Cannabis

Board hears concerns about crimes targeting cannabis industry

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

Marijuana board carries on with new member after federal shift

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

Walker names new member to Marijuana Control Board

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

Young tries again with legislative fix to marijuana conflict

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

Marijuana board chair explains resignation after change in US policy

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

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

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

Marijuana board issues consumer alert amid testing issues

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

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

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

Juneau physician secures three licenses for cannabis operation

Editor’s note: The story has been updated with a correction from Dr. Perez’s attorney Jana Weltzin about her statements to the board on whether Perez has ever issued a prescription for medical marijuana. Weltzin stated incorrectly that Perez had never written a prescription for medical marijuana, which has been legal in Alaska since 1998. In fact Perez told the board in response to questions that he’d issued “a handful” of medical marijuana prescriptions over the past 10 years in accordance with current Alaska regulations. Weltzin’s incorrect statement has been removed from the article and she provided the following statement from her client: “Mr. Perez understands that Alaska has two statues for the use of marijuana. He has the full intention to follow both guidelines as described by state regulations.” Dr. Norvin Perez, a medical physician at the Juneau Urgent and Family Care Center, was approved for three marijuana business licenses during the board’s two November meetings in Anchorage. All three — cultivation, manufacture and retail — will all be housed under the same roof in a building Perez owns. It is the same building that holds the Juneau Urgent and Family Care Center in an industrial-commercial zone of Juneau called Old Dairy Road. The application was unique, noted Marijuana Control Board Member Loren Jones, also of Juneau, because it’s the first time the board has licensed a practicing physician for multiple marijuana operations. “It’s a very unusual situation where he is a doctor at Juneau Urgent Care and he will own the marijuana businesses in the same building,” Jones told fellow board members. There’s inherent tension between Alaska’s medical marijuana laws outlined in Alaska Statute 17.37 and the new recreational marijuana laws, outlined in AS 17.38. The primary one — at least for board members asking Perez questions while scrutinizing his application — is that business owners are prohibited from written and advertised claims about marijuana’s curative powers. Many violations issued by the Marijuana Control Office enforcement agents over the past year have been against businesses caught advertising claims that cannabis can help with ailments ranging from anxiety to cancer. Mark Springer of Bethel, the board member representing rural Alaska, asked the doctor if he was aware that in establishing the businesses, he’s in the recreational industry where health claims are not permitted. Perez said he did. “I appreciated his transparency,” said Brandon Emmett, a board member from Fairbanks representing the cannabis industry. “He will need to be cautious about how he operates his business. He’s got to have a clear line between his role as a physician and a role running his business, cautious about not bleeding the two into one another. I personally don’t see a conflict.” Attorney Jana Weltzin, representing Perez before the Marijuana Control Board, wanted to be clear: “He recognizes there are medicinal values. However, he will not be talking about the curative, medical or therapeutic value (in his business). There is no connection between the two.” Alaskans are seeing a dichotomy between medical and recreational marijuana, Weltzin said after the meeting. “I don’t think I can explain why this is an issue,” she said. “Medical marijuana has been established in our state before I was born. Medical marijuana has been lost in the dust of the recreational market. If the industry is smart, they will lobby for rights, to give rights to medical users, in the recreational market. Right now we don’t have that.” Weltzin specializes in the new body of law related to recreational marijuana that the board has adopted since it formed in 2015. “The medical marijuana statue allows gifting and not exchanging marijuana for money,” she said. “Recreational authorizes sales for compensation. One is a commercial market and one is a gift market. That is the distinction.” Why the commercial market cannot advertise marijuana’s curative powers relates to the board’s attempt to remain neutral. Another reason, said Springer, is that “we’re not regulating a medical program. There’s no mention in the proposition or the statute of medical marijuana.” The scope of regulations the board oversees relate to “people over 21 years old, and for recreational purposes,” Springer said. Other attitudes also seem to be at play in keeping out talk of medical marijuana. “It’s an attempt to not encourage people to over consume,” Weltzin speculated. “If you tell everyone broccoli and carrots are extremely healthy, people will eat more broccoli and carrots. If people hear, ‘hey, this is good for you, it will cure your pain and help you sleep better,’ people would consume more. I think the intent was probably to temper over-consumption.” A cultivation license for Green Valley Enterprises in Juneau applied for by Perez was approved Nov. 15. It met with extensive questioning by board member Jones, who represents public health interests. In a 3-2 vote that nonetheless approved his operation plans, the board was split with Springer and Chairman and Soldotna Chief of Police Peter Mlyarnik against. A second license for a retail store to be called Glacier Valley Shop, and a third for manufacturing marijuana products also was approved for Perez at a special meeting Nov. 28-29 after more than two dozen applications including the two for Perez weren’t ruled upon at the regularly scheduled Nov. 14-15 meeting. The board approved the final two in a vote of 4-1, with Mlyarnik the lone vote against. A cannabis operation cannot be within 500 feet of a school, a recreation or youth center, a building where religious services take place, a correctional center or a rehab clinic. But the law doesn’t say anything about a hospital or medical facility, Jones pointed out. The Juneau Borough scrutinized the three cannabis business operations before granting a conditional use permit, or CUP. ForegetMeNot Enterprises Inc., under which the three businesses are organized, was granted a CUP by the Planning Commission but the matter never went before the borough Assembly because Juneau delegates permitting to the Planning Commission. “I mentioned (to the board) there wasn’t much controversy (in Juneau), but I found it rather strange. I am on the local (Juneau) Assembly and I believe in the local process. There was nothing under our rules that I could justify a ‘no’ vote,” Jones said. Jones therefore voted to approve all three applications. Naomi Klouda can be reached at [email protected]

Marijuana board rejects rule aimed at lease agreements

A measure that would have prohibited marijuana businesses from making agreements with their landlords to pay part of their revenue as rent was rejected by the Marijuana Control Board on Nov. 27 after a surge of public protests. The board voted 3-2 against the proposed new regulation. Chairman Peter Mlynarik and board member Loren Jones voted to change the law, which would have required landlords to pass criminal background checks and be named on the business license if they accepted profits in exchange for rent. The vote was a major victory for people who testified overwhelmingly in favor of the way the current regulation is written. Of the hundreds of licenses granted so far in Alaska for cannabis business operations, Alcohol and Marijuana Control Office Executive Director Erika McConnell had estimated that as many as a third or more involved this kind of lease arrangement. Kelly Wilmes, a managing partner in TOPROK LLC, told the board that many landlords and building owners had already relied on the rule as it is written when they invested money and formed business relationships. “Our group has personally invested$250,000 and (it) would create a financial hardship as we would be forced to repay the funds from our personal pockets with no reimbursement from our original investment,” she wrote to the board. The investment firm manager said destabilizing the foundations of current businesses would make it hard for them to survive. Two investment partners, Todd Zietlow and John Scott Young, wrote of the “tough decision” they made to partner with the owners of a marijuana business during the current downturn in the Alaska economy. If any change were made, they advocated “grandfathering” in provisions for percentage-based leases already approved. McConnell pointed out that licensees and applicants who use percentage-based leases could move to graduated leases and thereby achieve a similar effect “without involving the landlord in a financial interest in the business.” But the bottom line according to submitted public testimony is that raising capital from banks isn’t an option. Brandon Emmett, who holds a seat representing the marijuana industry on the board, said if the new regulation went into effect, he could foresee landlords opting out of their arrangements, which would cause a big financial shake-up to the new industry. “Many of these landowners or landlords are people who had empty space they just wanted to fill in the down-turned economy,” Emmett said. “They didn’t really have much thought about the industry and many were approached by operators. I could see them saying ‘no, not really that interested in getting further involved,’” if the new regulation required them to be on the license. Though he voted against it, Jones said he understood why people felt keeping the regulation in place is important. “I understood the feeling was that by removing the percentage lease allowance, it took away potential capital funding for startups. This wasn’t unheard of in the real estate world for a lot of different kinds of startups,” Jones said. The underlying concerns behind the recommended change was that too many unnamed and unknown investors could leave the door open for a criminal element to enter the legal Alaska cannabis industry. “There will be other issues that come up on the topic of financial interest. Most of us were just looking for a background check so we could know whether a person was going a little too far,” Jones said. Extended meeting The board met four days in November, divided between two, two-day Anchorage meetings in order to get through about 50 applications and four complicated violation hearings. This was a larger batch of applicants than other meetings and required twice the meetings in order to “not hold up the applicants,” Chair Mlynarik had said when the board voted to add a special two-day meeting in Anchorage after getting through just 22 of 50 applications from Nov. 14-15. “We’ve had so many doggone license applications that we just couldn’t get through them all,” said board member Mark Springer of Bethel, who holds a seat representing rural Alaska on the board. “Some of these applications require more attention then others. What really can take a while is when we do a manufacturer, looking at and approving each individual product they are going to make. Some submit photos and ingredients for 30 or 40 products.” These range from lollypops to cookies to specialty drinks containing cannabis. On Nov. 28, one applicant out of Soldotna, Fire Eater Sideshow Food LLC, submitted 90 products intended to be manufactured for retailers. The company will need to return to the board at its Jan. 24-26 meeting in Juneau after completing the application with more details. Emmett said other reasons also meant the board put in double duty this time. “We’ve had quite a few license applications, but also the board has evolved and we are asking more questions after a number of applications were tabled or denied,” Emmett said. If the applicants are better vetted at the meetings, the burden is lessened on the Marijuana Control Office staff and alleviates problems later on, he said. The board also passed regulation that allows licensed cultivators and product manufacturers to provide employees small samples for the purpose of quality control testing. It also requires that the amount taken from the inventory in the form of samples must be documented and retained by the licensee, as must documentation from the employee on a specific form required by the board. Another new regulation requires that all cannabis business owners report to director McConnell if any employee or other person steals money or marijuana or marijuana products from the operation. It adds this level in addition to any police reports that are made. Springer said the idea behind this regulation is to allow the board to keep tabs on crimes that may be occurring in or to businesses “for their protection.” It also embodies the board’s enforcement role and accountability to the public for what happens at cannabis operations. Another regulation requires reporting to McConnell when testing equipment at labs fail. There are only two marijuana testing labs in operation in Alaska, Steep Hill Alaska and CannTest LLC, both in Anchorage. The labs test for potency in marijuana samples, microbes, solvents and terpenes, or the oils that give cannabis plants diversity. The definition of an Alaska resident regulation will go out for public comment, as will questions on who sets the standard for odor emissions. Current regulations for license applications have the same residency standard as for the Permanent Fund Dividend, which is one calendar year of living in the state. The board is also looking at charging an operator if multiple inspections are required due to not being prepared for the scheduled inspection. More meeting documents can be found at commerce.alaska.gov/web/amco. For a complete list of items, when they are prepared to go out for public comment, go to https://www.commerce.alaska.gov/web/amco/MarijuanaRegulations/MarijuanaRegulationsPublicComments.aspx Naomi Klouda can be reached at [email protected]

Marijuana board still grappling with landlord arrangements

When the Marijuana Control Board combed through licenses applications for new cannabis operations at its Anchorage meeting Nov. 14-15, residency and landlord issues continued to trip up applicants. Only Alaskans can buy into a marijuana operation, per state law. The board has long expressed concerns about hidden ownership interests that could bring non-residents or a black market element into the legal industry. “We want a well-regulated industry and one that we know who the owners are,” said board member Loren Jones of Juneau, who holds a seat reserved for a member from public health. “And that we know they have the requisite residency and fingerprints on file, and they can’t be an owner if convicted of a felony.” A new regulation drafted in July but not yet approved seeks to revise the definition of “direct or indirect financial interest” in order to have a more transparent industry. Currently, landlords can take a percent of profit in exchange in lieu of rent. But they don’t have to be listed on the license, and therefore, there’s no fingerprint record or background check on them. The board scheduled an extra meeting Nov. 28-29 to finish going through about 30 more applications on the agenda that weren’t reviewed at the Nov. 14-15 meeting. They meet at 9 a.m. at the Crime Lab, at 4805 Dr Martin Luther King Jr Ave., in Anchorage. The landlord issue is up for a vote: the board is looking at eliminating percentage lease or rent agreements from the exemption of direct or indirect financial interest. Under this scenario, any percentage lease or rent agreement could be created but the landlord would have to be a licensee meeting the same standards as the operator of the business. The board has already approved many businesses on a percent-of-profit in lieu of rent arrangement. If the new regulation passes, the board also needs to decide how and when the existing licenses with these leases should come into compliance, or if they should be grandfathered in, said Alcohol and Marijuana Control Office Director Erika McConnell. A couple of new license applications illustrated the problem. X-Tracted Laboratories Royal Mountain Extracts LLC of Talkeetna proposed 80 percent of its net income go to the owners of the property in lieu of rent. The landlords, who only recently moved to Alaska and purchased the property on Commercial Drive in Talkeetna in March, are not yet Alaska residents. Residency, as defined by the board, is the same standard as eligibility for the Alaska Permanent Fund Dividend that requires a full calendar year living in the state. Therefore, the landlords can’t be on the application because they aren’t Alaska residents under the PFD standard. McConnell brought this application to the board’s attention. “When landlords have a percentage interest in a business, it places them in a position to exert influence in the business in a manner that is intended to be limited to licensees,” she wrote. Dan Nelson and Joe McAneney would be the licensee. The board asked questions about the plans at its Nov. 14-15 meeting, and recommended the landlords, Samuel Benson and Christina Tersine, wait until they achieve residency before the application is complete. Nelson, appearing with his attorney, agreed to wait until January and withdrew his application. But if the board passes its new regulation at its special meeting Nov. 28-29 in Anchorage next week, its new definition would require the landlords go through the same application process as the owner once they are officially Alaska residents. A landlord in Houston accepting income instead of rent on a limited cultivation facility was allowed to move forward after the board approved the applicant Arctic Farm LLC. But McConnell also brought this application to the board’s notice. “The lease shows that the landlord would initially receive 100 percent of the facility’s revenue less taxes and expenses, i.e. all of the profit,” she wrote. “Once the marijuana facility pays $175,000 in rent, the rent would be reduced to 50 percent of the facility’s profit,” she wrote of the plan. In this case, the landlord is Northern Lights Land LLC, owned by six people with shares ranging from 2.8 percent to 60 percent. “It appears that the high percentage on the percentage-based leases is a means to funnel profits from the marijuana business to people who are not licensees,” McConnell wrote to the board. “Despite the exemption, the landlords clearly have a financial interest in the business and should be licensees.” But the license applicant, Jonathan Cortez, explained that the land had been developed by the landowners (including family members). They have no decision-making interest in the business. The board approved the application after a long question-answer session that looked at the ownership issues. Board member Nick Miller, an industry representative from Anchorage who owns Alaska Buds, said it’s a common practice throughout Alaska to help startups through these lease-for-profit arrangements. Even malls do it to attract retail businesses, he said. “I’ve been told by realtors that this seems to be a common tactic used for startups in other industries when they don’t have a lot of capital upfront,” Miller said. “If someone owns a building, it’s standard practice. That’s okay but we still need to know who is making the decisions.” The board requires applicants also to show that a provision exists in the lease that if they default on rent, the owner can’t come in and take away marijuana products. Applicants were repeatedly quizzed by the board on whether their lease agreements contain that provision. Another applicant, Hempco LLC of Nikiski, has a prominent landlord. Mike Navarre, the former Kenai Peninsula Borough mayor, owns the property that Hempco licensee Jenny Foster is leasing. Navarre is now the commissioner of the Department of Commerce, Community and Economic Development after a recent appointment by Gov. Bill Walker. His office oversees the Alcohol and Marijuana Control Office. The public comments on the regulation are available on the Alaska Alcohol and Marijuana Control Office webpage. ^ Naomi Klouda can be reached at [email protected]

Onsite use decision delayed; special meeting called after clock runs out

The Marijuana Control Board postponed action until April on whether to legalize onsite consumption facilities after running out of time in its two-day meeting in Anchorage Nov. 14-15. In the meantime, because the board made it through only 22 of the 50 marijuana operations applications, they agreed to meet back in Anchorage Nov. 28-29 to finish the work. Otherwise, applicants would be left hanging until the Jan. 21 meeting of the board in Juneau. In the closing minutes of the meeting at the Dena’ina Civic and Convention Center, board member Loren Jones made a motion to postpone the onsite consumption vote. This third attempt to pass a measure, brought forth by industry representative Brandon Emmett, that would allow businesses patterned on bars to open for the public to allow people to socialize and legally consume marijuana products. But Jones put the brakes on, recommending that a new subcommittee be appointed to take up regulations deciding how the public facilities would function. “I don’t want to do this on the fly,” Jones said. “We received 550 pages of public comment that I haven’t even been able to read yet. There are fiscal implications with enforcement staff.” Board member Mark Springer of Bethel, representing rural residents, agreed that it would be better to concentrate on what’s involved in passing the new regulations when there is more time to go through the finer details. “This is the most consequential issue we’ve taken up,” Springer said. “This is pretty big stuff. We just saw what people think about a cultivation operation in a residential neighborhood. Image what we’ll start hearing when we start taking testimony on onsite consumption.” Springer was referring to an industrial-zoned neighborhood off Badger Road in Fairbanks where seven people testified against AK Green Bee, Inc. opening a marijuana grow operation. The residents complained it would be bad for the children in the neighborhood, that it would cause air pollution and bring new traffic on a small road that is critical to a number of users, including a church. Green Bee operators won approval for their operation in a 3-2 vote, with Springer and Chairman Peter Mlynarik voting against it. Emmett argued that the board has heard from the public regarding onsite consumption, and a year has passed with three attempts. “We’ve debated this for a couple of years. It’s been out for public comment, and motions have been approved,” Emmett protested. “We should no longer waste public resources on this issue. If this is something that’s not in the public interest then let’s vote on it. If the board’s not interested in approving it, then we need to vote it down. We need to settle it.” The matter first came up in January as a proposal by Emmett, an industry representative who owns a Fairbanks marijuana operation. It was tabled in February when Chair Peter Mlynarik, Loren Jones and Mark Springer voted to give the matter more time to see how the federal government would react under a new administration to legalization of marijuana, which is still federally classified as a schedule one illegal substance. It was also taken off the agenda due to a technical error in the public notification process. Emmett brought onsite consumption back into spotlight in March, but debating the proposal, which would make Alaska the first in the nation to allow it, didn’t receive a full hearing by the board until July, when an alternative was selected from three proposals. In Fairbanks on July 14, a measure passed 3-2 to go out for 60 days of public comment. The board at the time agreed they wanted to give municipalities time to weigh in on the matter with the extended comment period. The Nov. 14-15 meeting was to include a vote on whether to amend the regulation and send it back out for public comment, or vote it up or down. “I’m not sure what new information we will gather by putting it out there for more comments,” Nick Miller, an industry representative from Anchorage, told fellow board members at the meeting. “If you want more information, let’s gather it before January. We need to move on as an industry, correct the issues raised in the director’s report, not take in new information.” Director Erika McConnell brought up the need for more staff in the enforcement section of the Alcohol and Marijuana Control Office, if the measure should pass. She also cautioned the board to spell out how violations would be handled. In a new motion before the board, they voted 3-2 to postpone the matter until April, with Mlyarnik, Jones and Springer voting in favor and Miller and Emmett against it. They did not take up Jones’ motion, which calls for a separate committee to address specific questions, after Assistant Attorney General Harriet Milk told the board that any subcommittee would carry with it public notification responsibilities. The board then also agreed to meet Nov. 28-29 in Anchorage to complete the applications. Mlyarnik, in explaining why the onsite consumption agenda item must wait, said he felt a special obligation to answer the waiting applicants. “They’ve invested money in their businesses and they want an answer,” he said. “This is a money issue for them and we shouldn’t hold them up.” Springer assured the people attending the meeting, about 50 to 75 who filtered in and out during the two days, that the matter isn’t over. “We heard you and we will get to onsite consumption. We just won’t be doing it today,” he said. Naomi Klouda can be reached at [email protected]

Marijuana taxes near total for alcohol; testing under scrutiny

So far this year, Alcohol and Marijuana Control Office investigations show more notices of violations were handed out to bars than to marijuana operations by a count of 57 to 44. Tax revenue from marijuana operations this year through October is $1.5 million, while alcohol tax generated $2.2 million. Budgets for each segment for AMCO in 2017 came to $1.6 million for alcohol and $1.2 million for marijuana. The numbers came from a budget report by Alcohol and Marijuana Control Office Director Erika McConnell to the Marijuana Control Board Nov. 14 when it met in Anchorage for the second time this year, at the Dena’ina Civic and Convention Center. “Marijuana revenue is moving up in a close race,” observed board member Mark Springer of Bethel, who represents rural Alaska on the board. Of all marijuana tax revenues collected at $50 per ounce, calculated since the first operators opened for business in 2016 until Sept. 30, the state has collected $3.7 million. In employment, figures show that 1,924 people were issued handlers’ permits, the certification required of all staff and sales people employed in marijuana operations throughout the state. Some 18 marijuana operators were given notification of violations, a larger number by twice previous amounts, Enforcement Officer James Hoelscher acknowledged to the board. The violations ranged from continued missteps in advertising to tracking system errors. Businesses must account for all inventory in given time periods or receive a violation. A larger investigation that took months and involved the Anchorage Police Department revealed three illegal operations that had made up their own business names and tried to pass as legal operations in Anchorage. According to APD, three people in three different businesses were charged. Each faces multiple counts of fourth-degree misconduct involving a controlled substance and two unclassified felonies for continuing a criminal enterprise, said Renee Oistad, APD spokesperson. Oistad said she couldn’t give the names of the illegal operators because the cases haven’t gone to court yet. A discussion followed by the board and Hoelscher about what could be done to bring penalties against people who break the state’s marijuana laws. Department of Law Attorney Harriet Milk said the board has the authority to levy fines for certain infractions outside of state court action. Board Chair Peter Mlynarik agreed that, once Hoelscher forwards violations, the board will look at possible fines in the future. One problem brought to light by marijuana industry attorney Jana Weltzin is the current lack of a system for revoking marijuana handler permits after employers catch them stealing marijuana products. “It’s come to my attention from clients that they can’t revoke a bad employee’s permit after they steal from them,” Weltzin said. “I’m hoping you will address this sooner rather than later.” Another matter brought to light by public testimony is the need for a more precise way of testing THC in marijuana products. Brian Coyle, owner of AK Green Labs LLC, said testing needs to be “more uniform and accurate.” Director McConnell, in her report, said she wanted to create a scoping committee to take up questions and issues related to testing. The board unanimously agreed to establish the committee, and board member Brandon Emmett, an industry representative from Fairbanks, volunteered to be on it. McConnell will appoint additional members. “Through our work on the edibles testing regulation and some of the testing issues that have been raised by licensees recently, I believe a thorough examination of the testing regulations is warranted,” McConnell had advised the board in her director’s report. She wants to look at evidence of significant deviation in potency testing results of the same product by different labs, she told the board. She also wants to see if products such as edibles have a 50-milligram THC limit or a 60-milligram THC limit. Currently, regulations require one item from a production lot to be tested, such as cookies. But another section of the regulation requires testing for “homogeneity of each serving in a multi-unit package.” McConnell posed the question about whether testing one item is enough when a production may include 2,000 cookies or pieces. And, if the product is infused with marijuana by injection, does each serving in a multi-unit package need to be tested? These are some of the questions the committee will be taking up. As the board meeting continues in Anchorage at the Dena’ina Center Nov. 15, it will review what remains of the 50 applications for operators and an agenda that includes considered whether to legalize onsite consumption. Also on the agenda is a regulation considering random sampling of products, streamlining edibles testing and restricting who can have a financial interest in a business to those who are licensed to operate it. ^ Naomi Klouda can be reached at [email protected]

Onsite consumption tops agenda for marijuana board

Proponents of legalizing public establishments for marijuana consumption are hoping the third time is a charm. Onsite consumption leads the action agenda for the Nov. 14-15 Alaska Marijuana Control Board meeting in Anchorage at the Dena’ina Civic and Convention Center. The matter first came up in January as a proposal put forth by board member Brandon Emmett, an industry representative who owns a Fairbanks marijuana business. It was tabled in February when Chair Peter Mlynarik, Loren Jones and Mark Springer voted to give the matter more time to see how the federal government would react under a new administration to legalization of marijuana, which is still federally classified as a schedule one illegal substance. It was also taken off the agenda due to a technical error in the public notification process. Emmett brought onsite consumption back into the limelight in March, but debating the proposal, which would make Alaska the first in the nation to allow it, didn’t receive a full hearing by the board until July, when an alternative was selected from three proposals. In Fairbanks on July 14, a measure passed 3-2 to go out for 60 days of public comment. The board at the time agreed they wanted to give municipalities time to weigh in on the matter with the extended comment period. It’s not yet known which communities weighed in, because the board hasn’t yet posted its public comments. But industry members have made their preference known. “We have really leaned our shoulder into this,” said Cary Carrigan, the executive director of the Alaska Marijuana Industry Alliance. “We believe it’s critically important for the industry and vitally for the public as well, especially for tourists who need a legal venue for public consumption.” Proponents argued after the 2014 passage of the vote making recreational marijuana legal that regulations should be patterned after those for alcohol, which includes public consumption in bars, said Emmett. Proposed onsite consumption of marijuana would, in theory, be similarly based on laws governing public drinking establishments: kick out the inebriates, vigilance on illegal sales, monitor for over-consumption and keep out anyone under 21. The problem with that comparison nowadays is that most bars don’t allow smoking because of local ordinances, public health officials such as board member Jones pointed out during board meetings. Groups such as the American Lung Association, local government officials and individuals have argued air filters and other innovations haven’t solved the key question of public smoke hazards, said Jones, a Juneau assemblyman appointed to the public health seat for his long history in the substance abuse and mental health fields. If the measure passes, the regulation would go back out for 30-day public comment, unless the board decides to grant a longer period for comments. As written and passed by the board for the public comment in July, the regulations for legal onsite establishments would be the following: • The facility would need to protect employees from second-hand smoke by offering a window viewing area to monitor the floor where consumption takes place. • Onsite consumption would need 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. • Marijuana business operation applicants would need to submit written plans to the Marijuana Control Board 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. “I’ve talked to other state directors,” said AMIA’s Carrigan. “They are laser-focused on this one issue to see what we’re going to do.” In November 2016, Denver, Colo. voters passed Initiative 300, allowing businesses to apply for a license to allow adult consumption in designated areas of art galleries, yoga studios, coffee shops and a variety of other businesses. But that’s a pilot program inside city limits that will sunset in 2020 unless it’s extended by the city council or voter initiative, Carrigan noted. In California, medical bars are established that allow people to be monitored while they take prescription doses of cannabis for various illnesses and conditions. But before being allowed to enter, the patron must carry a prescription card, explained Jesse Henry, the executive director of the Barbary Coast, located in the Mission district of San Francisco for the past 10 years. The businesses are tightly regulated to not allow for general adult usage. “Now that recreational marijuana has passed, we’ll see if there can be expansions,” Henry said, referring to the November 2016 vote. “Bud” tenders monitor the area where medical marijuana products are consumed. He described people who come in daily for their seizure dosages and cancer therapy, among other patients’ illnesses. “If you don’t have a medical card and prescription, you can’t get in,” Henry said. He also described an air filtration system he said gets 99 percent of the smoke out. The Anchorage Assembly took proactive action at its Oct. 10 meeting by passing an ordinance that, while it doesn’t advocate for the public marijuana sites, sets perimeters in case the board’s regulation passes. Assemblyman Christopher Constant, who represents Downtown, said he wants to see a legal way for tourists to consume marijuana products. He also sees it as a personal liberty issue. “I don’t know what is going to happen on the Marijuana Control Board, but I do see that they have a chair who is anti the regulation,” Constant said, referring to Chair Mlynarik, the Soldotna police chief who also helped sponsor an initiative that went to Kenai Peninsula Borough residents that would have banned legal marijuana operations outside of cities. The measure lost 64-36 percent. “It may be hard to get the votes, but I think the challenges in the smoking issues can be worked out locally,” Constant said. The ordinance passed by the assembly states that the smoke-free areas for employees must be included. They also want outside smoking areas available, separated by a wall and a secure door from the indoor business portion. The business must maintain a ventilation system so that it “does not emit an odor that is detectible by the public from outside the pubic consumption site except as allowed by a local government conditional use permit process.” The MOA will charge $2,000 for the initial business license to a consumption site, and thereafter a $1,000 renewal fee. To see the full agenda of the Nov. 14-15 Marijuana Control Board, go to https://www.commerce.alaska.gov/web/Portals/9/pub/MCB/Minutes/2017/11.14/NovemberMCBMeetingAgenda.pdf ^ Naomi Klouda can be reached at [email protected]

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

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