Cannabis

Board makes call about on-site cannabis consumption

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

Marijuana board set for marathon meeting in Fairbanks

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

Downtown cannabis shop gets green light; moratorium debated

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

Alaskan delegation pushes parallel cannabis bills

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

Marijuana board will revisit onsite consumption at July meeting

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

Owner dies day after state shut down her Anchorage cannabis club

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

Enforcement, industry members ask for cannabis rule clarity

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

Marijuana board returns to onsite consumption regulations

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

Senators call for cannabis clarity

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

Bill to legalize hemp gains momentum

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

Anchorage official tapped to head marijuana office, board

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

Marijuana Control Board rules on CBD oils

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

Young to co-chair Congressional Cannabis Caucus

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

Inaction, CBD raids and Sessions fuel suspicions within cannabis industry

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

State raids cannabis shops, seizes CBD oil

Alcohol and Marijuana Control Office enforcement seized thousands of dollars worth of imported cannabidiol oils from marijuana retailers on Feb. 9. The products came from outside Alaska and were not packaged according to Alaska marijuana regulation. Until they know what it is, officials said, Alaska retailers shouldn’t be selling it. Federal law formerly allowed for similar hemp oils with low THC concentrations. The U.S. Drug Enforcement Administration, however, finalized a rule more than five years in the making and classified CBD oils as a “marihuana extract” and a Schedule I controlled substance on Jan. 17, 2017, making it illegal in all 50 U.S. states. This has created a situation where CBD products, which are widely available online and in health food stores, are subject to seizure by state marijuana enforcement officials, but only from marijuana establishments. “We do not have the resources to pursue every natural foods store in the state,” Chambers told the Juneau Empire, adding that regulators will focus their attention on licensed marijuana shops. “It’s what the law says, and I have to enforce the law,” Chambers said. The state explained how it became aware of the situation on Feb. 10. “A tip from the U.S. Post Office led investigators from the Alcohol and Marijuana Control Office (AMCO) to confiscate unapproved marijuana oils from several licensed retail marijuana stores across the state,” read a press release following the product seizures. “Post office staff contacted AMCO regarding leaking packages containing over 1,000 vials of CBD (cannabidiol) oil. AMCO investigators inspected the packages and found 20 unmarked vials. “The presence of an unknown substance in a package with products intended for human consumption—including syringe-style dispensers, chocolate bars, chewing gum, and caramel-flavored agave sticks—posed a potential public health and safety risk.” Alaska statute specifies that CBD oils are indeed a marijuana product and therefore under the supervision of the Marijuana Control Board. Federal laws, however, have caused problems for some Alaska companies who have up until now assumed CBD products were separate from marijuana. “As defined in statute and regulation, this oil meets the definition of ‘marijuana,’ ‘marijuana product,’ and ‘marijuana concentrate,’” according to the Feb. 9 press release from the Department of Commerce. “The Alaska Department of Law confirms that products derived from the marijuana plant are regulated under AS 17.38 and that there is no separate provision under state law that allows oil with any particular composition of CBD or THC to be regulated outside of AS 17.38 and 3 AAC 306.” However, CBD oils may not come from a part of the cannabis plant that is legally “marijuana.” Alaska statute specifies that “‘Marijuana’ does not include fiber produced from the stalks, oil, or cake made from the seeds of the plant, sterilized seed of the plant which is incapable of germination, or the weight of any other ingredient combined with marijuana to prepare topical or oral administrations, food, drink, or other products.” The Alaska Marijuana Control Board will hold a closed meeting on the topic with each of the involved retailers. Cannabidiol, or CBD, is a non-psychoactive compound derived from hemp, often made into tinctures, lotions and other topical therapeutic products for pain management and even epilepsy treatment. Tetrahydrocannabinol, or THC, is the psychoactive compound that gets a person high — CBD products typically have a negligible THC content. Alaska Cannabis Exchange is the source for much of Alaska’s CBD products. The products have only been available for two weeks. Owner Aaron Ralph confirmed the company receives its CBD oils at the tail end of industrial hemp pilot programs in the Lower 48. The resulting product is classified as an industrial hemp product under federal law, not as a marijuana product. Bryant Thorpe, owner of Anchorage’s first retail establishment, Arctic Herbery, confirmed that enforcement staff took his CBD products, and that he was not notified of the seizure until it happened. Lily Bosshart, owner of Anchorage retail shop Dankorage, said enforcement called her to warn not to remove any CBD products until they could arrive — they had showed up to the closed shop unannounced beforehand. The seizures come from confusion about CBD products’ place in the Alaska regulatory structure. Bosshart, along with several other retailers who had their CBD products seized, said this is the first she has heard about the product being illegal in Alaska. “It was my understanding that hemp products and this product in particular were ok,” she said. “I was unaware that this would be an issue. I wouldn’t be selling it if I thought it would be a problem.” James Hoelscher, AMCO’s chief investigator, said shops have a responsibility to find out for themselves whether or not products are legal if there is a perceived gray area. “When we spoke with retailers, a few were not aware that CBD oil was a regulated product. However, two admitted that they knew it wasn’t legal and were selling it anyway,” said Hoelscher in an AMCO release. “If there is a question about whether a product is legal to sell, all licensees need to do is pick up the phone.” Harriet Milks, AMCO’s legal counsel, said she was not fully aware of the circumstances around the seizures, but that she was aware of questions regarding CBD products as they came onto retail shelves in recent weeks. “’What is this product? We need to find out what it is,’” she said. “If it’s a marijuana product under our law I think we have a problem because it doesn’t seem to be packaged or tested or tracked according to Alaska regulations…if it’s not marijuana under our law, that’s a different story.” DJ Summers can be reached at [email protected] This story has been updated from the original to reflect the classification of CBD oil as a marijuana extract under new Drug Enforcement Agency regulations.

Marijuana board rejects onsite use

In a surprise move, Alaska’s marijuana control board has abandoned plans for cafe-style regulations that would have allowed marijuana to be consumed in some retail stores. The 3-2 vote to drop the regulation project follows more than 16 months of research, debate and public testimony that culminated Thursday in a conference room of the State Office Building in Juneau. “I’m stunned,” said Lacy Wilcox, president of the Southeast chapter of the Alaska Marijuana Industry Association. The board had been scheduled to vote Thursday to create an “on-site consumption” addendum to retail marijuana licenses, but as the board prepared to take up the subject, board members were informed that there were flaws in the public notice before Thursday’s meeting. Interim Alcohol and Marijuana Control Office director Sara Chambers said state workers made errors serious enough that the board could not approve the regulations without another 30 days of public notice. Rather than delay a decision, board member Loren Jones of Juneau suggested killing the idea altogether. Jones’ proposal had the support of board chairman Peter Mlynarik of Soldotna. It was opposed by Brandon Emmett of Fairbanks and Nicholas Miller of Anchorage. The swing vote was Mark Springer of Bethel, who had supported the idea during its development. On Thursday, he changed his mind. Ahead of his vote, he cited fears about what the new U.S. Attorney General might think. President Donald Trump has nominated longtime marijuana legalization opponent Jeff Sessions for the job. “It will draw a big spotlight on us,” Springer said of the cafe-style regulations. “We don’t want to be waving a red flag in front of federal law enforcement, at least not now.” Sessions is a well-known opponent of marijuana legalization, saying in April that it is “not the kind of thing that ought to be legalized.” Sessions, as a U.S. attorney in Alabama, famously joked in the 1980s that he used to think the KKK “were OK until I found out they smoked pot.” Speaking Thursday, Springer said he thinks it might be better for a state like Maine to take the lead on the topic. “If we want to protect this industry … then maybe we should take a deep breath on this and think about it a little bit more,” he said. Springer suggested that he doesn’t believe someone consuming a marijuana edible on the street would get in trouble with police. Alaska voters legalized recreational marijuana consumption with a 2014 ballot measure, but the legalization vote didn’t answer a critical question: Where can tourists use marijuana? The measure declared that using marijuana “in public” remained illegal. The state subsequently adopted a definition of “in public” that includes most outdoor spaces, including streets, sidewalks, trails and parks. Federal law prohibits the use of marijuana on federal land. In November 2015, the marijuana control board adopted a regulation that defines “in public” to exempt retail stores that obtain an “on-site consumption license endorsement.” That endorsement would let the store set aside a space for buyers to use marijuana. James Barrett is one of the owners of Rainforest Farms, the sole retail marijuana store open so far in Juneau. He said he had been planning a vapor lounge as part of the business. “We just don’t want a bad image for the industry if it smells like cannabis downtown,” he said, and having a lounge space would reduce the spread of odor. Wilcox said tourists aren’t the only ones who would be affected. “I don’t go to bars and drink, but it wouldn’t be so bad to go to a place and be with like-minded individuals,” she said. She said cafe-style rules would have met the need for social clubs and provided a bar-like equivalent for marijuana. She added that the board’s action effectively forces people to use marijuana illegally and Springer’s suggestion about marijuana edibles is wrong. “I feel like he was just advocating for an illegal act on the sidewalk,” she said. “That’s criminalizing something we made legal, and that’s very unfortunate.” Contact reporter James Brooks at [email protected] or call 419-7732.

Brothers share dream for retail cannabis use

By Mark Thiessen Associated Press JUNEAU, (AP) — Alaska brothers James and Giono Barrett have a dream: that some of the scores of cruise ship passengers who crowd the streets of the state capital each summer will one day use their shore excursions to kick back and light up a joint in a pot store’s lounge. The Barretts own Juneau’s first marijuana retail store and want to tap into the $260 million or so that tourists dropped in the small coastal city last year. Regulators could decide soon whether to make that happen. At a meeting Feb. 2 in Juneau, they will consider allowing marijuana retail stores statewide to provide separate areas of their businesses for onsite consumption. It’s the first time the matter has been addressed at the state level in the U.S., said Chris Lindsey, a senior legislative counsel with the Marijuana Policy Project. Recreational marijuana is legal in eight states and the District of Columbia. Denver is considering licenses for marijuana social clubs. Even if the Alaska board approves onsite consumption, don’t expect to walk into a store on Friday for a sit-and-smoke. Retail stores must file applications for such a lounge, which includes how it will be separated from the retail operation and ventilated and what is the security plan. Many retail stores will also have to get waivers on local ordinances banning smoking. Critics fear an Amsterdam-like scene and pot spilling out of the retail stores onto streets and trails. They hope the state pot board on puts in place restrictions to keep onsite consumption from happening. The Barrett brothers in December opened Rainforest Farms, where Gorilla Glue — with a THC level of 23.8 percent — is their best seller. They share concerns about cruise ship passengers smoking pot in alleys or on trails but say the easy solution is giving them a place to legally smoke their weed or eat their edibles before they head back to the ship. “We have a lot of tourists that come to Juneau — over a million every year — and a place for them to consume responsibly seems like a good thing to do,” James Barrett said. Many of these tourists will continue on to Anchorage, where they could try more Alaska-grown weed before heading further north on their planned vacations. Leah Levinton envisions an Anchorage “green light district,” where scores of tourists come on buses to try the offerings at four retail stores in the city’s Spenard neighborhood. She owns Enlighten Alaska with her brother, Evan, and their mother, Jane Stinson. “Whether or not the state approves onsite consumption, the fact is we’re going to have plenty of people coming from outside the state, and even (from) various countries that want to check out what Alaska has to offer in terms of cannabis,” she said. About 100 miles north of Anchorage is the quirky tourist town of Talkeetna, long rumored to be the inspiration for the community featured in the 1990s television series “Northern Exposure.” Talkeetna is the last stop for climbers hoping to make the ascent of nearby Denali, North America’s tallest peak, and residents have carved out a cultural and historical tourism niche for tourists making their way to Denali National Park. Joe McAneney is co-owner of The High Expedition Co., a marijuana retail store that he plans in a historic cabin on main street and hopes to tie in branding with the city’s rich mountain climbing history. He anticipates the state will consider his retail license in April. Beyond the small cabin, which once was used by National Park Service rangers, he and his partner are working with designers to build a unique consumption lounge attached to the retail store. The store plans to be open year-round to serve locals, but that can’t be the only focus, McAneney said. “I think anyone who really wants to succeed and set themselves apart in the Alaska market really needs to focus on tourism,” he said. Geri McCann has been involved with tourism in Talkeetna since 1973, and she is not in favor of having a marijuana retail store on the main drag. She markets Talkeetna as a cultural destination, where people can come to experience historic Alaska. “We cradle that and protect that,” she said. Her worry is that High Expedition customers will take their joints to a nearby riverside park and light up, even though smoking pot in public is illegal. “It’s going to change Talkeetna. Do we want that change?” McCann said. Alaska Marijuana Control Board member Loren Jones of Juneau believes operators expecting to make good money off tourists are being unrealistic. He said so many states have legal marijuana now, it’s silly to think people would take a cruise to Alaska just to get pot. “When a Disney ship comes in with families, I don’t think they’re going to be running out to consume marijuana instead of whale watching or fishing,” said Jones, adding he didn’t know how he was going to vote on onsite consumption. Another member of the five-man regulatory board is Fairbanks resident Brandon Emmett, who has advocated for onsite consumption since voters approved marijuana in 2014. “If this gets voted down, I think we have done a disservice to the taxpayers in Alaska because we’ve taken so much time hashing out the issue,” he said. Back in Juneau, the Barrett brothers have plans to build a consumption lounge. They believe their customers and the people who travel on cruise ships — mainly baby boomers — are the same demographic. They know what their patrons want: pot like Quantum Kush, which at 26.2 percent THC has the highest potency in Alaska, or no-potency weed for medicinal purposes. “They want to get really high, or they don’t want to get high at all,” James Barrett said.

Cannabis industry latest to be tangled in Anchorage permitting code

Brian Coyle thought his marijuana lab, AK Green Labs, would open last September. Nobody told him he needed a “change of use,” or a “nonconforming determination,” or that he would have to solve a spatial Rubik’s cube of parking space on his property — parking spaces over which he said the Municipality of Anchorage is “holding (his building permit) hostage.” Nobody told him he’d need five more months, private legal counsel and a former city manager turned hired gun to help him open a business the city insists it treats just like any other, or that it would take a meeting with city managers to even start clearing it up. After weeks of sitting in city rooms, Coyle’s attorney Jana Weltzin hired consultant Ron Thompson when she and several of her other Anchorage cannabis clients had trouble fixing permitting holdups associated with Title 21. Title 21, the Anchorage planning code, requires change of use permits for marijuana businesses. Change of use — when a building changes its function — triggers an avalanche of regulatory compliance. Weltzin argues the city didn’t need to create a new change of use category, as marijuana could’ve been folded into a different subsection of the use code. Now she said her clients are singled out. “This, what they’re applying, has never been applied to other businesses,” she said. Further, many Anchorage pot businesses leased buildings before the city adopted the change of use plan in February 2016. “When I applied for standard land use permit, they had not decided that all marijuana businesses need to go through change of use,” Coyle said. “They changed their mind, but they didn’t tell me about ‘til a day before my final inspection.” Further, Coyle said he’s been made to address parking space issues his absentee landlord is responsible for. Weltzin hired Thompson, who worked as the city’s building official, director of development services and public works director at various points since 1997. Mayor Ethan Berkowitz fired Thompson in 2015. Since then he hires himself out as a consultant and fixer for anyone bogged down in the city process. The city held a meeting with Coyle, Weltzin and Thompson to talk about a temporary fix, in light of his situation being a city mistake. Erika McConnell, the planning and zoning lead who handles most marijuana issues for the city, is apologetic about Coyle’s situation and a handful of others in particular she said came from misunderstandings and bad communications the city takes responsibility for. Still, the process raises hackles. “It’s silly,” said Weltzin. “Instead of thanking us for getting into buildings and making improvements and increasing their property taxes, they’re choosing to hold it all up for parking spaces, for no parking signs even.” City workers, marijuana businesses, consultants, homebuilders and Anchorage Assembly members each have a different take on what’s making Alaska’s largest city the slowest to get the marijuana industry running. Some marijuana business representatives believe they’re being singled out unfairly, while others say they only deal with standard practices. Since being legalized in 2014, Alaska cannabis producers have entered the world of industry regulation, trading potential prison time for potential dollars only on the other side of the federal, state and local micromanagement. In Anchorage, business owners have stumbled into a problem Anchorage businesses already know and fear: the planning and inspection process through which builders get building.  ‘The city is just really messed up.’ Something in the city process is indisputably holding back Anchorage’s marijuana businesses, and it may or may not be the standard treatment for all city businesses. Statistically, Anchorage lags behind other population centers in terms of getting active licenses on track growing, selling, testing, manufacturing and paying taxes. The Last Frontier’s largest city, home to 40 percent of the population, represents a third of the state’s 450 marijuana business license applications. The Alcohol and Marijuana Control office declares a license active when it has satisfied every requirement and can begin selling, growing, testing or manufacturing whenever ready. Anchorage has 28 percent of the state’s 74 active licenses. Despite having more active licenses than any other city in Alaska, however, Anchorage has a smaller percentage of active licenses up and running than any other major population center. The state has declared 21 licenses active in Anchorage as of Jan. 10. Only four are either producing or selling cannabis, or 19 percent of the total active licenses in the city and 4 percent of over 100 pending Anchorage licenses at the state level. This is well below the average rate for Alaska’s major population clusters, according to AMCO data. The Central Kenai Peninsula, which includes Kasilof, Kenai, Soldotna, Sterling and Nikiski, has 69 percent of its 13 active licenses either selling or growing. Roughly 50 percent of Fairbanks’ 14 active licenses are either selling or growing. In Juneau, half of the six active licenses are selling or growing.  At an Anchorage Cannabis Business Association meeting on Jan. 11, anything that touched the Municipality of Anchorage boiled into tirades. Would-be entrepreneurs in the state’s newest industry, some nearing bankruptcy, swapped Kafkaesque tales about the building and permitting process. Some had been told a permit requirement by one city worker only to have another tell them something different. Others spoke about lost applications eventually found wedged under municipal desks. Nearly all had a horror story about endless arguments in municipal halls over parking spots. None knew to whom to appeal. Nick Miller, ACBA’s president and a member of the state Marijuana Control Board, lamented that none of his organization’s members had received clear instructions from the city. “There’s no consistency,” he said. “The planning and permitting are entirely disconnected.” Chris Constant, a Fairview Community Council leader and hopeful Anchorage Assembly member, dropped in to commiserate with what he said is another problem he hoped to fix someday. “A lot of you learned that the city is just really messed up,” he said. “It’s exhausting to watch the process unfold with such disrespect to time.” Business as usual Thompson said businesses would jump the same hoops anyhow. The change of use permit requires the same as a special land use permit. The marijuana industry simply suffers from shock at the process, plus a handful of problems unique to them, he said. Problems seem systemic, not personal — at least, not any single person anyone can name. Most marijuana industry members spoke highly of Erika McConnell and of other city workers they said have been as helpful as they know how to be, but the overall structure is daunting. No one person knows everything or controls everything, and many people have a crucial part in the process. Building permit plans pinball between a multitude of city departments and sub-departments, each of which have a single separate chunk of a building approval process. “I’m beat up as this point,” said Cade Inscho, who is currently waiting for footing and foundation permits on a $260,000 hole he plans to turn into a marijuana dispensary. “Nobody has the full story in that building. It’s completely wrong.” Switching the terms and communicating the requirements poorly, Thompson said, is a particular problem with marijuana. “I believe most of the requirements they put in place mimic what’s going on in other businesses, except this change of use permit,” he said. “That is just terminology that doesn’t work with the building system that’s in place. They created a bunch of sections for marijuana, which was a good idea … but nowhere do you tell them that they need a change of use permit. “So there’s people that don’t understand that permitting process that created new language that doesn’t need to be there.” The permitting laws themselves are only part of a network of colliding problems for Anchorage cannabis businesses. Money compounds issues, McConnell said. Since the Marijuana Control Board banned all Outside investment in marijuana licenses and Alaska’s banks insist they want no part of it, shop and grow owners must bootstrap businesses, find private investors in state, or find Outside investors to buy building space the businesses can lease. Cheap buildings have regulatory compliance issues from the get-go. “What I have seen happen is that because marijuana business in Alaska don’t have access to normal capital,” said McConnell. “They’re working on a shoestring and they’re finding locations that are the cheapest they can find. These locations have problems. “I can think of several examples where this has been a problem. The marijuana businesses end up having to address these issues. And it’s tough. But it’s not because they’re marijuana businesses.” A going concern Unfair or not, Anchorage developers and residential homebuilders know the cannabis industry’s story well. Andre Spinelli, president of Anchorage’s Spinell Homes and the Builder’s Council co-chair on the Anchorage Home Builders Association, had only an unhappy message for marijuana businesses: welcome to the club. “This is something homebuilders have complained about and talked about and had meetings and reports and studies about for years,” he said. Spinelli voiced the same litany of bureaucratic miscommunications as those voiced at the ACBA meeting nights before. He said inspectors and permit reviewers spend little time helping businesses meet code, but rather simply say “no,” part of what Thompson called a citywide culture of “say ‘no’ now and let the industry prove you wrong later.” “It just turns into wasted time and money,” Spinelli said. “It’s constantly like this game of whack-a-mole. You get 10 departments to say ‘yes’ and then a ‘no’ comes up. It’s not just me, or the homebuilders. You talk to Verizon or Walgreens about doing building in Anchorage and they’ll all tell you, there’s no department that’s quite as messed up.” City leaders know the issue well. Anchorage Assembly member Bill Starr, who represents Chugiak and Eagle River, sympathizes with marijuana’s entry into a building permit process he called “over the top.” “I don’t get that sense that the (marijuana) industry has had a harder time of it that anyone else,” Starr said. “I don’t think our departments are built for efficiency. They’re seeing the standard for our city.” Starr, Thompson, and Spinelli have each suggested several fixes at various points to mayoral administrations and the Assembly — streamline codes or the departments, hire a new building manager who will consolidate department functions and provide central leadership, allow third party permit reviews, whatever it takes to get the city moving faster. “There is a major issue to address here,” said Thompson. “It really seems like nobody wants to address it and get better, and that’s a sad thing.” Mayor Ethan Berkowitz did call attention to the building process in 2015 during a mayoral debate opposite Assembly Member Amy Demboski. “You want to have clarity, because people who are trying to build things should know what the rules are,” he told the crowd. “You want to have speed, because when it takes a long time to process a permit or inspect a site, then it adds cost to projects. And you want to have flexibility because one-size-fits-all rules don’t really work when you’re building things.” A 2012 housing market analysis from Juneau-based economics firm McDowell Group underscored Anchorage’s lack of housing and available land. In the recommendations, it said the city would benefit from a more streamlined process. Also in 2012, an Assembly taskforce of officials, businesspeople and academics recommended similar measures as Anchorage’s housing expense forced more and more people to live in the cheaper Mat-Su Valley. These recommendations included streamlining the rezoning process, expediting the permitting process for developers and trusted planners, and assigning a “single project advocate to have responsibility and accountability for development through the entire permitting process.” Changes never came, however.  “I feel defeated in the topic, that I was never able to make a change,” Starr said. “I was never able to figure out the key.” Fear and loathing in Anchorage No grieving party really knows who to talk to for a fix — though several are talking about petitions and lawsuits. Most keep quiet. The city bureaucracy has bred a culture of fear. Several cannabis industry members refused to comment on the record about their troubles with the city, each of them saying they don’t want to invite revenge from the inspectors, permit reviewers or any other city employee with control over a piece of the process. Spinelli said the fear isn’t anything new for homebuilders and contractors. “People are very wary of complaining,” Spinelli said. “They don’t want to speak out about problems with the building department because they know the building department is going to read it. They fear retribution.” Further, he said, the complexity and disconnection make it so few people know where to isolate communication breakdowns or identify mistake origins. “It’s just impossible to prove,” Spinelli said. Thompson echoed Spinelli almost verbatim. “People are so afraid of retribution by inspectors,” he said. “They have so much power, an enormous amount of acting power. They have the right to say yes or no on everything. Most people just do what they say and not argue a thing. They feel if they were to argue and question and push back, they’re gonna get a nasty inspection next time.” Little is really known, or solved. Whatever the problems, Anchorage marijuana businesses are clearly lagging behind, and some are afraid to come forward to their own city leaders. Thompson success in this role itself, he said, is a downbeat comment on a city that should be expanding opportunities during a statewide recession. “I am literally making a living combating incorrect decision-making at the muni,” he said. “It’s sad that that’s how it is.” DJ Summers can be reached at [email protected]

Warren latest to push for cannabis banking

BOSTON (AP) — As marijuana shops sprout in states that have legalized the drug, they face a critical stumbling block — lack of access to the kind of routine banking services other businesses take for granted. U.S. Sen. Elizabeth Warren, a Massachusetts Democrat, is leading an effort to make sure vendors working with legal marijuana businesses, from chemists who test marijuana for harmful substances to firms that provide security, don’t have their banking services taken away. It’s part of a wider effort by Warren and others to bring the burgeoning $7 billion marijuana industry in from a fiscal limbo she said forces many shops to rely solely on cash, making them tempting targets for criminals. After voters in Warren’s home state approved a November ballot question to legalize the recreational use of pot, she joined nine other senators in sending a letter to a key federal regulator, the Financial Crimes Enforcement Network, calling on it to issue additional guidance to help banks provide services to marijuana shop vendors. Twenty-eight states have legalized marijuana for medicinal or recreational use. Warren, a member of the Senate Banking Committee, said there are benefits to letting marijuana-based businesses move away from a cash-only model. “You make sure that people are really paying their taxes. You know that the money is not being diverted to some kind of criminal enterprise,” Warren said recently. “And it’s just a plain old safety issue. You don’t want people walking in with guns and masks and saying, ‘Give me all your cash.’” A spokesman for the Financial Crimes Enforcement Network said the agency is reviewing the letter. There has been some movement to accommodate the banking needs of marijuana businesses. Two years ago, the U.S. Department of the Treasury gave banks permission to do business with legal marijuana entities under some conditions. Since then, the number of banks and credit unions willing to handle pot money rose from 51 in 2014 to 301 in 2016. Warren, however, said fewer than 3 percent of the nation’s 11,954 federally regulated banks and credit unions are serving the cannabis industry. Taylor West, deputy director of the National Cannabis Industry Association, a trade organization for 1,100 marijuana businesses nationwide, said access to banking remains a top concern. “What the industry needs is a sustainable solution that services the entire industry instead of tinkering around the edges,” Taylor said. “You don’t have to be fully in favor of legalized marijuana to know that it helps no one to force these businesses outside the banking system.” Sam Kamin, a professor at the University of Denver Sturm College of Law who studies marijuana regulation, said there’s only so much states can do on their own. “The stumbling block over and over again is the federal illegality,” he said. The federal government lumps marijuana into the same class of drugs as heroin, LSD and peyote. Democratic President Barack Obama’s administration has essentially turned a blind eye to state laws legalizing the drug, and supporters of legalizing marijuana hope Republican President-elect Donald Trump will follow suit. Trump officials did not respond to a request for comment. During the presidential campaign, Trump said states should be allowed to legalize marijuana and has expressed support for medicinal use. But he also has sounded more skeptical about recreational use, and his pick for attorney general, Alabama U.S. Sen. Jeff Sessions, is a stern critic. Some people in the marijuana industry say the banking challenges are merely growing pains for an industry evolving from mom-and-pop outlets. Nicholas Vita, CEO of Columbia Care, one of the nation’s largest providers of medical marijuana products, said it’s up to marijuana businesses to make sure their financial house is in order. “It’s not just as simple as asking the banks to open their doors,” Vita said. “The industry also needs to develop a set of standards that are acceptable to the banks.”

Young cannabis industry will start to mature in 2017

Big changes and big money are on the way for Alaska cannabis in the upcoming year. Alaska joined the national green rush in 2014, and then spent 2015 hashing out regulations and 2016 scrambling to build out grow operations and retail stores to meet those rules. In 2017, Alaska’s cannabis entrepreneurs will ramp up into a full-fledged industry, with developed supply chains feeding a ballooning number of retail stores. The industry will finally make the kind of money necessary to bring in tax dollars, and political influence could grow as a result. Already, Alaska has a number of operational cultivators and retailers across major and minor population centers. Sales kicked off with Valdez’s Herbal Outfitters and Fairbank’s Pakalolo Supply Inc. in late October, followed by Rainforest Farms in Juneau. On Dec. 15, Anchorage saw its first retail opening at Arctic Herbery, beating the Dec. 17 opening of Alaska Fireweed as the first entrant to the state’s largest population center and cannabis market. A handful of additional Anchorage stores will pop up in the coming months, finally having navigated the intensive dual licensing process required by the Anchorage Assembly. Supply issues will begin to ease as more and more cultivators bring their products to market. Currently, the level of finished cannabis products in the state doesn’t allow for the kind of widespread consumer base necessary to bring the Alaska market to the same levels seen in Lower 48. In some cases retailers have either run out of product to sell or have limited the amount of product their customers can buy. The state’s take of the industry’s taxes will increase, though nobody knows by how much. The Alaska Department of Revenue took its first cannabis tax payment of $5,600 in November at a specially purposed Anchorage drop box. In 2017, estimates place Alaska’s cannabis tax revenue somewhere between $5 million and $12 million. Both industry and regulatory leadership will undergo changes. Marijuana regulations could look far different in 2017 than the helter-skelter period between 2015-16. Several of the most influential regulatory voices are gone or on their way out, leaving 2017 to an entirely different dynamic. Cynthia Franklin, executive director of the Alcohol and Marijuana Control Office, resigned from the position on Dec. 5. AMCO falls under the auspices of the Alaska’s Department of Commerce. Commissioner Chris Hladick will need to hire another, which could potentially change the atmosphere of meetings and the color of ever-changing regulations. Franklin had a conservative approach to regulations compared to other states, and a hands-on approach to managing the board, often arguing with former chairman Bruce Schulte over policy points. Throughout her two-year tenure as the Marijuana Control Board’s director, Franklin frequently butted heads with the industry members on the five-member board over items like servings limits, buffer zones between businesses and protected areas and advertising restrictions. The board itself may change as well, with one of its more conservative voices and its wild card having terms expire at the end of February 2017. Fellow board members are quick to praise Peter Mlynarik, Chief of the Soldotna Police Department, for his diligence as the board designated public safety member. He ran afoul of the industry eventually, however, when he collected signatures for a Kenai Peninsula Borough commercial cannabis ban following a record of conservative policy positions. Bethel’s Mark Springer, the board’s designated rural member will also have his term end in 2017. Springer’s record as the board’s informally designated tiebreaker has been well earned, swinging on both conservative and industry-friendly sides of innumerable issues that split board votes in half. Stakeholder leadership will continue to evolve as well as the industry makes more and more money. In 2015 and 2016, the Alaska marijuana industry lacked the kind of central political and industry leadership some Lower 48 states have in the form of lobbyists or well-funded trade associations. Several organizations will vie for the top spot. Among others, the Anchorage Cannabis Business Association, the Alaska Small Cultivators Association and the Alaska Marijuana Industry Association form a cluster of interests, which sometime collaborate and sometimes collide. Two of these industry associations have leadership crossovers with the Marijuana Control Board. AMIA’s president, Brandon Emmett, will sit on the MCB until 2019, a year longer than any other current member, and ACBA’s president Nick Miller will sit on the MCB until 2018.  Emmett’s position as AMIA president could potentially change next year, as AMIA will hold a public vote to elect new board members. Given his public and industry visibility and place on the Marijuana Control Board, electing a different president may not be likely. DJ Summers can be reached at [email protected]  

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