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 For a complete list of items, when they are prepared to go out for public comment, go to 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 ^ 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: ^ 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

Board makes call about on-site cannabis consumption

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

Marijuana board set for marathon meeting in Fairbanks

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

Downtown cannabis shop gets green light; moratorium debated

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

Alaskan delegation pushes parallel cannabis bills

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

Marijuana board will revisit onsite consumption at July meeting

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

Owner dies day after state shut down her Anchorage cannabis club

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

Enforcement, industry members ask for cannabis rule clarity

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

Marijuana board returns to onsite consumption regulations

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


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