colorado they were creating a whole new regulated market. They met that deadline.” Armentano said there are now enough templates for both recreational and medical marijuana that no other reason for slow development exists besides institutional resistance. “Alaska potentially raises this issue as well,” he said. “When we look at the states where voters have approved markets — Colorado, Oregon, Washington — all of those states have been able to roll those programs out operational and functional. “The exception is Alaska. They have been unable to do what lawmakers and regulators in these other states have to the extent that you have to ultimately begin to wonder if the key variable is that in some states the lawmakers and regulators simply don’t share that same desire.” Despite requests from Chambers to the Legislature for more AMCO funding, and from the board for a position on social clubs, the only marijuana-related topic lawmakers have on the 2017 agenda is an industrial hemp bill. Sessions and federal rules With a 52-47 vote, Sessions has set a new record for most opposed attorney general in U.S. history. After a month of broad panic, the nation’s marijuana industry can’t seem to agree on a single way to feel about Sessions, according to the slew of press releases and his careful aversion to a straight answer — which has been routine from the federal government for a half-decade with anything concerning marijuana from banking to gun policy. Sessions, a player in the 1980s drug policies of the Reagan administration, has a history of ominous statements about cannabis. He became infamous for a statement that Ku Klux Klan “was okay until I found out they smoked pot,” a tongue-in-cheek statement made in 1986. As recently as 2016, he has remarked that “good people don’t smoke marijuana,” and that Washington leaders should not support its legalization. However, Sessions also responded in a confirmation hearing that he acknowledged federal resources could be stretched thin by attempting to enforce federal laws against states. Some industry advocates are measured about Sessions, saying he has given no indication that the new attorney general will enforce any more federal cannabis laws than President Barack Obama’s administration did. “We remain cautiously optimistic that the Trump administration will refrain from interfering in state marijuana laws,” wrote Robert Capecchi, federal policies director for the Marijuana Policy Project, which is responsible for many of the campaigns to legalize cannabis, including Alaska’s. “When asked about his plans for marijuana enforcement, Attorney General Sessions said he ‘echo[es]’ the position taken by Loretta Lynch during her confirmation hearings. He repeatedly acknowledged the scarcity of enforcement resources, and he said he would ensure they are used as effectively as possible to stop illicit drugs from being trafficked into the country.” In a mild plea, Aaron Smith, executive director of the National Cannabis Industry Association, wrote that the organization “looks forward” to Sessions keeping up the previous administration’s policy. “That policy, as outlined by the Cole Memo, has allowed carefully designed state regulatory programs approved by voters and lawmakers to move forward, while maintaining the Justice Department’s commitment to pursuing criminals and prosecuting bad actors,” wrote Smith. Others fear he will prosecute marijuana businesses in states where it is legal, in compliance with federal law. “Jeff Sessions’ views are out of step with mainstream America and they are in conflict with the laws regarding marijuana in over half of the states in this country,” wrote Justin Strekal, political director for the National Organization for the Reform of Marijuana Laws, in a press release. “Our elected officials, now more than ever, know that marijuana policy is at the forefront of the minds of American voters and that we are willing and able to mobilize for it.” DJ Summers can be reached at [email protected]

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