Cannabis

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]  

Guns, marijuana users, and the feds

Federal courts and the nation’s highest legal official both agree that marijuana will have to shed its status as a Schedule I controlled substance before its users can buy a gun.    But Alaska Sen. Lisa Murkowski hinted that talk on the subject isn’t over. “With the change in administration coming in January further discussions on this issue will have to wait until a new team is installed in the Justice Department,” said Murkowski in a statement to the Journal. During 2016, two pieces of judicial guidance have squashed objections to the Bureau of Alcohol, Tobacco, Firearms and Explosives rules that forbid marijuana users from buying a firearm without lying on their federal application. ATFE Assistant Director of Enforcement Programs and Services Arthur Herbert sent a letter to federal firearms dealers on Sept. 21, 2011, expressly forbidding them from selling to marijuana users, both medical and recreational. Letter from the Department of Justice Cannabis is still a Schedule I Controlled Substance, meaning it has no federally accepted medical use. Until that changes, other federal laws have to toe the line, according to a Department of Justice letter sent to Murkowski. However, the letter has a few winks and nods, mirroring the tone of other federal marijuana guidance that suggest the feds won’t devote too much time to enforcement.   Murkowski, who represents the state with the highest per capita gun ownership in the country, wanted the U.S. Department of Justice to reexamine the ATFE rules in a letter to U.S. Attorney General Loretta Lynch sent in March 2016. On Oct. 27, 2016, Murkowski got a letter back from assistant attorney general Peter Kadzik saying the law is clear: no firearms purchases for marijuana users. “The department is also committed to enforcing the Gun Control Act of 1968 (GCA), which inter alia, prohibits the sale of ‘any firearms or ammunition to any persons knowing or having reasonable cause to believe such a person…is an unlawful user of or addicted to any controlled substance,’” the letter reads. “By its explicit terms a controlled substance for the purposes of the GCA is defined by reference to the CSA (Controlled Substances Act), and marijuana remains an illegal, controlled substance under federal law.” Murkowski said the Department of Justice talks from both sides of the federal mouth, crushing the ability of states to determine their own laws. “The Justice Department’s response is disappointing and reflects a bias against firearm owners,” Murkowski wrote to the Journal. “One the one hand, the Justice Department expresses respect for state regulated markets in marijuana, yet on the other it continues to insist that one who uses marijuana consistent with state law can neither acquire nor possess a firearm.” Kadzik’s letter has an undertone common in federal marijuana communications, both upholding federal law and downplaying the DOJ’s desire to actually enforce the law. Like the 2011 Cole Memorandum, which directs banks on marijuana-related actions, Kadzik’s letter hints that federal law enforcement doesn’t have all the time in the world to focus on marijuana laws in states where it is legal. “Note that the department generally has not focused its limited resources on individuals who use of possess marijuana consistent with applicable state law,” Kadzik wrote. Kadzik also pointed out that the U.S. Department of Justice doesn’t charge drug users with illegal firearms purchases very often, and doesn’t really know how many of those cases involved marijuana rather than some other controlled substance. In Alaska, Kadzik writes there’s no record of it happening at all. “The United States Attorney’s Office for the District of Alaska has not identified any cases where it filed charges under §922(d)(3) or §922(g)(3) in fiscal years 2015 or 2016 based upon an individual’s use of marijuana consistent with applicable state law,” Kadzik wrote. Winks and nods aside, the DOJ’s letter clearly upholds the federal law for the second time in 2016. The 9th U.S. Circuit Court of Appeals issued a decision on a Nevada case on Aug. 31 that upholds the ATFE guidance from 2011. Cardholders meet the definition for “unlawful drug users,” according to the court decision. The case concerned a Nevada woman, S. Rowan Wilson, who attempted to buy a gun but was prevented from doing so by the storeowner, who knew she had a medical marijuana card. Nevada is one of 29 states that have legalized medical or recreational marijuana. The next administration With the DOJ reply to Murkowski and the 9th Circuit Court decision, little wiggle room and little support seems to exist for marijuana users. Murkowski hinted she will discuss the matter with the new administration, but so far the new DOJ scares marijuana legalization advocates. President-elect Donald Trump nominated Jeff Sessions as attorney general, sending shockwaves throughout the developing marijuana industry. Sessions has an established anti-marijuana stance, once remarking “good people don’t smoke marijuana.” The National Rifle Association has remained silent on the issue of marijuana users buying guns. DJ Summers can be reached at [email protected]

Most state employees can use marijuana off the job

Tera Ollila was smiling when she became one of the first people to legally buy marijuana in Juneau. When it came time to talk to a reporter, her smile faded. “Do you have to use my name?” she asked before granting permission. Ollila, like some of those waiting in line Wednesday and Friday at Rainforest Farms, is a state employee, and while she believed state regulations allowed her to buy marijuana without threatening her job, she wasn’t 100 percent sure. The state of Alaska’s official drug-free workplace policy, last updated in 2012 (two years before voters legalized marijuana), states: “Classified employees and appointed officials are prohibited from engaging in the improper or unlawful use manufacture, distribution, dispensing, possession, or use of alcohol or a controlled substance on state property, in the workplace or while in performance of official duties.” In other words, no using marijuana on the job and don’t be high on the job, including on a work-related trip. Otherwise, as long as you’re not intoxicated at work, what happens at home stays at home. There are a few exceptions are for what the state calls “safety-sensitive positions” regulated by the federal government. Those include (but are not limited to) many ferry system workers and people with commercial driver’s licenses. “Some state employees in safety sensitive positions are prohibited from having THC in their system,” said Division of Personnel and Labor Relations’ Nancy Sutch in a statement provided by a Department of Administration spokeswoman. “Employees should contact their HR representative if they’re unsure of their status.” Many state departments require pre-employment drug testing, and if someone is suspected of being intoxicated on the job, the state can ask an employee to take a drug test. The exact procedures for that, and the chances of random drug screening, vary by position. Under the regulations approved by the Alaska Police Standards Council, corrections officers, parole officers, police officers and probation officers can’t use marijuana. If they do, they risk having their police certificate revoked by the council. The same standard doesn’t apply for Village Public Safety Officers — their regulations contain no restriction against using marijuana in off-hours, but they have to refrain from using marijuana in the year immediately before they are hired. Rainforest Farms last week became the first marijuana store to open in Juneau, and a second will come before the Juneau Planning Commission on Wednesday. A third is awaiting approval by the state licensing board, and entrepreneurs have announced plans to open five more in the capital city. For these businesses and prospective businesses, state rules affecting marijuana use aren’t an abstract problem. In 2015, according to figures from the Juneau Economic Development Council and Rain Coast Data, 4,097 Juneauites were employed by the state. Another 2,042 were employed by local and tribal governments (including the hospital, school system, airport and harbors), and 693 were employed by the federal government. That’s a substantial fraction of the 17,930 people who have jobs here. The federal government figures do not include uniformed Coast Guardsmen and women, but uniformed or not, federal workers are prohibited from using marijuana, even in their off hours. That’s not the case for employees of the City and Borough of Juneau, who operate under rules more like those of the state. The CBJ’s drug-free workplace policy was last updated on Aug. 13, 1990, and states that anyone using, intoxicated by or possessing “controlled substances in the work environment or during working hours is subject to immediate disciplinary action up to and including dismissal.” It doesn’t include any notice barring employees from home use. Dallas Hargrave, the city’s human resources director, said the city’s policies on marijuana are roughly the same as they are with alcohol. If someone had a few drinks at lunch and came back to work intoxicated, they’d get in trouble. If someone used marijuana before work or during work and was high, they’d get in trouble. As for the rest of it? “As long as they’re not impaired at work, what they do on their off time is not relevant to us,” Hargrave said.

Covering the cost of cannabis

The State of Alaska will collect its first marijuana taxes this month, but records from the Alaska Alcohol and Marijuana Control Office show the nascent industry has already paid more than three quarters of a million dollars in fees since the first license requests were filed in 2015. According to the results of a public records request filed by the Juneau Empire, marijuana retailers, testing labs, manufacturers and growers paid $341,512.50 in fees between July 1, 2015 and June 30, 2016. From July 1 through Nov. 1 this year, they paid another $428,144. “We’re really happy to be able to be above-board and contributing to the state at a time where we’re absolutely strapped for cash,” said Cary Carrigan, executive director of the Alaska Marijuana Industry Association, which represents businesses across the state. Those figures only tell part of the story, however. The Alaska Department of Commerce and Community Development, which oversees AMCO, has stated that it wants to make the department completely self-funded with fees by fiscal year 2020, which starts in July 1, 2019. “I think we’re on track,” said Cynthia Franklin, director of AMCO. In Fiscal Year 2017, which started July 1, the state provided $1.5 million in startup funds to pay for marijuana regulation. That came atop $700,000 in the previous fiscal year. Even if fee applications continue at the present pace, AMCO won’t make enough in fees to cover that bill. Furthermore, the state splits permit fees with municipalities. If a marijuana farm pays the $5,000 fee for a permit, half that sum will go directly to the city or borough that hosts it. The figures provided by AMCO don’t include that split, and even if they did, AMCO doesn’t have permission from the Legislature to spend more than $100,000 of the money it has collected so far. The remaining $670,000 will remain locked away until lawmakers allow the state to spend it. That leaves AMCO in an ironic situation: It is struggling to deal with a flood of marijuana demand atop the normal tide of alcohol license renewals, but a state hiring freeze and the locked-up money mean it can’t immediately fix the issue. At a meeting in late October, Jeremiah Emmerson of the Alaska Small Cultivators Association pleaded with the Marijuana Control Board to release more financial information. “We could utilize that information to maybe put a little public pressure on the governor to say… ‘can we please, please assist this particular agency with more staff?’” he said. “I know you guys are overwhelmed, and I really think the cure-all is to have more staff so we can get through things more rapidly.” AMCO figures don’t include the regulatory costs incurred (and fees collected) by other state agencies, including the Department of Environmental Conservation, which will oversee kitchens producing marijuana edibles. “At this point in time, so far, we haven’t yet gotten to the point of it being a revenue generator,” said Rep. Lance Pruitt, R-Anchorage and chairman of the subcommittee that set AMCO’s budget this year. “We need to focus first on it covering its costs.” In Alaska, marijuana businesses — like alcohol vendors — pay both taxes and fees. There’s little question that this year, the state will make millions of dollars from marijuana taxes. The state tax is $50 per ounce for flower (or bud) and $15 per ounce for other parts of the cannabis plant. Earlier this year, the Alaska Department of Revenue estimated that the state will collect $6 million in fiscal year 2017 and $12 million in 2018 from marijuana sales. The first ceremonial retail sale took place Oct. 28 in Fairbanks, and the first official store opening took place Oct. 29 in Valdez. The first tax deposit is expected no later than the last day of November. Pruitt and many other lawmakers make a distinction between taxes and fees. “Really, the fees should cover the cost of the regulation, and taxes should be going toward the state coffers to pay for other things,” he said. When he campaigned for office this fall, Pruitt said he heard from voters who said the industry needs to get up and running with help from the state. He’s not opposed to that, but in testimony earlier this year, he said he wants to make sure that isn’t a permanent situation. “Maybe we need to use some of the taxes at first to get it off the ground, but that should be kind of a temporary thing,” he said. Carrigan said he thinks “we are willing to pay what’s reasonable and necessary to move the industry forward,” but it will take time for marijuana to pay for itself on fees alone. He said the state’s goal of summer 2019 is a reasonable one that will give the industry time to open its retail stores. “Right now, people are paying a ton of money out of pocket, and it’s really incumbent on us to get our retail operations open,” he said. When that happens, the marijuana industry will start to resemble the alcohol one. Last fiscal year, that industry generated almost $2 million in licensing and permit fees, enough to pay for all alcohol regulation operations in Alaska.

Red Run opens, Kenai now has a pot shop

Back in April, when Roger Boyd was getting Red Run Cannabis Company licensed by the Kenai city government, he told the city Planning and Zoning commission he considered it a statement as much a business. He now considers his statement made. At Red Run’s opening at noon on Monday, a line stretched to the end of the business’s parking lot. By 1:30, the line remained about the same in length. Although licensed as both a marijuana cultivator and retail store, the excitement at Red Run Monday was on the retail side. For customer Carol Schuldt — shopping with her friend Marti Butcher, who had come down from Anchorage for the occasion — Red Run represented a big difference from “the days when you had to buy it from your aunt’s cousin’s brother, or somebody.” “I can choose what I want, like buying a fine wine, and I can stop by and get it on my way to Home Depot,” she said. She saw at least one other advantage to the shop. “I’m not a criminal!” Schuldt shouted as she left the store, which is located in a renovated One Stop gas station and convenience store owned by Boyd. She carried her purchase in an opaque bag. The line outside the door cheered. Strains and suppliers Red Run co-founder Eric Derleth showed off Red Run’s three cultivation rooms and outlined the technical complexities needed to not only grow the plants — the building’s air circulates through two HVAC systems — but also to secure them. Red Run has 30 security cameras feeding footage into about 40 terrabytes of storage, backed up in a secure cloud service. Derleth expects Red Run’s own marijuana to be saleable in January. He said that  suppliers presently control the marijuana market, and they're struggling to keep up. “It’s a matter of having relationships with people and tapping into that,” he said. Relationships between marijuana activists have made the Alaska marijuana industry possible, Derleth added, even though in many cases these activists are now business competitors. Derleth and Red Run co-founder Marc Theiler are founding members of the Kenai Community Coalition on Cannabis, and their relationship with fellow advocate Leif Abel allowed Red Run to have its opening: the product it offered Monday was grown outdoors this summer by Abel's Kasilof-based cultivator, Greatland Ganja. “Greatland Ganja had nine strains, and we worked that out with them ahead of time because they were selling it so fast,” Derleth said. “They held on to it as a good faith gesture.” Red Run sold all nine strains at the same price: $20 per gram, which some customers said is comparable to, or just slightly above, the street price. Derleth said some black market marijuana can go for $10 a gram, a price he hopes Red Run will be able to reach in two years as more cultivators come into the market. Missing from Red Run’s sales counter on Monday were marijuana oils, concentrates, and edibles. Alaska has only three licensed marijuana product-manufacturing facilities, and Derleth said the slim supply has kept their productivity low. Red Run plans to sell such products in the future. At the opening, Abel stood behind a counter with sample buds from each of his strains in jars with vents for smelling. He said that between the weather, technical hang-ups, and his company’s licensing process, completing an outdoor harvest this summer hadn’t been certain. Nonetheless, he said the product sold Monday had been harvested two months ago. It had been delayed by state-required product testing. Currently only two labs are licensed for marijuana testing: one in Anchorage and one in Fairbanks. Abel said legal marijuana supply is unlikely to match demand any time soon. “You have this great demand, and you have retailers who will have to cut hours or close for several days a week because they’re trying to limit how much product’s moving so they can stay open more continuously until the next crop,” Abel said. “That will even out in a year or so. ... I encourage all those folks who got their licenses to grow as fast as possible.” Into the new year For legal marijuana advocates, 2016 has been a mixed year. In the Nov. 8 general election, three states voted to legalize recreational marijuana and three for medical marijuana. However, the incoming Trump administration’s stance on the drug is unclear, though presumptive attorney general appointee Jeff Sessions has opposed legalization. Asked if he believes the marijuana industry has permanently established itself as a legal venture, Abel — a board member of the Alaska Marijuana Industry Association and executive director of the Coalition for Responsible Cannabis Legislation — said nothing is certain. “I feel comfortable with state politics and local politics,” Abel said. “Federal politics are a bit of a larger question right now. I wouldn’t say anything is guaranteed. But what I have learned from this process is you just don’t give up. ... When you have a business that takes two to five years to pay for, you move forward. You don’t stop because of a perceived federal threat. You move forward and involve yourself in politics to the best of your ability.” Boyd said that while the political future of marijuana may be uncertain, its place in America’s broader culture has permanently changed. “You know that expression, ‘an idea whose time has come?’” Boyd said. “The normalization and legalization and use of cannabis medically and as a mild intoxicant, that’s just being accepted across the board.” Ben Boettger can be reached at [email protected]

The Great Cannabis Divide

More Americans than ever have legal access to marijuana, but the cherry glow highlights a gap between the way voters think and what federal lawmakers say and do, according to policy reformers. Paul Armentano, deputy director of the National Organization of the Reform of Marijuana Laws, or NORML, said cannabis legislation confirms one of the sore spots that drove the 2016 federal election cycle — the sense of a growing schism between voters and their federal representatives. Armentano is happy with the statewide results, but only to a point. “They key point is that when you get through with the lovey-dovey, feel good responses, it’s also indicative of a breakdown of the democratic process,” he said. Along with Donald Trump’s prediction-defying win in his presidential bid over Hilary Clinton, Nov. 8 wove more changes into the U.S. political fabric when eight of nine states legalized either recreational or medicinal cannabis. Voters who hot-boxed the voting booths with support dramatically changed the national cross-section. One-fifth of the country’s population now doesn’t need a prescription to buy marijuana. Americans in three in five states — 29 overall — can access medical marijuana. By 2020, the National Cannabis Industry Association projects a national marijuana market of $22 billion. The voter turnout reflects a growing national trend. In the eight states, ballot measures passed with an average 58 percent of voters in favor, confirming Pew and Gallup polls that say six of 10 Americans support marijuana legalization or letting states decide the issue. Because of these numbers, however, the largest marijuana policy reform group in the nation is uneasy with what the state-by-state movement says about U.S. democracy in 2016. Congressional inaction Pundits and media think pieces said the 2016 presidential race was the boil over of years of belief among the electorate that Washington D.C., elites don’t care, don’t listen or don’t move. Decriminalizing marijuana is part of that divide, Armentano said. “I can’t think of a single issue that would so clearly represent it,” he said.  Armentano’s aggravation puts a dark cloud over the otherwise joyful post-election week when cannabis industry media outlets and legalization supporters trumpeted 2016 as a watershed year. Armentano bristles that the states have to take action in the first place. “In a healthy democracy, when a significant portion of the public takes certain policy decisions, their elected officials go to the halls of Congress, carry bills and lobby for bills that are reflective of the views of their constituency,” he said. “The reason we had nine states in this election with voter initiatives…was because in every one of those states, lawmakers were unwilling to address the issue. That’s problematic.” The public is holding an open rebellion against federal law. Polls say six out of 10 Americans support legalizing marijuana; 29 states have some form of legal medical use, not counting the states allowing marijuana plant-derived cannabidiol oils for medical purposes. One-fifth of the country’s population doesn’t even need a prescription for cannabis, thanks to California and its nearly 40 million residents. State laws defying federal laws have led to an uneasy truce involving banking and law enforcement. Marijuana is listed as a Schedule I Controlled Substance, meaning it has no accepted medical use. In direct conflict with federal law, a majority of states now approve medical marijuana and growing numbers are legalizing it for adult use including Alaska, which just had its first legal sale in October after a voter initiative was approved in 2014. And yet, Armentano said, federal legislators do not respond. “I’ve been doing this for 21 years,” he said, “and I’m still waiting for a single piece of legislation addressing medical marijuana to receive a vote at the federal level. Not a floor vote, a committee vote. I’ll take a subcommittee vote — any actual recorded vote. It has not happened.” Armentano’s frustration takes root in congressional inaction. Congress has had many chances to take up marijuana-related issues, both in the past and in the present. In 1981, the late Rep. Stuart McKinney tried to reschedule marijuana with a bill co-sponsored by 84 House members, including Newt Gingrich, who went on to become Speaker of the House and is now a key advisor to President-elect Donald Trump. After the bill died in committee, Rep. Barney Frank began annually introducing nearly identical legislation, which failed each time. Since then, successive attempts to deschedule or reschedule marijuana have failed.  Currently, marijuana-related legislation is suffering the same fate. The Compassionate Access, Research Expansion, and Respect States Act of 2015, or CARERS Act, would move marijuana to a Schedule II substance and protect banks doing in marijuana business. It has lingered in the Senate Judiciary Committee without action since New Jersey Democrat Sen. Cary Booker introduced it in March 2015. The House version was kicked to a handful of subcommittees, none of which have taken any action. Californian Republican Rep. Dana Rohrabacher introduced the Respect State Marijuana Laws Act of 2015 in April. Like the CARERS Act, the House divvied it up among half a dozen subcommittees where the bill sits inactive. Even marijuana-related subcommittee actions in other areas have yielded nothing. In a 2015 appropriations bill, legislators including Alaska Republican Sen. Lisa Murkowski voted to include a provision that would prevent the federal government from prosecuting banks for dealing with marijuana businesses. The addition, passed with a 16-14 subcommittee vote, ended up stripped from the final bill. Republicans and states’ rights Besides a divide between the voter tide and federal inaction, Armentano sees hypocrisy as well. Republican lawmakers are typically full-throated about states’ rights and federal overreach. NORML tracks voting records and public statements to see which lawmakers support legalization directly or at least the rights of states to make up their own minds. “About two-thirds (of Republicans) disagree with that position,” Armentano said, “despite their longstanding propensity to generally argue that the government that governs best governs least, and that so many of these issues are best addressed on a state and local level. They clearly don’t believe that’s the case concerning marijuana policy.” The voter-policymaker divide is especially distinct in the GOP, where lawmakers haven’t kept up with their electorate’s evolving attitudes. As a voter issue, support of marijuana legalization is largely non-partisan, though young Democrats and independents top the charts, according to Gallup data. In the most recent poll, Gallup reported than 42 percent of polled Republicans support legalizing marijuana — a number that has doubled over the last 10 years. Among the states that have legalized medical marijuana, there is a roughly even split between red, blue and swing states. West Coast blue states and New England blue state Maine and Massachusetts each have recreational marijuana, along with swing state Colorado and deep red Alaska. Red states like Arizona, Montana, Arkansas and North Dakota count themselves among the legal medical marijuana states. Florida, which swung red this election, legalized medical marijuana in 2016 with 70 percent of voters in approval. Red states like Mississippi, Missouri, North Carolina and Nebraska have removed jail sentences for possessing small amounts of marijuana. Some Republicans, notably Rohrabacher and Alaska’s Rep. Don Young, have stuck to the states’ rights argument on the issue by sponsoring or cosponsoring marijuana-related bills. 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.” During the Republican presidential candidate debates, Sen. Rand Paul supported states’ rights regarding marijuana along with Carly Fiorina and former Florida Gov. Jeb Bush. Others seem to bend that belief where marijuana is concerned. After Arkansas became the first Southern state to legalize medicinal marijuana, Gov. Asa Hutchison, a former head of the U.S. Drug Enforcement Agency, expressed fear of tax burden and discomfort with the state-by-state nature of legalization. “It’s an example of the states innovating in a risky area, and certainly the states are leading on this, but we’re to a point that the federal government is going to have to readdress this,” he told reporters form the Arkansas Democrat-Gazette after the election. “This does not call for a state-by-state solution, it calls for...a national solution.” Trump on pot Federal policies aren’t expected to change one way or another in the coming years, both from an unchanged Congress and a lukewarm White House. Most experts have a “wait and see” approach to what will happen under Trump, but they don’t think his cabinet could muster enough support to scale back legalization. Morgan Fox, communications manager for the Marijuana Policy Project, said he isn’t particularly worried about a newly Republican-dominated Washington. “This is a bipartisan issue, and while support has always been a little less strong with Republicans, we also have a lot of Republican support in a lot of states as well as certain people in the legislature,” he said. Experts have no real hints for what Trump will do. As far back as 1990, Trump advocated for legalizing all drugs.  In interviews throughout his election campaign, Trump didn’t give any solid guidance about his support for a recreational market, though he has firmly stated his “100 percent” support of medical marijuana and his support of states’ rights in determining whether or not to legalize. “But I know people that have serious problems and they did that they really — (medical marijuana) really does help them,” he told Bill O’Reilly of Fox News in February 2016. Reformers from NORML, the Marijuana Policy Project and the National Cannabis Industry Association don’t so much fear Trump as his possible cabinet. “The reality is, if we look at the small cadre of individuals guiding Trump presently on public policy, we see a veritable murderers’ row of long time, stalwart prohibitionists,” Armentano said. Trump’s advisers include New Jersey Gov. Chris Christie, a former federal prosecutor who promised during Republican presidential debates to enforce federal law in all states that have legalized marijuana, along with medical marijuana opponent and former New York Mayor Rudy Giuliani. Both were once considered frontrunners for Attorney General, although Guiliani is reported to be interested in Secretary of State and Christie has been sidelined from his previous prominent post in the Trump transition team. Presidents have rarely taken a supportive side to medical or recreational marijuana legalization. Marijuana has had only a brief respite at the federal executive level. Former presidents Bill Clinton and George W. Bush, whose presidencies covered 16 years total, both took hard stances against medical marijuana development. President Barack Obama has had a spotty pot record, being dubbed the “worst president on medical marijuana,” by Rob Kampia, executive director of the Marijuana Policy Project, in an interview with Rolling Stone. Under his presidency, federal drug law enforcement steeply stepped up threats, raids, prosecutions and confiscations of marijuana cultivators in Colorado, Washington, Rhode Island and California.  In his second term, however, Obama’s administration started embracing a more lenient platform of encouraging states to experiment with marijuana as they wished. DJ Summers can be reached at [email protected]

Why did Marijuana Control Board deny this company a license?

Outsiders aren’t allowed to invest in Alaska’s marijuana industry, but like Lower 48 states, they’ll sure try. Alaska saw its first open attempt at an Outside company finagling its business structure to get into the Last Frontier’s burgeoning cannabis industry.  At the most recent Marijuana Control Board meeting on Oct. 28, the board rejected a license application for Wild Flower Holdings LLC, the first time the board has rejected anything since opening the application process in February. Few items stacked up to the board’s or Alcohol and Marijuana Control Office’s eyes. Board Executive Director Cynthia Franklin said she dealt mainly with Outside parties over the license. The license application itself was duplicate of Dream Green Farms’s successful application; Wild Flower had even left Dream Green Farms’s name on the application. The application also listed plans for only 10 plants, which licensed Alaska growers later said was so uneconomical as to be highly suspicious. Further, it appeared to the board that the LLC owner, Andrea Gribbons, had little knowledge of the industry. Franklin and board members probed the applicant for information about how the business would operate, but she seemed to have little idea. Rather, she ceded certain information to management consultants from Arizona company Happiedaze LLC, which owns the property proposed on the license. Board members voted the license down. “You know me,” said board member Brandon Emmett, who holds an industry stakeholder seat. “I’ve advocated pretty hard in the past for Outside investment just because I think it’s so important that these businesses have access to capital. But it seemed clear to me that this applicant really didn’t know the business, and I think as a board it’s important we have knowledgeable people owning these licenses.” The concept of the owner-operator lives strong in Alaska regulation. Alaska bars non-residents from any indirect or direct financial investment in a marijuana license, intended to prevent both criminal money laundering and to give Alaskans a foothold in the industry without being overwhelmed by the beginnings of Big Marijuana. Regulations breed loopholes There are two main types of workaround for residency requirements, involving either management agreements or real estate. Management agreements, where a business owner cedes operation to consultants or contractors, are both legitimate and common ways for businesses to get needed expertise or to get hold of tax certain tax advantages. They also create a window for non-residents to maneuver into controlling positions by skirting regulation language. Real estate is the easiest and most above-board way for nonresidents to invest. State and local zoning regulations have caused a space crunch, especially in areas with low vacancy rates like Anchorage, Seattle or Denver. Deep-pocketed nonresidents can offer a solution. They buy the property and lease it to cannabis growers at up to four times the average rental rate, or ask for a portion of the license’s revenue along with the rent.  Vince Sliwoski, an attorney with law firm Harris Moure, said residency requirements in Oregon produced the same kind of workarounds. “People are always scheming to find ways around the residency requirements,” he said. “Usually they go against either the spirit or the letter of the law.” Sliwoski said the workarounds typically involve some kind management agreement like the one seen by the Marijuana Control Board. Usually, he said, regulators pry until they find out who’s making the actual money. “Eventually they figured out the residency rules weren’t really doing anybody any good,” said Sliwoski. In 2016, Lower 48 marijuana markets have been scaling back their residency restrictions. Oregon removed residency requirements entirely in March 2016. Washington eliminated a requirement for non-resident investors that made them fill a six-month residency before being allowed to invest in Washington businesses. In Colorado, a bill passed in April that has not yet been signed that lifts the current two-year residency requirement for all license holders. Instead, it simply requires one of the company’s officers be a Colorado resident.

At long last, Alaskans can buy legal marijuana

On Oct. 29, nearly two years after Ballot Measure 2 legalized adult use cannabis in Alaska, the retail store Herbal Outfitters opened in Valdez, a small town a half day’s drive from Anchorage. This marks the first retail store opening. Fairbanks’ Pakalolo Supply Co. made a ceremonial legal cannabis sale the day before. Those who braved the chill and drizzle to cluster around the store's entrance said two years was worth the wait. “I’ve been waiting 46 years,” said Michael Holcombe, a Valdez retiree who can still remember blowing pot smoke at cops while waiting in line for the Rolling Stones and Stevie Wonder. Holcombe was the first in the store to make a purchase. Others caravanned through Alaska’s mountains and icy October roads to see history in the making. “We wanted to be part of the crowd that bought the first legal weed in Alaska,” said Christopher Front, who traveled from Anchorage with his wife Hannah and dog, Daisy. “She wanted to be the first dog,” he added. For Alaska’s first sale to happen in Valdez, instead of population centers like Anchorage or Fairbanks, surprised even the owners. “We never anticipated that we’d be the first legal sale,” said Derek Morris, Herbal Outfitters’ general manager. “That’s still a little bit of a shock to us.” Valdez’s previously claim to fame, beyond its small town charm and scenic beauty, was as the site of the infamous Exxon Valdez oil spill. That spill funneled federal disaster relief funding into Alaska at a time when the state was undergoing an oil-driven economic recession worse than but similar to the one Alaska is in now. Now, Valdez will mark the beginning of an industry that has raked in hundreds of millions of states taxes in Colorado, Washington and Oregon. Bluntly speaking The road to the first legal joint has been a stony one. What is a blazing new industry in the Lower 48 has strained to grow in Alaska. Lack of capital and banking restrictions have given industry little financing with which to get rolling. Local authorities have not always been kind, with several ongoing municipal and borough wide bans causing chronic political battles. Budding entrepreneurs have taken a hit in their pocketbooks due to zoning restrictions and local regulations that demand fat up front investments before sales even spark up. Like other Alaska businesses, Morris said the company had a sticky time getting onto its feet since first applying for a license in Feb. 2015, though he insists the local Valdez government and citizens were more welcoming than in other areas. “It’s been a bumpy road,” said Morris. “There were a lot of zoning and ordinance laws, particularly with regulations in the store… but the local community’s been very supportive.” Morris formerly worked in Colorado’s legal industry managing Maggie’s Farm, one of the state’s largest suppliers. He said he came to Alaska for a change of scenery and a change from what he saw as too much greed in the Colorado scene. Even for someone as experienced as Morris, the first sale has an emotional impact. “Our nerves are a wreck,” he said. “Our anxiety is high. But our hearts are full.” Herbal Outfitters carried two merchandise from two cultivators: Greatland Ganja from Kasilof and Green Rush from Sterling. Arthur Able, one of Greatland Ganja’s owners, said the first sale is a milestone. “I’m just ecstatic,” he said. “Super excited about the actual beginning of the industry. After this everything gets better. Every transaction will get smoother. The grows will get more streamlined and better quality.” 4/20 friendly, $420 not so friendly Legal Alaska pot isn’t cheap — yet. Patrons pay $420 per ounce or $22 per gram at Herbal Outfitters — a cute price considering the product, but also roughly $100 dollars more than what the black market charges for similar mid- to high-grade merchandise. This high price reflects an incomplete supply chain, not a new status quo of expensive product feared by some medical marijuana activists before Colorado legalized in 2014. With only one retail store open and only one Anchorage tester funneling cannabis into a limited number of ready-for-market stores, the price point starts off high. Prices sink dramatically as cultivators and retailers become more established and the consumer demand funnels into stores away from the black market. When Colorado opened legal adult use sales in 2014, Denver metro area prices averaged $323 per ounce or according to survey performed by Colorado Pot Guide. Outside the Denver area, the price rose to $367 per ounce. By October 2016, that price cut roughly in half. A similar scenario played out in both Washington and Oregon. When Washington sales opened July 2014, the average statewide price per a gram was $25 to $30. That number fell to $10 per gram by 2016. Able said he expects product to get cheaper over the next year. “Definitely in the first year,” he said. “The factor is going to be more related to the amount of grows coming online than the timeline.” DJ Summers can be reached at [email protected]

Anchorage zoning laws force cannabis shops to cluster

Legal cannabis sales are about to happen in Alaska, maybe even within the week. Flower and bud and wax and shatter won’t have a wide city network to start, though. The municipal process takes time and has already backfired, as Anchorage residents object to the denseness of pot businesses. Greatland Ganja, a Kasilof cultivator, dropped off samples at recently approved testing lab CannTest LLC on Oct. 24. Several Anchorage retail shops are near operational — one, Arctic Herbery, has already started handing out samples — and will have a flow of tested product as soon as CannTest clears it. Valkyrie Security and Asset Protection is trucking a bundle of samples to CannTest from Fairbanks later in the week, and Valdez retailers say they could open by Saturday, Oct. 29. The marijuana industry, unable to access banking and without any current sales to replenish the thousands in rent, construction, legal and license fees they’ve paid in the last year, views municipal rules as a needless constraint. Besides considering it unnecessary, industry stakeholders think the Municipality of Anchorage rules are indirectly leading to public backlash against marijuana businesses by concentrating them into green-friendly clusters. Erika McConnell, the Anchorage municipality’s marijuana land use planner, said industry members are reading the cause and effect of zoning requirements accurately. “There’s a limited number of zoning districts in which these businesses can be established,” she said. “You kind of end up having certain areas of town where you find spaces.” Jana Weltzin, a cannabis business attorney, describes the municipal land use requirements as “overly burdensome,” and said they cost both city staff and businesses time and money. “A cannabis production company would make better business sense in other parts of the state, unfortunately,” wrote Weltzin. Principals with principles Ballot Measure 2 legalized recreational adult use cannabis in Alaska, but allowed local governments to opt out of legal cannabis or create their own rules. Municipalities have taken different views on how regulations should go. To date, Anchorage’s process has been the most problematic. It requires licensees to have a license application deemed complete by AMCO before before the Anchorage Assembly will review licenses, rather than approving the city license before or concurrently with the state license. It has more restrictive hours of operation than the state and more restrictive zoning rules. The Anchorage Assembly passed an amended land use ordinance requiring setbacks between marijuana business and schools, churches, recreational facilities, and child-centered facilities. The land restrictions create pockets of proper zoning in B-3 business zones for retail and industrial zones for cultivation facilities, largely concentrated in Midtown-Spenard and South Anchorage. Some neighborhood tensions boiled over on Oct. 17 as a result. That afternoon, Campbell Elementary School made a robo call announcement to hundreds of parents imploring they attend the Oct. 18 Anchorage Assembly to protest several marijuana business license applicants that had passed through the process “without public input.” In a letter to the Anchorage Assembly, Campbell Elementary School principal Michelle Johansen told assembly members she had learned at a Taku-Campbell Community Council meeting that there were five marijuana businesses vying for space near Campbell Elementary. Johansen demanded that the Assembly move one of the agenda items, approval of Raspberry Roots cultivation facility, up further on the agenda so parents could protest. “The Campbell community vehemently opposes another marijuana business so near our school, for what we hope are obvious reasons,” wrote Johansen. “We are disappointed that Raspberry Roots is the last item on your agenda for tomorrow evening. I respectfully request that the item be moved up the agenda so that community members, who have children to put to bed, can participate in the discussion.” Each of the proposed businesses scheduled for hearings that night — cultivator Raspberry Roots and retailers Alaska Buds and Enlighten Alaska — passed assembly approval, having undergone extensive contact with their respective community councils. While the elementary school dominated headlines, industry leaders heard directly from the public at large. Nick Miller, a member of the Marijuana Control Board and president of the Anchorage Cannabis Business Association, said his phone blew up with angry calls from the general public after the Campbell Elementary fiasco. “I got a lot of calls from the public just upset that all the businesses are bunched up,” Miller said. “My phone was ringing of the hook.” Miller said he sympathized, but also that his hands were tied. “If the public’s concerned about these businesses being so bunched up they need to contact their assembly representatives,” said Miller. “There’s only so much we can do as an industry.” Parks and recreational marijuana Public outcry could worsen if the assembly chooses new rules that would put the screws on cannabis businesses even further. “Anchorage definitely has the most restrictive regulations in the state,” said Miller. “The other municipalities have been friendlier. And as far as I can, tell none of them are revisiting the regulations. We don’t even know how the process is going to work yet and they’re already revisiting the regulations.” An Anchorage Assembly Economic and Community Development Committee has been talking about adding dedicated parks to the protected land use list and expanding dedicated parks areas, an idea which came before marijuana legalization but could have an impact all the same. Protected zones now include playgrounds and athletic areas. With tens of thousands of acres of public land that could be designated as dedicated park space, Anchorage could potentially ratchet down the allowed area even further. “That would add more locations that are then unavailable,” said McConnell. “If you take the set of properties that are available for marijuana business, it would shrink that set. I can’t say exactly how or by how much, we’d have to look at maps, but it would shrink it.” Other buffer zone regulations could change to be stricter or more lenient. One of the more contentious buffer zone issues relates to how the city will measure the distance between a marijuana business and a protected area. State law bans all cannabis businesses from being within 500 square feet of protected areas. Anchorage follows suit but has been interpreting the law in such a way that several businesses, which have paid building rent for months, might be in violation of the rule. “The thing most contentious is how would one measure in terms of crossing streets,” said McConnell. Under current regulation, businesses could be measured 500 feet from a protected area even if the two are separated by a major arterial road. Stakeholders are requesting the Assembly change the rules so that the distance must be measured to include the nearest labeled crosswalk. Rules on rules As Anchorage municipal rules box businesses in, other local rules lean to more leniencies. In Fairbanks, businesses don’t have to have a fully approved state license before the local authorities green light the local license. The borough assembly has already approved dozens of marijuana businesses while the Anchorage Assembly chips away at handfuls every two weeks.  While Fairbanks makes businesses stay 500 feet from the state-specified zones — K-12 schools, playgrounds, correctional facilities and public housing — it only requires 200 or 100 feet of distance from other areas for which the Anchorage rules require 500 feet of distance. Other locales open up entire districts to what Anchorage forbids. The Juneau Assembly lets limited cultivators with grows under 500 square feet operate in residential areas with certain restrictions, while residential grows are strictly off limits for Anchorage limited cultivators. Not all cities have stricter rules. The Kenai City Council requires 1,000 feet from schools, matching the federal Drug Free Zone standard. However, the 1,000-setback distance is alive and well in Chugiak and Eagle River, which have special carve outs in city regulations not only for schools but for every other protected zone. Only two areas — blocks of industrial land near airports without key utilities — are green friendly in the entire Chugiak and Eagle River area. The local versus state dynamic has bred some surprising flip-flops, twists and tensions in a case study of local civic involvement. The Mat-Su Borough has had a reputation as Alaska’s black market green belt for decades, and in 2016 the politics have matched the strength of the strains. Mat-Su cities Palmer and Wasilla both banned commercial cannabis inside town limits, while Houston invites the potential tax base with open arms. For most of 2016, the cannabis business community rallied to defeat a proposed borough-wide ban on commercial cannabis, which reopened dozens of Mat-Su licenses the state Marijuana Control Board had previously tabled. The Kenai Peninsula Borough has a similar proposed ban, for which a registered signature gatherer was Peter Mylnarik, Chief of Police in Soldotna and the Marijuana Control Board’s chairman. Because ballot signatures didn’t come in until late, it’s still an open question on whether the borough assembly will take the ballot up in a special session or bump it back to the 2017 election season. In Fairbanks, a group of anti-cannabis advocates have gathered enough signatures to put a borough-wide commercial cannabis ban onto the 2017 ballot. DJ Summers can be reached at [email protected]

Who can work in a marijuana shop?

A hip new industry is attracting excited workers, but ongoing regulations might block some from the new field. To work in a licensed cannabis business in the state of Alaska, employees have to pass a training course for a marijuana handler’s permit. Proposed permit requirements, though, are causing some friction for marijuana industry hopefuls who say the potential rules are “unreasonably impracticable.” If a new draft is accepted, Alaska marijuana handler card requirements would be the strictest in the country and be inconsistent with similar Alaska alcohol employee permits. “I believe the current regulations being proposed for occupational licensing in the cannabis industry are incongruent with the voice of the people and unfair,” said Steven Cehula, who plans on working in the industry. “This is limiting opportunities for employment without any tangible benefit for the state or city. Disqualifying potential cannabis workers for something that would not preclude them from working in the alcohol or tobacco industry simply doesn’t make sense.” According to draft regulations, Alaskans will not be able to obtain a marijuana handler’s card if they have a felony conviction in the last five years, been convicted of selling alcohol without a license in the last five years, or convicted of a misdemeanor crime involving violence, weapons, dishonesty, or a controlled substance other than a Schedule VI controlled substance. Marijuana is a Schedule I controlled substance, the most restricted rating in the U.S. Controlled Substances Act. These restrcitions mirror exactly those placed on the actual license applicants for marijuana businesses.  The proposed regulations have drawn criticism from industry organizations including the Anchorage Cannabis Business Association, as well as individual applicants.The Marijuana Control Board hasn’t adopted the regulations just yet, however.   “It’s still in draft form,” said Peter Mlynarik, the board's chairman. “We’ll have to see how it plays out at the end.” Mlynarik said the board’s intent is not to stifle the marijuana industry from making new hires, but to ensure new entrants have some kind of background check. The board's next meeting will take place Oct. 27 in Nome and Oct. 28 in Anchorage, where it will review the handler card matter. The Alcohol and Marijuana Control Office will be accepting public comment on the draft until Oct. 24 State by state, product to product States with legal adult use marijuana have different occupational licensing practices. Colorado has an occupational license requirement for any employee of a licensed business. The application says the state will deny any applicant with any conviction for a controlled substance-related felony over the last 10 years or any felony over the last five years. The application also asks for criminal convictions of any type in the last 10 years, but does not automatically exclude those with convictions from holding an occupational license. In contrast, the Alaska draft will explicitly exclude an applicant if there are certain misdemeanors. The Oregon Liquor Control Commission is more lenient. It may refuse to grant a marijuana worker permit if the applicant has been convicted of a felony involving controlled substances, felony marijuana offences, violence, theft, fraud or forgery in the last three years. Oregon only tracks one misdemeanor for marijuana workers, with unlawful delivery of marijuana in the last three years, which is a class A misdemeanor. The state of Washington is most lenient of them all. The Washington Liquor and Cannabis Board doesn’t require workers in the marijuana industry to have any occupational licensing whatsoever. Alaska’s occupational licensing for marijuana differs from alcohol regulations.To work in an alcohol business in Alaska, employees must complete training for Alcohol Professionals, or TAP, card. Unlike the marijuana draft, an applicant for TAP card has no criminal restrictions at all, according to Kirsten Myles, vice president of operations for the Cabaret, Hotel, Restaurant, and Retail Association, or CHARR, a lobbying organization representing alcohol and hospitality business interests in Alaska. The only possible restriction on a TAP card is a red stripe on a driver’s license. The state uses the red stripe to ban certain criminal offenders from buying alcohol or entering an alcohol establishment, but doesn’t necessarily prevent an alcohol licensee from hiring a red striped person as an employee, according to Myles. From Myles’ perspective, narrowing the marijuana employment pool is a bad idea. “It doesn’t make any sense,” said Myles. “It’s hard enough to find good employees for any business.” With over 300 marijuana licenses statewide, the marijuana industry will provide some employment opportunity, but economists so far haven’t made any solid projections for workforce size. A recent report from the Department of Labor states: “With the recent legalization of commercial marijuana in Alaska, farm workers and laborers (crop, nursery, and greenhouses), and inspectors (testers, sorters, samplers, and weighers) are expected to increase, but projecting marijuana-related jobs is especially uncertain. The industry is new and we don’t yet know how many of its workers will be self-employed, among a variety of other unknowns.” Other states can give some guidance to employment numbers. By the end of 2015, Colorado issued nearly 27,000 occupational licenses. These numbers only include businesses that deal directly with the product. Support Industry numbers aren’t counted. According to estimates from Marijuana Business Daily, the numbers of employees in the industry nationwide is between 100,000 and 150,000. DJ Summers can be reached at [email protected]

Cannabis testing labs set to open this month

For all the frustrations of the regulatory process, the cannabis supply chain is starting to connect. Retail operations are cobbling together their final plans after having their state licenses issued, the Anchorage municipality has approved its first retail license and will review more in the coming months, a handful of cultivators have harvested or are getting ready to harvest their first batches of legal product, and security companies are standing by to make deliveries. Testing labs — the central piece of the supply puzzle and the gateway to legal sales — should be ready within weeks, owners say. “I’ve been telling people mid- to late October,” said Mark Malagodi, CEO of CannTest, one of two licensed testing labs in Alaska. By regulation, all cannabis products must undergo testing for potency, residual solvents and microbials. Without the lab results, retail shelves will stay empty. CannTest and AK Green Labs in Anchorage are the only two testing facilities in the state to be granted a license by the Marijuana Control Board on June 9, but others are in the wings waiting to offer services to Alaska cannabis businesses both on and off the road system. Alaska Herbal Analysis LLC in the Mat-Su Borough dropped out in the face of a proposed Mat-Su Borough commercial cannabis ban, but the ban was voted down on Oct. 4 and will likely reignite several tabled borough license applications. Danish Gardens LLC has initiated a testing lab license for Anchorage alongside another Chugiak operation. Juneau’s cannabis producers will not have to ship product to Anchorage for testing after one of several lab licenses opens. Alcohol and Marijuana Control Office staff is currently reviewing the license application for Southeast Alaska Laboratories LLC, and Glacier Analytics LLC has initiated a license application as well. For the first batch of sellable marijuana in October and November, however, the Anchorage labs will likely be the only operating facilities. Both have a clutch of regulatory obligations to fill before they can accept deliveries from cultivators, but the timeline is relatively short and should coincide with the first retail operations openings. Malagodi said on Oct. 3 that CannTest will have the final state inspection completed within the week, and city inspections shortly after.  “Right now we’re waiting on a letter from the (Municipality of Anchorage) that will allow us to get our special land use permit,” said Malagodi. “Once we get the special land use permit we can request an inspection from I assume the fire marshal. That should finish off the muni requirements.” Apart from municipal and state inspections, labs must also secure approval from a third party contracted by the State of Alaska. The American Association for Laboratory Accreditation, or A2LA, performs this service for Alaska. Malagodi said CannTest has received a visit from A2LA representatives and been given a small list of documentation-related fixes to make for regulatory compliance, along with equipment demonstrations. AK Green Labs is slightly more behind on the timeline due to procedure. The state granted both facilities their licenses in June, but AK Green Labs signed an intellectual property licensing agreement with Steep Hill Labs Inc, a California-based company, shortly afterward. Because AK Green Labs received its license in June, the Steep Hill agreement bumped back the timeline slightly. AK Green Labs will now have to resubmit standard operating procedures to the Marijuana Control Board for approval, as the standard operating procedures are contained with the “operational plans” and must be reviewed by the board by regulation.  The board’s next meeting is Oct. 26-27, so AK Green Labs won’t have full approval until after that date. Further, the operators will be traveling to California to complete training for the Steep Hill process. “(October to November) generally match the estimates the testing facilities provided to me, except that Green Labs may be more the middle of November due to internal training they are doing before A2LA comes up to approve them,” wrote Alcohol and Marijuana Control Office director Cynthia Franklin in an email. Brian Coyle, AK Green Labs’ owner, said Franklin plans to work with the board to hurry the process along, potentially asking the board to delegate the approval of new operating plans to her. This delegation authority, granted to the board by statute, has been used with other license applications but not with testing labs. In the future, as labs change standard operating procedures to accommodate best practices and equipment calibration, Coyle said such delegation may be a more common tool. “This is an example of something we worked out,” he said. DJ Summers can be reached at [email protected]

Study says legalized marijuana does not affect crime or economics

Proponents and opponents of marijuana legalization have more in common than they think: each side makes predictions that for the most part have not come true. The Cato Institute, a Washington, D.C.-based public policy think tank focusing on free market and limited government analysis, released a study on Sept. 16 analyzing several datasets on crime, employment and drug use in the four states where adult use marijuana has been legalized. The study, “Dose of Reality: the Effect of State Marijuana Legalizations,” claims that marijuana-related economic and criminal outcomes across the board haven’t changed substantially enough in any of the states examined to attribute them to legalization. It concludes that increases in marijuana use predate legalization, there are no observable increases in youth use, perceptions of risk began to decline before legalization, and economic benefits are most clearly seen in tax revenues to the state. Most relevant data comes from Colorado, Washington and Oregon, which established legal adult use marijuana sales before Alaska. Alaska has not yet had its first retail sale. Cultivators have begun harvesting crops and the first retail stores have begun receiving their licenses. In an address to Marijuana Business Daily, Alaska Marijuana Control Board Executive Director Cynthia Franklin said she estimates first sales could begin as early as November, or February at the latest. “Our conclusion is that state-level marijuana legalizations to date have been associated with, at most, modest changes in marijuana use and related outcomes,” according to the study. “Our estimates cannot rule out small changes, and related literature finds some effects from earlier marijuana policy changes such as medicalization. But the strong claims about legalization made by both opponents and supporters are not apparent in the data.” No increased drug use Opponents of adult marijuana use fear that making the product legal will lead to a rise in both adult and youth marijuana use. Cato’s study finds no link. In Colorado, usage rates for marijuana and alcohol have both been rising slightly since 2009, three years before the state legalized recreational marijuana. Washington and Oregon also chart small, steady rises in marijuana use, but like Colorado the rates began increasing years before the states legalized. On a similar note, treatments for marijuana and alcohol abuse have declined in the years after legalization, not risen. “Marijuana admissions in Colorado were fairly steady over the past decade but began falling in 2013 and 2014, just as legalization took effect,” according to the study. “Alcohol admissions began declining around the same time. In King County (Washington), admissions for marijuana and alcohol continued their downward trends after legalization. These patterns suggest that extreme growth in marijuana abuse has not materialized, as some critics had warned before legalization.” The study charted data on whether people in each state associated “great risk” with monthly marijuana use. In each state, perceptions of risk declined in the years preceding legalization. “In essence, rising marijuana use may not be a consequence of legalization, but a cause of it,” the study reads. No increased crime Opponents of marijuana legalization predicted crime spikes would follow, while supporters have argued the end of the black market would lower crime rates. The data doesn’t support either conclusion. According to the study, Denver property crime and violent crime rates have stayed constant after 2012, when the state legalized adult use of marijuana, and 2014, when the first shops opened. Other Colorado cities including Fort Collins show the same trend. In Seattle, police data showed that property and violent crime rates have been dropping for the last two decades, without any changes in pattern either immediately before or after legalization. Oregon’s crime rates stayed steady after the state’s 2014 legalization. Intoxicated driving, another predicted outcome, has also remained constant. “No spike in fatal traffic accidents or fatalities followed the liberalization of medical marijuana in 2009. Although fatality rates have reached slightly higher peaks in recent summers, no obvious jump occurs after either legalization in 2012 or the opening of stores in 2014,” the report states. “Likewise, neither marijuana milestone in Washington State appears to have substantially affected the fatal crash or fatality rate. In fact, more granular statistics reveal that the fatality rate for drug-related crashes was virtually unchanged after legalization.” Annual data from both Oregon and Alaska suggest a similar pattern. School suspensions related to drug use did see a slight rise in Colorado after medical marijuana was legalized in 2009, but those levels stayed steady after recreational shops opened in 2014. Economics Marijuana legalization supporters argue economic benefits, but like with crime and usage predictions, the data shows few overall changes. The Cato study punctures a widely held theory that Colorado’s soaring property values were in large part driven by marijuana legalization. In Colorado, Washington and Oregon, these claims are unfounded, the study says. “Figure 23 sheds doubt on these extreme claims by presenting the Case-Shiller Home Price Index for Denver, Seattle, and Portland, along with the national average,” according to the study. “Data show that home prices in all three cities have been rising steadily since mid-2011, with no apparent booms after marijuana policy changes. Housing prices in Denver did rise at a robust rate after January 2014, when marijuana shops opened, but this increase was in step with the national average.” Despite the millions in sales, state economies themselves remain mostly untouched by legalization. “Although it is hard to disentangle marijuana-related economic activity from broader economic trends, the surges in economic output predicted by some proponents have not yet materialized. Similarly, no clear changes have occurred in GDP per capita,” the study found. The study does identify one concrete area of growth. State governments have been reaping the tax rewards of legalization in amounts more than forecast. Colorado made $135 million from recreational marijuana taxes in 2015, or more than $10 million per month. In Washington, the state collected double the forecasted amount with $70 million during the first year of sales. Oregon, which began taxing recreational marijuana in January, has collected $14.9 million in taxes so far, far more than the predicted $2 million to $3 million. DJ Summers can be reached at [email protected]

Senate and House Judiciary Committees address hot topics related to marijuana

Welcome to the conversation, legislators. Senate and House Judiciary Committees called a joint informational meeting at the Downtown Anchorage Legislative Information Office on Sept. 14 to discuss the hottest and longest running topics in the Alaska marijuana industry: namely timeline, board politics, banking, unlicensed sales, and marijuana social clubs. The Legislature, which has been mostly absent from discussions surrounding recreational legalization, bowed under the weight of the state budget crisis. Cannabis issues have spun into larger problems as several necessary legal fixes went unaddressed by legislators, including marijuana social clubs and removing marijuana from the state’s list of controlled substances. During the meeting, members of the Judiciary committees expressed concern about some of industry’s complaints, mainly focused on difficulties in the licensing process and the struggle with federal laws that keeps banks out of the business. "I am pleased to see progress in moving the initiative forward," said Rep. Gabrielle LeDoux, R-Anchorage, chair of the House Judiciary Committee. "However, I am concerned that lack of staffing may be causing problems that may put unnecessary obstacles in the path of fledgling businesses and Alaskan entrepreneurs, thus impeding the will of the voters who passed the initiative." Legislators express support for marijuana consumption outside the home Social clubs were central to the conversation, including allegations of misconduct against Marijuana Control Board Executive Director Cynthia Franklin and broad support for the concept from legislators. Franklin and the Marijuana Control Board have struggled with how to address marijuana social clubs, which allow dues-paying members to consume personal cannabis on the club’s premises not to sell any product. The board decided in December 2015 that it has no authority to either ban or allow them, and asked the Legislature to do one or the other. The Legislature didn’t, and some clubs continued to operate. On Aug. 31, Attorney General Jahna Lindemuth issued an opinion at the urging of the Department of Community, Commerce, and Economic Development Commissioner Chris Hladick. The opinion argues that because marijuana social clubs qualify as a business, a place of amusement, and a place to which a substantial number of the public has access, they meet the definition of a public place and therefore are illegal under regulations barring public consumption. Rep. Charisse Millett, R-Anchorage, Sen. Lesil McGuire, R-Anchorage, and LeDoux each argued largely in favor of allowing some kind of venue for marijuana consumption, not only to give Alaska’s tourists a place to consume their products but to give Alaskans a place to consume outside their own homes, where they might not want to do so around children. Legislators’ disagreements with elements of the AG’s opinion mainly surrounded the way she interpreted the legal definition of a public place. LeDoux argued banning marijuana consumption in public carried a different intent than the AG interprets. “You’re outside,” she said. “You’re someplace that everybody can be, that you can just walk around in. I’m not sure these marijuana clubs meet that kind of public definition other than through the regulations. I’m troubled that the regulations are making the law rather than the Legislature making the law.” McGuire agreed and wants the Legislature to act on the issue. “I think this area needs to be cleared up in state statute,” she said. Schulte alleges ‘coercion’ against executive director Gov. Bill Walker fired Bruce Schulte as the Marijuana Control Board chair in July, but the commercial pilot said he “isn’t going anywhere.” Among other suggestions to committee about how to clean up board policies and regulations, Schulte testified that Franklin has not been transparent about earlier attempts to take action against marijuana social clubs. Schulte said that in late 2015 Franklin, who is also the director of the Alcohol and Marijuana Control Office, attempted to deny liquor licenses to individuals based on the owners’ involvement with marijuana social clubs. In one case, according to Schulte, she has tried to compel the eviction of Anchorage marijuana club Pot Luck Events through the liquor license process. Franklin only granted a liquor license to Pot Luck Event’s landlord, Robinson Garcia, for a party upstairs from Pot Luck on the condition that he and his attorney Dan Coffey planned to evict the club.  Franklin had already denied a liquor license at 440 W. 3rd Ave. in November for a concert. Garcia was told the alcohol board would not grant any liquor licenses to that address because Pot Luck Events is a tenant of the building. When Garcia filed for another liquor license for Dec. 26, 2015, Franklin granted the license, noting at the bottom: “approved only in light of ongoing litigation to evict illegal pot club still located in same building.” “It seemed to be denying that business owner a lack of due process,” Schulte said. He characterized Franklin’s actions as “looking like coercion.” “This is not the way to go about enforcing regulation,” he said. Franklin had left the meeting by that point and did not have the opportunity to respond. No eviction notice has ever been filed for Pot Luck Events. Neither Coffey nor Garcia have responded to email and telephone attempts by the Journal to contact them. In a January interview about the liquor license, Franklin said it’s her job to enforce marijuana law. In the absence of municipal or state police action against the club, she had to get creative. The state budget being what it is, she said, authorities may not have the resources to prosecute what they otherwise would. The fact that neither the municipality nor the state has taken direct legal action against Pot Luck Events does not mean the club is legal. “I understand that saying something is illegal and letting it go on looks counterintuitive,” said Franklin. “We can’t count on criminal law for everything. There are other ways to get rid of illegal businesses.” ‘Please don’t break our backs’ Franklin has long maintained that AMCO doesn’t have enough staff to answer questions, oversee licensing and enforce regulations against unlicensed parties. Testimony from industry representatives supported requests for more funding to help grease the skids for license applicants, but also criticized the process as expensive and red-taped.   Like industry, legislators wanted some explanation for timelines. “Are you, as far as the initiative is concerned, is the board where it’s supposed to be as far as issuing licenses?” LeDoux asked. “Yes,” Franklin said. “The idea of the timing…was to get a marijuana industry up and operational two years from the date. We will see a very rapid rollout of the other license types once the lab is operational.” License applicants, however, expressed concern with some of the more expensive particulars. Jana Weltzin, a cannabis business attorney, praised AMCO staff for their professionalism and agreed with Franklin’s call for more staff, but had a host of concerns about the complexities of the licensing process. Many of her clients have been paying leases for nearly a year, which is problematic for an industry when sales have not yet begun. Dual licensing between municipalities presents hundreds of thousands of dollars in compliance costs, and even state fire marshals don’t know how to proceed with marijuana buildings. “We are two years into this,” Weltzin said. “I just don’t understand how we can still not have an answer.” Weltzin said she understands the nuances of regulations but would appreciate solutions to streamline the industry’s sticking points. “We’re willing to bend over,” she said, “but please don’t break our backs.” In response, Franklin defended some of AMCO’s and the board’s policies, including the leasing issue, as necessary to ensure state control. “A lot of the applicants seem to be in shock that they asked for a regulated industry and now they’re getting a regulated industry,” she said. Legislators seemed to side with Weltzin. “Think of some ways where we could make this system of a little bit less cumbersome,” LeDoux told Franklin. “Think about that and maybe get back to me.” DJ Summers can be reached at [email protected]

Unresolved legal issues, bans still loom for cannabis industry

Courts, cops, lawyers and the Legislature are each holding one piece of the Alaska cannabis puzzle that doesn’t yet fit together. The industry is partially divided over how to deal with a rash of unlicensed pot shops, which touches on high-profile drug distribution cases the state has pursued since 2015. Meanwhile, the Mat-Su Borough found itself on the receiving end of a lawsuit regarding the petition to ban commercial cannabis in unincorporated areas of the borough, and the Kenai Peninsula only barely gathered enough signatures for its own such ban, which has yet to be scheduled. Open cases Enforcement staff from the Alcohol and Marijuana Control Office, or AMCO, asked the Marijuana Control Board to look for ways to prosecute a half-dozen unlicensed retail shops selling product in Fairbanks, Anchorage and the Kenai Peninsula. Cannabis business attorney Jana Weltzin penned a letter to the board asking it to do everything possible to protect the industry players who have spent time and money to go through the licensing process. The quickest fix would be for the Legislature to take marijuana off the state’s controlled substances list, allowing AMCO to bring charges of selling a regulated substance without a license as in alcohol regulations. “The promptness of the resolution of these problems is 100 percent dependent on the industry itself,” wrote AMCO and board director Cynthia Franklin in an email. “The industry needs to protect themselves from illegal competition by working to get a legislative solution.” Peter Mlynarik, the Marijuana Control Board chair and Chief of Soldotna Police Department, said law enforcement agencies may not have either the resources or the will to investigate and enforce the many complaints against unlicensed sellers.  “Let’s say local enforcement said it’s not a priority,” he said. “You would have to quadruple the staff at AMCO to have all those complaints investigated. All those things take time. If it’s non-commercial, you’re talking search warrants and all these other things, reasonable suspicion, to get in there and do something. It’s a lot more time consuming.” Franklin said AMCO would need triple their current staff to properly take care of the unlicensed shops. Given law enforcement’s lack of enthusiasm, others under state criminal charges cry foul over their own cases. Charlo Greene, whose legal name is Charlene Egbe, voiced concerns about why law enforcement has chosen to prosecute her operation, Alaska Cannabis Club, but not the unlicensed sellers discussed during the Sept. 7 Marijuana Control Board meeting. “It’s not a shortage (of law enforcement), they’re just picking and choosing who they feel like punishing,” she said. Greene’s operation, Alaska Cannabis Club, was raided by police twice in 2015 following her well publicized on-screen and profane departure as a broadcast reporter for KTVA. Greene insists her club never sold cannabis and is more akin to a marijuana social club — which were recently declared illegal in an opinion from Attorney General Jahna Lindemuth but no owners have yet been charged with any criminal wrongdoing — than either an unlicensed retail shop or two alleged marijuana delivery services charged around the same time in 2015. “We never publically stated that we sell any marijuana,” she said. “Period, point blank. That’s the main difference. These other organizations have.” Despite Greene’s distinction, the state is charging her with drug distribution along with the marijuana delivery companies. This brings up a matter of legal importance to her own case. “What exactly has changed between now with these other clubs and mine, is what I’m having a hard time understanding,” said Greene. “Why am I the only one operating one of these groups that’s being prosecuted if they have all this documentation proving these other ones exist? My prosecution is political. I am undergoing a selective prosecution if that’s the case.” Selective prosecution or an inconsistent application of the law could become a factor for Greene along with other cases. The state charged Rocky Burns, Larry Stamper and Michael Crites with running their respective alleged marijuana delivery services, Discreet Deliveries and ACDC. John Skidmore, the Anchorage Division director for the Department of Law, said the state’s prosecution of the previous criminal cases could factor in the new regulatory developments, if the Marijuana Control Board and the Legislature choose to move in that direction. “When policy makers in society decide to change the laws, is that a consideration for prosecutors in cases that are already pending? The answer is yes,” he said. “Does that automatically mean that those prosecutions go away? That answer is no.” Similar situations exist in other areas of law, Skidmore said, particularly after criminal reform bill Senate Bill 91 passed during the 2016 Legislative session. After that bill passed, criminal prosecutors for offenses like failure to appear in court or violation of jail release terms needed to reevaluate their cases, as the bill lessened penalties for those offenses. Skidmore said he has no knowledge of any enforcement officials bringing the alleged unlicensed marijuana sellers before the Anchorage division. “I would probably wait for the policy makers to finish their work,” he said. “Then we would want to analyze what were the rationales and reasons behind why they adopted that particular policy to help us evaluate what are the societal interests of pursuing or not pursuing the prosecutions of cases that are not resolved.” Skidmore was careful to clarify both that the state hasn’t yet convicted Charlo Greene, Rocky Burns and Michael Crites, and that speculation on legal developments should be tempered. Changing the pace of prosecution, he said, could all be part of the industry’s development process. “Some of this is growing pains and transitions as the marijuana industry gets going,” Skidmore said. “That’s certainly going to factor into what we factor into prosecution as well, and the decision whether or not to prosecute, would be, ‘is this part of the transition?’” Bans and licenses In Southcentral areas outside the Anchorage municipality, marijuana business license applicants are vying to get more time to prove to their respective local governments that they can bring in enough money to make the industry valuable as a tax base. Industry representatives in the Mat-Su Borough are suing over a proposed ballot initiative scheduled for an Oct. 4 vote that would outlaw commercial cannabis business in unincorporated areas. Only Houston would be marijuana-friendly, as Wasilla and Palmer both passed commercial cannabis bans. In the meantime, a temporary moratorium on commercial marijuana passed in April, squashing production in what is largely regarded as the state’s largest cannabis-producing area. The two people representing themselves in the lawsuit, Ronda Marcy and Thomas Hannam, claim the ballot violates both the public process and the Alaska constitution. “The Matanuska-Susitna Borough Clerk, Lonnie R. McKechnie, was ‘objectively unreasonable’ to permit the proposed zoning initiative to be placed on the Ballot, when the Supreme Court of Alaska provided written notice, in a case under her name, that ‘zoning by initiative is invalid,’” according to the lawsuit. Borough cannabis licensees have a tight timeline. Darcy and Hannam, both of whom had hoped to enter the industry, are asking for an expedited consideration of the lawsuit. Another agricultural hub for the cannabis industry, the Kenai Peninsula, is also waiting for word on a proposed ban. Petitioners on the Kenai Peninsula Borough, whose ranks included board chairman Mlynarik, failed to gather enough signatures to get a commercial cannabis ban onto the October ballot. On Aug. 15, the petitioners got enough signatures to put the initiative onto the ballot either at the borough assembly’s discretion or on the October 2017 ballot.  In order to get the initiative onto the 2016 ballot, the borough assembly would have to hold a special election, estimated by borough staff to cost as much as $60,000. DJ Summers can be reached at [email protected]  

Marijuana board issues first retail, manufacturing licenses

Retail stores, cupcakes, caramels, cookies and candies replaced enforcement talks at the Sept. 8 meeting of the Marijuana Control Board. The meeting marked the first issuance of both manufacturing and retail licenses, moving the industry to the final phases before growers have an outlet for their cannabis. Held up for most of the day by manufacturing license discussions, retail stores breezed through by the end of the meeting. The following retail licenses have been approved: Frozen Budz in Fairbanks, Enlighten Alaska in Anchorage, Arctic Herbery in Anchorage, Rainforest Farms LLC in Juneau, Raspberry Roots in Anchorage, Herbal Cache in Girdwood, Pakalolo Supply Co. in Fairbanks, Remedy Shoppe in Skagway, The Frost Farms in Anchorage, Herbal Outfitters LLC in Valdez, and Weed Dudes in Sitka. Apart from the normal objections from the Anchorage municipality, Nick Miller, the board’s newest member, had to recuse himself and switch seats to face his fellow board members for his retail outlet, Alaska Buds LLC in Anchorage. The board approved. The Frost Farms in Anchorage initially had trouble when it was discovered they had posted a public notice on a single light pole near their Dimond Blvd. location in Anchorage, rather than on a post office bulletin board or similar public area. Regulations specify such notices must be “conspicuous.” Complaints were received that the notice was not actually noticeable. The owners explained that there were no public notice spots available in the area, and the license was approved with the others following a clarification of intent from the board. Generic vs Branded Edibles Most of the day’s conversation revolved around products. The board took a painstaking look at what each manufacturing facilitiy planned to offer. For every product, the board asked for its type, how much THC it contains, what kind of packing it requires, how many serving sizes, how the consumer will be alerted to serving sizes and how closely the product resembles commercial product appearance. Edible cannabis products in particular is a major sticking point for states with legalized recreational marijuana. Colorado, Washington and Oregon each have myriad regulations, for example. The goal is to keep edibles and other cannabis derivatives away from children and away from consumers who might confuse a marijuana cookie for a Milano. “It’s good to discuss these things just so we have a baseline,” said board chairman Peter Mlynarik. Frozen Budz, a manufacturing facility as well as a retail outlet, went through a half hour’s worth of questioning to determine if its entire product line met regulatory muster. Owner Destiny Neade was asked to explain how products like gummies, brownies, and caramels will be packaged and sold to make them distinct from commercial products. During one exchange, the board argued with furrowed brows and clasped hands whether or not to allow Neade to make cannabis Rice Krispies.  “These two are more like home products,” said board member Loren Jones. “It’s generally a product that’s produced at home, not generally commercially available. Are we only talking about branded products?” Harriet Milks, assistant attorney general and the board’s legal counsel, clarified. “The point of this is that there’s not confusion in the market place,” she said. “It’s a call you need to make.” Brandon Emmet agreed with Jones that “these crispy treats aren’t widely commercially available.” Peter Mlynarik, Chief of Police in Soldotna and the board’s chair, did have concerns about how Neade would make the serving sizes for the brightly colored crispy treats clear for the consumer. “My concern on this is it’s brightly colored, it’s attractive,” he said. “When you put these demarcations on these colorful patterns…will it be easy to see?” Neade affirmed that indeed the crispy treats would be clearly marked with indentations for the legal 5-milligram serving size, and the board voted unanimously to approve the product type. The board repeated the conversation over peanut brittle. Some manufacturing applications were even cut short so the board could pass a handful of retail licenses. Justin Roland from manufacturing company Einstein Labs only had 16 of his planned 26 products reviewed. He said the board’s thoroughness impressed him, and he would rather get to retail licenses anyway — without them, he has no place to sell. “I would rather cut my product list down and get retail stores up and actually ready to get my products,” said Roland. License ownership and management  A hiccup occurred when Top Hat Concentrates came before the board with an application for a manufacturing license. Top Hat Concentrates applied for the license, but notified the board in an email before the meeting that the company itself would be managed by a separate entity, Top Hat LLC. The owners of both the concentrates company and the LLC happen to be the same, but Franklin said this type of management structure is subject to heavy abuse in the alcohol industry. Though the board grants ownership to the concentration license and must be notified of its ownership changes, the LLC would be beyond its authority. By managing under a separate LLC, Franklin fears the legal accountability of the operation could shift over time and potentially even allow for Outside actors to manage Alaska marijuana businesses — which regulations expressly forbid. “This is a huge problem, to have someone other than the licensee managing the license,” said Franklin. “The board is setting a precedent in allowing a license to have a different entity managing it. This is a huge turning point. To this point, we have required…that the people behind these entities actually operate these licenses themselves.” Milks elaborated after a short break. “When the board approves an entity, it’s that entity that’s being licensed,” she said. “Whatever goes on behind the scenes…is quite another matter. It’s something the board will need to address sooner rather than later. What happens…you have groups managing licensed properties and the board doesn’t know what they’re doing. It has very serious public safety implications.” The board eventually approved the concentration license with a condition. Any entity managing the license must also have a license and be under control of the management of the Marijuana Control Board. The LLC must be under identical ownership of the license being managed. DJ Summers can be reached at [email protected]

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