Cannabis

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]

Marijuana board wants to deschedule marijuana in face of illegal pot shops

Legislative inaction and Alaska Attorney General Jahna Lindemuth’s recent opinion on marijuana social clubs are making waves for an industry an optimistic two months away from the first legal sale. At a Sept. 7 meeting of the Marijuana Control Board, Lindemuth’s opinion squashed a scheduled discussion about onsite consumption for marijuana retail stores. It also rolled into the discovery of a network of unlicensed cannabis shops around the state and an industry-led push to eradicate them with limited resources. Meanwhile, the Legislature still has not addressed several marijuana-related issues and left them to fester, creating a situation where marijuana enforcement officers have a hard time confronting unlicensed businesses. Unlicensed pot shops Lindemuth’s opinion has produced a rare moment of solidarity between regulators and industry. According to Alcohol and Marijuana Control Office enforcement officers, stores around the state in Fairbanks, Anchorage and the Kenai Peninsula have been cropping up that sell marijuana without a license. One of the industry’s most high profile attorneys, Jana Weltzin, drafted a letter imploring the Marijuana Control Board and its enforcement arm to more vigorously prosecute unlicensed marijuana sales. From the licensed industry’s angle, unlicensed pot shops might as well be black marketeers. Because Ballot Measure 2 explicitly aimed to destroy the black market, Weltzin said unlicensed shops will give the Legislature all motivation it needs to declare marijuana legalization a failure in 2017 and repeal Ballot Measure 2. “The time is now to make the transition,” wrote Weltzin. “Those who refuse to transition unilaterally risk the massive investment of time, money, and stress the rest of us as a collective movement have made. It is not fair to allow the selfish wants of a few to tank the entire industry and ruin this opportunity for the state.” In the board’s eyes, this usurps the two years of regulatory effort on the part of the industry players currently waiting for their first sale. “This is going to be a gold mine,” said board member Mark Springer. “To use that metaphor, who wants their claim jumped?” Enforcement officers and AMCO staff saw the situation coming, and that it damages the upcoming legal market by offering the public a false start. “This is not a surprise to anybody. It’s become so blatant that people are operating in small businesses with green crosses on the front clipping buds out in the open,” said James Hoelscher, the enforcement supervisor for the Alcohol and Marijuana Control Board. “The difference we see with this store front, they’re giving the public the perception that they’re legal, that they’re licensed. It’s our opinion that something needs to be done about this until it becomes too late.” Hoelscher said the businesses continue to exist because local law enforcement has no appetite to make any enforcement actions of their own. Because AMCO’s offices are stretched thin on resources, they can’t either. “It’s kind of a hot potato,” he said. “Not to put anybody on the spot, but it seems like it’s not something they want to deal with at the time. The response we’re getting is pretty much, it’s being allowed to happen.” Cynthia Franklin, the director of the board and of AMCO, said prosecutors themselves don’t have an appetite to prosecute the cases either. “The prosecutors just aren’t interested in these kind of cases,” she said. “What we want the board to be aware of is unless we get some laws protecting the industry, our industry is going to be very vulnerable to these unlicensed actors.” The root of the problem is marijuana’s classification as a controlled substance in the State of Alaska. This means there is not a specific crime for selling marijuana without a license, as there is for the alcohol-related crimes such as bootlegging. Franklin had tried to change the substance designation during the legislative session, but like the marijuana social club issue, it did nothing. As it stands now, the only marijuana-related crimes concern possession over the statutory limits and other dealing-related crimes. “We don’t have a crime called 'selling marijuana without a license,'” Franklin said. To do so, the Legislature would have to make a statutory decision during its next session to remove marijuana a controlled substance under state law, thus making it mirror alcohol regulations. In the meeting, the board took the position that it would like the Legislature to deschedule marijuana. Onsite consumption delayed again Lindemuth wrote an opinion on Aug. 31 that marijuana social clubs, which charge a membership fee to consume home-brought marijuana on their premises, are illegal. She said they qualify as businesses, and therefore are unlicensed. The people who visit them, she said, clearly violate the ban on public consumption of marijuana. In the AG’s opinion, this means two popular marijuana social clubs, Anchorage’s Pot Luck Events and Kenai’s Green Rush Events, violate state laws. Both have continued operating, and law enforcement from the state, local government or Alcohol and Marijuana Control Office have not yet taken any enforcement action. The opinion responded to widespread uncertainty about whether social clubs are illegal. The Marijuana Control Board asked the Legislature to either create a social club license type or to ban them in late 2015, but no such actions was taken. The board did, however, make a carve-out for onsite consumption in licensed retail stores in 2015. It had planned to review the draft for onsite consumption over the summer, but has bumped back approval each time in the face of widespread opposition from anti-smoking advocates including the American Lung Association and Alaska Tobacco Control Alliance. This time, the board voted to postpone onsite consumption discussions again, this time until October, saying the AG’s opinion leads to too many questions. “The AG’s opinion talked about what is a public place,” said Loren Jones, the board’s public health designee. “They conclude that if we as a board give them a license to consume, that’s now exempt from the definition of public. I’m not sure I agree with that. I’m not sure it would tested very well in court.” The board voted 3-2 in favor of postponing the onsite consumption draft. Jones, Springer, and chair Peter Mlynarik voted in favor, while Brandon Emmett and new member Nick Miller voted against.  DJ Summers can be reached at [email protected]

Court rules no guns for medical marijuana cardholders

Alaska’s hunters and concealed carry holders can’t continue to pack iron if they hold a medical marijuana card, according to a recent court decision. The 9th U.S. Circuit Court of Appeals issued a decision on a Nevada case on Aug. 31 that upholds previous Bureau of Alcohol, Tobacco, Firearms, and Explosives order to gun sellers not to sell firearms to state medical marijuana cardholders. Cardholders meet the definition for “unlawful drug users,” according to the ATF guidance and the court decision affirming it. 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 24 states that have legalized medical or recreational marijuana. Wilson’s challenge was complex, but the decision distilled to a Second Amendment rights denial. “The district court concluded, however, that Wilson’s Second Amendment challenge failed under our decision in United States v. Dugan, 657 F.3d 998 (9th Cir. 2011),” reads the court opinion. “In Dugan, we held that the Second Amendment does not protect the rights of unlawful drug users to bear arms, id. at 999–1000, in the same way that it does not protect the rights of ‘felons and the mentally ill,’ Heller, 554 U.S. at 626–27. The Government argues that if the Second Amendment does not protect the rights of unlawful drug users to bear arms, it must not protect any possible rights of unlawful drug users to purchase firearms or of firearm dealers to sell to unlawful drug users.” The court affirmed the ATF orders and Wilson’s status as an unlawful drug user. On Sept. 21, 2011, the ATF issued an “Open Letter to All Federal Firearms Licensees” stating that “any person who uses or is addicted to marijuana, regardless of whether his or her State has passed legislation authorizing marijuana use for medicinal purposes, is an unlawful user of or addicted to a controlled substance, and is prohibited by Federal law from possessing firearms or ammunition.” This answers a question Sen. Lisa Murkowski had on March 2 when she sent a letter to U.S. Attorney General Loretta Lynch asking Lynch to reexamine federal gun regulations conflicting with state laws where marijuana is legal. As of Sept. 1, Murkowski’s office has still not received a reply from Lynch.   In December 2015, Alaska had 730 federal firearms license holders, about one for every 1,000 residents. According to a Columbia University study released in June 2015, Alaska also has the highest per capita gun ownership in the nation; 61.7 percent of Alaskans own one or more firearms. Alaska also has more than 1,000 medical marijuana cardholders. This number, however, is an inaccurate metric for marijuana usage, as state laws have not allowed for marijuana cultivation or distribution until recreational use was approved by a voter initiative in 2014. DJ Summers can be reached at [email protected]  

Alaska banks, credit unions won’t follow Lower 48 counterparts into bud business

Marijuana businesses and the State of Alaska have something in common: banks won’t help them reap the rewards of the Green Rush. In the same week that Alaska banks and credit unions closed the business accounts of several licensed marijuana business owners, U.S. Bank told the Alcohol and Marijuana Control Office it can no longer accept credit card payments for licensing fees. The bank would not give details on its Alaska-based decision. “Although legalized in many states, marijuana remains illegal under federal law,” according to a statement from U.S. Bank. “As a federally regulated bank, U.S. Bank complies with federal law. We are committed to serving our valued clients while complying with the highest standards of legal and regulatory compliance. As a matter of policy, we do not comment on customer conversations or relationships.” U.S. Bank’s cancellation of credit card activity came as a surprise to the Department of Revenue. No other industry has the same kind of cash dependence as cannabis, and the department is having to construct a cash room in Anchorage just to allow for tax drops. Both credit card companies and banks themselves fear federal scrutiny and as a result the marijuana industry remains largely cash only. Marijuana is still a Schedule I controlled substance under federal law after the Drug Enforcement Agency’s August decision to not take it off the listing alongside heroin. Federal judges and financial regulators have told banks to move ahead in states where it is legal, leaving banks with two options: drown in the compliance paperwork or risk a federal crackdown.  ‘We can’t tell them what to do’ Nationwide, more than 300 banks now accept money from marijuana businesses. Alaska’s banks, however, remain cool to the idea.  Kevin Anselm, director of the Division of Banking and Securities in the Department of Commerce, Community & Economic Development, wants to have a more cheery outlook for the industry but has nothing to offer. “I wish I had better news,” she said. “It’s really tough for an absolutely legitimate business in the state of Alaska. It really is a struggle on all fronts.” Alaska’s financial institutions simply don’t have the wherewithal to do what others in the Lower 48 can. “In Washington and Colorado there are a number of banks and institutions that have decided to go into these markets,” she said. “That has not been the decision up here. A lot of it is we don’t have the structure to make it easy for the banks, to move money, cash or otherwise.” Alaska has three federally chartered banks that fall outside state authority. Anselm said she’s approached each of the remaining state chartered banks and credit unions with no luck convincing them to do business with cannabis. The Commerce Department puts together informational seminars to support banks looking to get into the industry under federal guidance specified in the Cole Memorandum and Financial Crimes Enforcement Network, or FinCEN, basically an informal promise to not prosecute banks for taking pot money as long as they keep the business clean: no gangs, no organized crime, no money laundering, and no kids. Still, the advice meets reluctant ears. “We’re trying to give them all the support they need, but we can’t tell them what to do,” Anselm said. Assembling and reporting the background information is daunting. There are three separate suspicious activity reports banks must file for every single marijuana account transaction. The cost and manpower to process them simply isn’t worth the trouble, according to banking leaders. Steve Lundgren, president of Denali State Bank and of the Alaska Bankers Association, said marijuana in Alaska brings extra costs and extra risk without any real potential for extra profit. “We have discussed, as a group, and no member bank I’m aware of is planning or proposing to directly bank with marijuana businesses,” he said. Federal law aside, filing or not filing the right paperwork can result in a stiff fine or even a spike in insurance rates from the Federal Deposit Insurance Corp. Filing the right paperwork means extra staff and fees; Colorado and Washington banks add thousands in service fees to the accounts of marijuana businesses, Lundgren said. While Washington, Oregon and Colorado banks are slowly coming into the fold, banks in Alaska think the state’s unique characteristics make it a poor investment. “It’s not going to be a big money maker,” Lundgren said. Lundgren said Colorado and Washington get millions from marijuana because they are populous and within driving distance of neighboring states. Those are two features Alaska doesn’t have. Lundgren also takes a long view. He said the Alaska market will fall prey to full national legalization at some point. Once marijuana can be transported across state lines, Alaska marijuana businesses could suffer as product gets shipped in at lower costs from large-scale growers in the Lower 48, much like most of the produce. “I think there will be so few businesses up here, even if we charged thousands of dollars in services fees it’s probably not going to be enough to mitigate the risk,” he said. Washington solutions Other states have had better luck with banking, but the solutions don’t necessarily apply to Alaska. Rick Riccobono is Washington’s Director of Banks. The notorious “cash only” cannabis stigma, he said, is largely mythical. The reality is more nuanced. “People say it’s a total cash business in Colorado and Washington,” he said. “Quite the opposite. We’ve actually gotten this thing pretty far along.” Riccobono said roughly 90 percent of all marijuana-related taxes and fees pour into the state treasury electronically, not with cash. Washington, he said, has at least three credit unions and two banks that accept money from cannabis operations. Recently, one even made a loan to a business, which Riccobono said is a first. Banks and credit unions at first refused to handle Washington’s marijuana-related monies, including taxes and licensing fees. A cannabis business law firm and the State of Washington had the same response: take all of our money or none of it.  “The state was pretty clear. If you’re going to do any of our business, you’re going to do all of our business. But we did kind of go a round or two with them on that,” Riccobono noted with a laugh. Still, marijuana businesses can’t pay taxes directly to Washington state with credit cards. Part of the problem is with the credit card companies themselves rather than the actual banks. Visa, MasterCard and other credit card companies have a strict no marijuana purchases policy. Like other businesses with reputations as less than family friendly — strip clubs, for example — marijuana vendors in Colorado ended up miscoding the transaction as “herbal tea” or “food” to cloak the purchase. Naturally, credit card companies threaten to drop the bank when they find out. Washington uses workarounds. In both, credit cards are allowed, but the transactions are non-marijuana transaction codes that credit cards companies can accept. The first, called PayQwick, serves as a closed loop system similar to PayPal. Retailers stock a prepaid card with money and all transactions take place within that system. The product might be marijuana, but the prepaid card system meets industry standards for credit card companies who depend on a wide range of similar setups. “There’s a code for that,” Riccobono said. “It’s totally permissible to load a prepaid card in a loop. They couldn’t cut that out, or then they’d have to cut PayPal. They’d have to cut Target.” The second electronic system, used by marijuana retailers, has a customer credit card buy the digital currency Bitcoin and accept Bitcoin payments. Retailers cash their accounts out at the end of the day and deposit the money into their bank. Banks then make electronic transfers directly into the state treasury for taxes and fees. Alaska solutions Alaska, however, isn’t like the Lower 48. The two private systems that Washington state uses to facilitate electronic marijuana tax payments can’t work here, according to Brandon Spanos, deputy director of the Tax Division of the state Department of Revenue. Either they don’t exist or the tax structure doesn’t allow for them. PayQwick isn’t registered to work in Alaska. The Bitcoin system relies on retail taxes, which don’t exist at the state level in Alaska. The state will only collect excise taxes of $50 per ounce from cultivators. In the absence of those two closed loop systems, Spanos said the state may switch its credit card processing vendor altogether. “There are other processors that don’t scrutinize the payments like U.S. Bank does and are willing to process credit card transactions that are legal in that state,” said Spanos. “We are looking into those options.” Spanos said Alaska hoped for a 50-50 split between cash payments and electronic payments for taxes, but recalibrated that hope after the Alaska banks and U.S. Bank’s actions in recent weeks. “The further we get down this path the more it looks like we’ll get less than that, just because the banks taking early action in shutting down some of the accounts,” said Spanos. “We are just a less populated state. In Colorado, they simply change their name and go to another bank. I anticipate that happening less frequently. There are fewer banks, and they’ll figure out quickly who the marijuana players are.” DJ Summers can be reached at [email protected]  

AG provides opinion on marijuana social clubs

Alaska’s gray market marijuana social clubs may have just gone up in smoke. Alaska Attorney General Jahna Lindemuth issued an opinion Wednesday that marijuana social clubs — which include Anchorage’s Pot Luck Events and Kenai’s Green Rush Events — are illegal. Lindemuth said these clubs, which allow fee-paying members to consume marijuana on premises but do not sell marijuana, fall under the definition of public consumption, which is prohibited by statute.  Though the Marijuana Control Board may allow retail stores to have onsite consumption, neither Pot Luck nor Green Rush is licensed as a retail store or any other cannabis business license type.  “When Alaskans voted in 2014 to liberalize personal use of marijuana and to allow a commercial marijuana industry, they also voted to prohibit public consumption of marijuana,” said Lindemuth in a statement. “Unlicensed marijuana social clubs are public places like any other place of business—such as cafes, movie theaters, or retail stores—where marijuana consumption is not allowed by law.” Chris Hladick, Commissioner of the Department of Commerce, Community, and Economic Development, requested that Lindemuth offer an opinion on marijuana social clubs. In a statment released hours later, the DCCED said it appreciates Lindemuth's opinion, as it clarifies a longstanding disagreement between interpretations of Ballot Measure 2. With the opinion, Hladick wrote local governments can now work with law enforcement to address these clubs. "The ballot measure anticipated a licensed, regulated commercial marijuana industry in Alaska," reads the statement from DCCED. "In order for the Department and the Marijuana Control Board to be able to fulfill the meaning and intent of the law, this clarification was needed. The Alcohol and Marijuana Control Office enforcement staff, in cooperation with local law enforcement, will work to address illegal consumption. Local governments may use their civil and injunctive powers to disallow the operation of illegal businesses in their cities and boroughs." Her legal opinion caps a lengthy standoff between the clubs’ owners, law enforcement and regulators. Marijuana social clubs like Anchorage’s Pot Luck Events previously existed in a legal gray area. They allow consumption and sharing on premises in exchange for a membership fee, but sell no marijuana directly. The Marijuana Control Board issued an opinion saying the Legislature would have to create the license type for them to either issue a license or close the club. Opponents of the clubs including Marijuana Control Board director Cynthia Franklin defined clubs as “public places,” in which marijuana consumption was banned during the summer of 2015. Pot Luck owner Theresa Collins said throughout 2015 and 2016 she was perfectly within the confines of the law because the fee-based membership did not fill the definition of a public place. “You don’t pay a membership fee and sign a membership contract at a movie theater,” Collins said. Law enforcement took no action against Pot Luck Events or a Fairbanks club that opened its doors in November 2015. Soldotna club Green Rush Events closed that month, based on fears of law enforcement, then reopened. Lindemuth is unequivocal in her opinion. “If that place is not a licensed retail marijuana store, consuming marijuana there is unlawful,” she wrote. “Charging people a fee to consume marijuana at a physical venue, if done regularly and for financial benefit, is to operate a business. The venue itself would therefore be a ‘place of business’ where it is unlawful to consume marijuana ,even if the venue’s proprietor expressly invites people to do so.” Even if it were not acting “as a business,” she wrote, it is still public consumption, as a substantial amount of people have access to it. Furthermore, Pot Luck’s distribution of marijuana samples qualifies the venue as a business, Lindemuth said, as they are taking money in exchange for providing them if the total amount exceeds one ounce, the statutory limit. “If this person has ‘dominion or control’ of the marijuana provided as samples — even if he does not own or have physical possession of the marijuana — he is acting unlawfully if the total amount of marijuana is more than one ounce or if he receives payment for transferring that marijuana to patrons.” This is a developing story. Check the Journal’s website for updates. DJ Summers can be reached at [email protected]

Walker appoints Nick Miller to MCB

Gov. Bill Walker on Wednesday appointed marijuana industry representative Nick Miller to the Marijuana Control Board. The appointment fills the seat left vacant by Bruce Schulte, the former chair of the board whom Walker ejected from the board on July 29. Miller, the chair of the Anchorage Cannabis Business Association, is in the process of opening a retail store in Anchorage. “I’m very pleased to appoint Nick to the Marijuana Control Board during this critical time in this new industry’s development,” Walker said in a press release. “Nick will do a great job complementing the existing Alaska Marijuana Industry Association’s representation on the board, and enable even broader industry perspectives.” Miller joins four other members of the Marijuana Control Board as the second industry representative alongside Brandon Emmett, who has applied for a marijuana production license in Fairbanks. The other members represent public health, the rural public and public safety, hailing from Juneau, Bethel and Soldotna, respectively. Stakeholders in the marijuana industry had expressed concern that Walker’s new appointee might not represent industry interests. There are two seats on the Marijuana Control Board to represent industry, though Emmett’s seat is technically industry/public, while Schulte’s former seat is industry. The law establishing the Marijuana Control Board provided for one person from the public safety sector; one person from the public health sector, one person currently residing in a rural area, one person actively engaged in the marijuana industry and one person who is either from the general public or actively engaged in the marijuana industry. Because Emmett is currently actively engaged in the marijuana industry, he would fill the industry requirement, and the other member could be a member of the public. Emmett represents the Alaska Marijuana Industry Association, the statewide industry group for the marijuana industry, and Schulte gave up his position as president of the association when he took the position as chair of the Marijuana Control Board. Miller represents another smaller industry group, the approximately 30-member Anchorage Cannabis Business Association, which focuses specifically on marijuana businesses in the Municipality of Anchorage. The goal of the association is to “provide two-way communication between industry participants and government officials (and) agencies,” according to Walker’s press release. Miller could not be reached for comment on Wednesday evening. His appointment runs through Feb. 28, 2016, according to the release from the governor’s office.   Reach Elizabeth Earl at [email protected]  

As sales near, cannabis industry still lacks unified voice

More than 300 licenses spread among a landmass the size of Mexico is causing some organizational problems for an industry without income or central leadership. Common theory in the Alaska cannabis industry says the industry needs more time to get onto the map than its sister states in the Lower 48. Colorado, Washington and Oregon each had an established medical marijuana industry for years prior to full recreational legalization. Medical suppliers only needed to switch gears. This explains in part why Alaska hasn’t had a recreational sale just yet, but also presents an issue the industry is only now starting to recognize: it has little organization. Left without leaders “It’s a huge problem,” said Taylor Bickford. Since leaving his involvement with the industry behind after Ballot Measure 2 passed, Bickford said he has concerns about the lack of unity the industry has now as a result of lobbying efforts. Bickford worked as the spokesperson for the Campaign to Regulate Marijuana Like Alcohol, which was mainly responsible for rustling up the 53 percent of Alaskans who voted in favor of Ballot Measure 2 in 2014.  Nearly $800,000 for the campaign came from the Marijuana Policy Project. Bickford, a senior vice president at public relations firm Strategies 360 now representing the Bristol Bay Native Corp., managed the communications campaign while father Frank Bickford handled Juneau. The elder Bickford oversees the accounts of Altria Client Services, a tobacco group affiliated with Philip Morris USA Inc., John Middleton Co., U.S. Smokeless Tobacco Co., and Nu Mark LLC; the Alaska Society of Eye Physicians and Surgeons; the American Academy of Ophthalmology; Oracle America, Inc.; and Alaska Hospitality Retailers. “If you look at any major industry in the state, they all have representation in the state capital, particularly in an industry like marijuana that’s going to be heavily regulated,” Bickford said. “The danger for the industry is it’s hard for them to present a unified voice to the Legislature.” Bickford said the marijuana industry suffers from a lack of centralized direction in a place where localities end up having more control than the state. Ballot Measure 2 gave local authorities the ability to craft their own marijuana laws, up to and including banning commercial sale and production. Areas range from Southeast Alaska municipalities asking for more lenient buffer zones between cannabis businesses and schools to proposed borough-wide bans in the Kenai Peninsula and Matanuska-Susitna. “What you have is a number of disparate voices that probably are mostly close to being on the same page, but in a lot of cases are not,” he said. “All these businesses are going to be just as, if not more, accountable to local governments than they are to the state. And in Alaska, that’s a pretty big patchwork.” Karen O’Keefe, the Marijuana Policy Project’s director of state policy, said her organization did continue lobbying efforts into the 2015 session following the Ballot Measure 2 approval in 2014, but implementation efforts dropped after the law passed. “There have been some lobbying efforts after the passage of Ballot Measure 2,” she said. “Last year in particular, there was a lot of legislation moving. There was a team of advocates working to make sure the will of the voters wasn’t being undermined. “That included Frank Bickford, Taylor Bickford, his son, the campaign spokesperson at the local level, Tim Hinterberger, a lot of other people showed up at the local level and in the Legislature.” In 2016, the tune changed. Rep. Gabrielle LeDoux, R-Anchorage, has been one of the cannabis industry’s major legislative supporters. She said she noticed a cannabis industry absence in the Juneau lobbies during the 2016 session, in part because the fiscal crisis-driven Legislature had no time for it. This industry was fortunate, according to LeDoux, because it needs statehouse representation as much as any other industry. “Even if it doesn’t seem like there’s going to be a lot going on in Juneau, you’ve got to be aware if you’re an industry player,” LeDoux said. “You’ve got to know when somebody proposes a bill that’s going to bite you. Unless you’ve got somebody down in Juneau, and that’s generally a lobbyist looking over the bills every day when they’re read across…you might find yourself someday with (a bill) that’s going to pass both houses and you didn’t know anything about it because you weren’t at the table to give your comment.” A patchwork LeDoux and other public officials say industry is understandably concerned given its history, but that fears have little basis in reality. “It’s just like in fisheries,” she said. “People are always trying to second guess. ‘Why is this happening, why is that happening, is somebody trying to sandbag this, is somebody trying to sandbag that?’ It’s just like fisheries, or just about anything else in politics I should say.” Regardless, the perception of large-scale antagonism against the industry spurs the conversation for better connections in the political world. Recent events have shaken the cannabis industry, including the ousting of long-time advocate Bruce Schulte from the Marijuana Control Board and who Gov. Bill Walker will choose to replace him. Board shakeups are standard for Walker, but industry views setbacks through a blood-colored lens. Though voted in by a 53 percent majority, Ballot Measure 2 was unpopular with most of Alaska’s movers and shakers. A laundry list of power brokers across the state publicly opposed Ballot Measure 2, including the Alaska Republican Party, the Alaska Association of Police Chiefs, the Alaska Chamber, the Alaska Conference of Mayors, the Alaska Industry Support Alliance, the Anchorage Assembly, the Mat-Su Business Alliance, the Alaska Mental Health Trust Authority, several boroughs and cities, Alaska Native corporation Doyon Ltd. and the Alaska Native Village CEO Association, among others. From stakeholders’ perspective, regulators on the Marijuana Control Board and in high-density localities are drawing the first sale out too far. Recent board events — including the firing of former chair Schulte and current chair and Soldotna Chief of Police Peter Mlynarik gathering signatures for a proposed Kenai Peninsula Borough commercial cannabis ban — make them even more suspicious. And now one of the Anchorage Assembly’s most sympathetic voices, Mountain View’s Patrick Flynn, is not allowed to vote or discuss any issues of relevance to the cannabis industry. Nick Miller is the president of the Anchorage Cannabis Business Association, a group of 30-odd dues-paying industry participants with plans to operate within the municipality. Miller agrees with Bickford in that the industry doesn’t put up a united front in Juneau, to the public, or with each other. “Between Anchorage and Fairbanks and Fairbanks and Kenai and Kenai and Mat-Su, there is a pretty large disconnect,” Miller said. “As an industry, I don’t feel we’re very unified. We don’t always send the same message. We all have our wants and needs, but we don’t really coordinate or align those very well.” Miller isn’t unsympathetic to the challenges of having hundreds of localities with disparate rules. As of yet, bringing each unaffiliated group together under a united flag or even a widespread newsletter hasn’t happened. “I feel like you need a group to lobby in your local area for your local regulations, but you think there’d be a time and place where members meet monthly and say, ‘ok, what are your top six issues statewide?’” he said. “For better or for worse there have been organizations that have tried that but it’s just not very well organized.” Lobbying smells suspicious to some cannabis business people, Miller said, and ACBA members seem wary. “I’m not sure what’s more important at this point,” one asked during an Aug. 10 meeting, “a lawyer or a lobbyist?” Miller has had conversations with one lobbyist, Paul Fuchs, who mapped out strategies, detailing which legislators and power brokers he has relationships with and how he would approach each differently on issues relevant to the industry. Miller learned more than he thought he did about the “very strange “ business of lobbying and wants to duplicate the experience for his members. Fuchs will speak and answer questions at the ACBA’s bi-weekly meeting on Aug. 24. Lobbyist or executive director? While ACBA vets possibilities for direct industry lobbyists, others think industry associations should fill the role in the absence of the money a lobbyist would demand. The Alaska Marijuana Industry Association hired Cary Carrigan as executive director last month. Carrigan is a former weatherman for KIMO and KTUU, as well as the former host of a radio show on KUDO. He approached the AMIA board looking to put his 30 years in Alaska media to good use after watching his Alzheimer’s-stricken father in-law-pass away and wanting to get more involved with cannabis. “There’s going to have to be someone from the mainstream who understands how the PR angle worked,” said Carrigan. “That’s what I’m trying to do.” Carrigan agrees that the Alaska cannabis industry lacks organization, but the solution is not a lobbyist in his mind. It’s the AMIA. “That’s a great thought, but I don’t know if the people need to buy the legislators more dinner,” he said. “I think what they need to do is let the legislators know that there’s an industry out here that wants to help support the state in a time of financial crisis.” The AMIA has marketed itself as the premier industry association since 2015. Two of its board members, Schulte and Brandon Emmett, ended up on the Marijuana Control Board as well. Other unaffiliated industry voices have criticized AMIA for being less an industry association than a board member organization. AMIA still has no dues-paying members, while other grassroots industry groups like Miller’s ACBA have dozens. AMIA board members, Carrigan said, launched too quickly and with too much ambition. Each had his or her own license applications to file and businesses to build and couldn’t focus energies on the association activities it had planned. With a volunteer executive director, the group will launch an aggressive campaign to build social media presence and organization activities for Alaska’s scattered industry, he said. This could involve providing campaign assistance for boroughs with potential commercial marijuana bans like Mat-Su and Kenai Peninsula, as well as resources and speakers for education, community outreach and regulatory assistance. “Our hope is to make the AMIA an umbrella organization just to give people a central focal point,” he said. “There’s going to be groups of people all over the place. There’s going to have to be some focal point because this where things tend to fall apart, because they get skewed and there’s too many people in too many different areas duplicating the same things.” National look Alaska’s industry focus on organization, and the differing ideas to get there matches the national pattern, according to Kris Krane, president of cannabis business advising company 4Front Ventures. Krane is the former associate director of the National Organization for Responsible Marijuana Legislation and now serves on the national board of directors for the National Cannabis Industry Association, Common Sense for Drug Policy and Marijuana Majority. Krane wasn’t surprised to hear about the push for a lobbyist and the questions about a central industry group. MPP gets laws passed, but doesn’t directly lobby for industry needs. The establishment of trade groups and the hiring of lobbyists comes next. “We’ve seen this happen in Arizona, we’ve seen this happen in Massachusetts, we saw it happen early in Colorado,” Krane said. “You have these industry associations that spring up that want to be the trade group and more often than not what ends up happening is a trade industry association eventually does arise, sometimes more than one, that is legitimate. “But it never actually happens until the businesses are up and running and enough of them are generating revenue that they can financially support the activities of one of these organizations.” In the meantime, trade groups vie for early traction, and he said tension between groups is the rule. Colorado’s early medical and adult use days had several trade groups that eventually whittled down to two competing associations with influence at the state level. “Eventually, once these businesses are operational and generating revenue, the dust will settle,” Krane said. “Most people will get behind whatever trade organization it is.” Krane said industry’s paranoia of state interference might sound fearful, but are a “totally valid concern.” Without money from sales, the kind of political firepower to address that concern is limited. “Without business that have cash flow, you would need to have a small handful of extremely wealthy people who have these licenses be willing to front this money without support from other license holders or other industry players. That’s what’s generally proven difficult.” In the meantime, he said nothing in Alaska looks anything less than normal. “None of this is a red flag for the development of the industry,” Krane said. “These are just the normal growing pains of developing something from nothing: an entirely new industry.” DJ Summers can be reached at [email protected]

More than 100 names on list to fill marijuana board seat

Gov. Bill Walker has no shortage of names to replace Bruce Schulte on the state’s body of cannabis regulators. Walker fired Schulte from the Marijuana Control Board on July 29, leading to a conclusion on Schulte’s part of anti-cannabis agenda within the governor’s administration. The board’s applicant listings are now stacked with more than 100 industry members, public officials, average citizens and attorneys with varied ties to commercial cannabis. It remains to be seen whether Walker will appoint another member of industry or someone from the general public to the seat. State law requires one seat be reserved for industry and another for either industry or the general public. Through its first year, the board had two industry representatives. Both Schulte and board member Brandon Emmett insist Emmett filled the industry/public seat and Schulte the designated industry seat, but Emmett’s original appointment letter from July 1, 2015, does not specify one way or another. Grace Jang, Walker’s director of communications, said the seat is open to more than just an industry representative. “That seat is open to industry or public,” said Jang. “It just depends on who’s the most qualified.” The list of candidates from 2015, when the board held its first meeting, is still active. Several industry representatives have either reapplied or submitted new applications. Among the new names are Joshua Tyson Bird, Mark Browne, Krystal Dietrich, Billy LaVoyce Fikes, Jr., Johnny Furlong, Matthew Gore, Diane Lee Hutchison, Kim Kole, Cameron Leonard, Robert Mikol, Dollynda Phelps, Rebecca Rein, Amy Tuma and Sara Williams. Those without licenses Bird, Browne, Fikes, Furlong, Gore, Hutchison, Leonard, Nathan and Rein have no cannabis licenses pending. Some are known in the industry, while others have no apparent involvement. Three applicants have legal or public service background. Diane Hutchison serves on the Fairbanks-North Star Borough Assembly with a prohibitionist stance on commercial cannabis. On June 9, Hutchison voted against local approval for several commercial cannabis licenses. She argued both that the licenses were incomplete because they had not completed background checks — the core of a much-debated argument during the 2016 Legislative session — and said she doesn’t support anything that contradicts federal law.  “You can’t just pick and choose what part of the Constitution you are affirming and you are going to uphold,” she said. In August 2015, Hutchison proposed a borough tax of 8 percent on wholesale marijuana, instead of the current 5 percent rate applied to alcohol. “Hutchison has mixed feelings about taxing marijuana,” according to an Aug. 10, 2015, article in the Fairbanks Daily News-Miner. “The government might come to depend on a marijuana tax, which would make it harder to reverse the new law approving marijuana for recreational use, the assemblywoman said. On the other hand, a higher tax might discourage people from purchasing and using marijuana, Hutchison said.” “A higher tax discourages use—to me, that’s a biggie,” Hutchison said, according to the article. “I still think the No. 1 issue here is health and the general well-being of the young people.” Like Hutchison, others come from public or legal backgrounds. Cameron Leonard is an attorney with Anchorage-based law firm Perkins Coie and a former senior assistant Attorney General for the State of Alaska, retiring from that position in 2013. This overlaps the years Cynthia Franklin, the board’s director, served as the Anchorage Municipal Prosecutor. He now specializes in environmental law, particularly relating to helping industrial operations navigate federal environmental process. Rebecca Rein is the deputy city clerk for the city of Houston. Houston is the only locality in the Mat-Su Valley that has actively courted cannabis development, while Wasilla and Palmer have opted out and the borough will have a commercial ban ballot on the October ticket. Other names are well known in industry groups. Bird owns and operates Green Rush Events, the Kenai-based marijuana social club. Furlong operates Cheeky Monkey, “a new start up company which will offer retail franchise storefronts which takes the head shop, vape shop, and accessories and brings them into one clean, sophisticated, and fun adult atmosphere,” according to its website. Williams, who serves on the Mat-Su Borough Marijuana Advisory Committee, recently left her long-time project, Midnight Greenery, and plans to start another, though neither businesses have licenses pending with the Marijuana Control Board. Others have little industry participation or public service or legal experience. Browne has no license and has a public record evidently limited to a letter to the Alaska Dispatch News briefly mentioning the marijuana’s potential ability to help Alaska’s economy. Gore’s public involvement with cannabis consists of several Amazon product reviews for grow tents, lights and plant nutritional supplements. Those with licenses The remaining industry applicants have a range of experience in the commercial marijuana industry. Dietrich, owner and operator of a Talkeetna trucking business, plans to operate a standard cultivation facility in Talkeetna barring a Mat-Su Borough ban in unincorporated areas. Robert Mikol has a license for his Fairbanks standard cultivation facility. Mikol is a geospatial analyst with Wolf Creek Federal Services and a graduate of the University of Fairbanks School of Natural Resource Management. Amy Tuma has a license to manufacture concentrates in Willow. Dollynda Phelps, a Kenai drywall business owner, has a limited cultivation license for a facility in Kenai. Kim Kole has applied for four separate marijuana licenses in Anchorage. Like Kole a fellow Alaska Marijuana Industry Association member Leif Abel, owner of Greatland Ganja cultivation facility in Kasilof, remains on the list from last year’s application period and said during an interview during his facility’s July 28 inspection that he is hoping his application is reviewed. Another AMIA member? Upon leaving the board he once chaired, Schulte, along with several other of the industry’s more visible members endorsed Kole, saying she knows the regulations and as a woman would address criticism from 2015 about the board members being all male. Kole points to her regulatory knowledge as her best asset, highlighting her work producing one of the state’s marijuana handler courses, required by regulation for each commercial employee. “We have to have somebody go in there who knows the regulations cold,” said Kole. “You can’t have somebody new learning that stuff. The fact I put together one of the handler card courses means I’ve gone over them 20 times.” Kole also said her Anchorage home makes her an important voice, though statute for the board’s makeup does not mention geographical representation other than one member must be from a rural area. With Schulte off the board, no members currently live in Anchorage or plan businesses there. Others said Kole or Abel would prolong a year of dominance from the Alaska Marijuana Industry Association. AMIA is among the most visible of cannabis industry groups though also the smallest, having obtained no dues-paying members since its July 2015 birth. Its members are the remnants of the Coalition for Responsible Cannabis Legislation, an advocacy group formed to advocate for the ballot measure legalizing recreational use that passed in 2014. Schulte served as the president of AMIA but resigned shortly after the news broke of his removal from the Marijuana Control Board. Kole is on the board of directors at AMIA alongside Brandon Emmett, Shaun Tacke, a co-owner of a Fairbanks cannabis business license with Emmett, Leif Abel, and attorney Jana Weltzin, who serves as member and legal counsel in addition to handling the personal businesses of several AMIA board members. The group’s mission statement said it will provide fund raising efforts, sponsored recreational activities, informational seminars, group health insurance options and lobbying effort, but has engaged in few events in the last year. The state has no record of any of its members being registered as lobbyists. Phelps is a member of the Alaska Small Cultivators Association, which encourages favorable legislation for limited cultivators with grows under 500 square feet and smaller standard cultivation operations — the Mom and Pop guys, she calls them. She said her own involvement with the regulations is as just as substantial, having hosted one of the marijuana handler’s courses and served on the Kenai Peninsula Borough Marijuana Task Force alongside Leif Abel and Marijuana Control Board chairman and Soldotna Chief of Police Peter Mlynarik. Other industry members like Williams also have local regulatory experience.  Phelps said AMIA’s efforts consist of attention mongering more than advocacy, and that AMIA represents those wanting to dominate the industry rather than ensure equal access for the Mom and Pop operators she represents. “I do not think it’s a wise idea,” said Phelps. “I think this industry needs a much broader industry representation than just those five or seven people. This industry consists of thousands of people, and I question why Gov. Walker would appoint two people from the same industry group and certainly don’t think it’s a good idea to do it again.” Kole said AMIA’s involvement with the Marijuana Control Board process has not benefitted its own members exclusively. “We are not doing it for ourselves,” said Kole. “We are doing it for the industry as a whole.” Kole acknowledged AMIA has not been as active as planned, but that the lag came from time management issues, not intentional clannishness. She said AMIA has scheduled a relaunch in the coming weeks to announce changes that will encourage more membership, including Schulte’s replacement, current board membership and a January 2017 voting process for board members. “We are putting ourselves up for election along with everybody else,” she said. “We want to be as transparent and non-cliquey as possible.” DJ Summers can be reached at [email protected]  

KPB marijuana ban petition won't be on October ballot

A citizen initiative seeking to ask voters whether commercial marijuana is legal in the Kenai Peninsula Borough outside the cities is a no-go. The borough clerk’s office finished verifying the signatures Friday and found the petition came up short. The petitioners were 62 signatures shy of the 898 they needed to qualify for the Oct. 4 general election ballot, said Borough Clerk Johni Blankenship. “They submitted 998 signatures,” Blankenship said. “We were only able to validate 836.” The petition cannot get onto the October ballot. However, it doesn’t rule it out entirely from a vote. The petitioners still have 10 days to gather additional signatures to supplement the ones they have, and if they succeed, the clerk’s office has another 10 days after that to verify them, Blankenship said. If the initiative at that point has enough valid signatures, the petition would then go to the Kenai Peninsula Borough Assembly. Assembly members would be able to decide then whether it would go to a special election or would have to go to the October 2017 ballot, she said. The clerk sent out a notice to borough assembly members and the petitioners letting them know the petition had been certified as insufficient to be placed on the ballot for the Oct. 4 regular election. The petition has been a political football for the past few months, after an ordinance that would have placed the question on the ballot failed to be introduced at the borough assembly in May. A group of citizens circulated the petition booklets this summer and turned them in on July 26, just before the borough assembly meeting. The technical deadline fell at 5 p.m. on July 21, but the petitioners requested and were granted a five-day extension, according to the letter from the clerk. Reach Elizabeth Earl at [email protected]

Buds and bugs: cannabis grow inspections underway

KASILOF — On July 28, Kasilof’s Greatland Ganja became the second of 47 approved cultivation facilities in Alaska to pass inspection and receive its full license despite glitchy tracking software and a worry over plant height limits. The first, Fairbanks’ Pakalolo Supply Co., passed inspection earlier in July. Before commercial cannabis licensees receive their final approval, each has a visit from Alcohol and Marijuana Control Office enforcement officers. Officers check to make sure facilities are up to specifications outlined in the Marijuana Control Board’s regulations for security and inventory. Greatland Ganja passed the inspection with only a few minor hiccups. Apart from a needed security tune-up and snags in the Alcohol and Marijuana Control Office inventory tracking software, enforcement officers’ only criticism was to tease owner Leif Abel for “slacking” in a greenhouse with fewer cannabis plants than the others. The officers also gave some slack for a preponderance of plants over the 18-inch height guidance discussed by the Marijuana Control Board in an emergency meeting on July 12. Leif Abel, owner and operator of Greatland Ganja alongside brother Arthur Abel and their father Seymour, grumbled about the state’s cannabis tracking software but said the enforcement officers met his expectations for professionalism. “I think the state’s responding very reasonably and treating us like any other business,” Abel said. Enforcement officer Joe Bankowski recognized the glitches, but said they are only part and parcel of the new partnership between regulations and a formerly illegal activity. “There’s a big learning curve here for everybody,” said Bankowski. The inspection, administered by AMCO officers Bankowski, Joe Hamilton, and Scott Starr, took just less than three hours from start to finish and was divided into two distinct enforcement focuses. Officers either counted plants with the state’s tracking system or monitored building codes and regulations with an especially sharp eye for security-related items. Security requirements in Marijuana Control Board regulations require a heavy investment for cannabis businesses. Cultivation operations must be out of the public view with extensive video monitoring and storage capacity, along with a coterie of requirements for door and window alarms, signs pointing out restricted access areas within the facility, and commercial grade locks. The officers spent the inspection’s first hour checking security requirements and found only one problem area. Greatland Ganja’s facility sits back from the Sterling Highway surrounded by a six-foot security fence peppered with signs cautioning that the building is heavily monitored. From a central control room inside, a flat screen television hooks into each of the state’s required high-resolution security cameras and stores the visuals in a 24-terrabyte unit for the required 40 days. The cameras covered virtually every nook and cranny of the operation with enough resolution to make out a person’s features within 20 feet, except for a blind spot made by an incubation room’s cannabis-stuffed growing racks. The officers made a note of the blind spot and gave Abel a week to install a new camera from the stockpile he’d bought in case he needed such additions. Potentially, explained Bankowski later, enforcement officers can issue two kinds of citation: and advisory notice, or a notice of violation. The difference, he said, concerns the severity of the violation and the adherence to regulatory intent. A willful disregard for an enforcement officer’s directions or for regulation — Bankowski used the example of a failure to install a new camera in the Abels’ incubator room, or having untagged plants — will receive a notice of violation. An advisory notice is the Alaska cannabis equivalent to a “fix-it ticket,” and gives a time frame to correct simple oversights. Officers give a time frame in which to correct the problem and require some proof of its completion. The bulk of the inspection’s remaining two hours was spent tallying up plants. The State of Alaska entered into a contract with Franwell, a Florida-based company, to provide cannabis-tracking services. Franwell’s technology, METRC, is already in use for the same purpose in both Colorado and Oregon. As a piece of equipment, the METRC gun resembles a graphing calculator glued to a Glock, much the same as the inventory controls Franwell has produced since 1993 for retail operations. Enforcement officers point the gun at the metal tags required on each plant and the software matches the plant to the strain and quantity the growers entered into the system prior to inspection. Franwell’s system is still rather buggy, as METRC developers have to craft an entirely new system for Alaska. “The program is probably a little bit like Healthcare.gov,” said Arthur Abel. “They’re probably a little overburdened and under budgeted and behind schedule, so they’re having to fix things as they go along.” Cultivators still have no way to enter either seeds or waste into the system, an issue for cultivators who must trim regularly to keep crops viable. The Abels keep detailed physical records of seeds, waste, and growing plants in the meantime, which enforcement officers consulted during the inspection. The METRC gun read through the facility’s metal walls into adjoining rooms at one point. Several times during the walkthrough, METRC didn’t correctly populate with the plants Greatland Ganja had registered on its shelves. At one point, Bankowski had to place a call to METRC support to resolve the issue. By the inspection’s end, the issues were fixed and enforcement officers encountered no untagged or plants unaccounted for. Abel feared the enforcement officers would take a more critical eye to the plants in Greatland Ganja’s outdoor greenhouses, and was pleased they recognized the spirit of the law behind the Marijuana Control Board’s 18-inch height guidance for pre-inspection plants. Previously, the Alcohol and Marijuana Control Office and the Alaska Marijuana Control Board issued guidance that cultivators may have an unlimited number of tagged clones on premise, but that they must be within a 6- to 18-inch height range to prove they’d been obtained and tagged after June 9, when the board began approving licenses. “I was a little bit nervous when they went out into the greenhouse,” Abel said, “because those plants have been in the sun, and they’re a little more than 18 inches tall. “So I’m really glad that they were reasonable and understand that this is agriculture. In the summer you have to grow.” DJ Summers can be reached at [email protected]  

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