Cannabis

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]  

Schulte uprooted from Marijuana Control Board

Editor's note: this story has been updated from the original version to include additional comments from Gov. Walker's office and other board members. Gov. Bill Walker has removed Bruce Schulte from the Marijuana Control Board. Walker’s letter gives little explanation for Schulte’s removal. “While I have appreciated your willingness to serve on the Marijuana Control Board, I have determined that your continued representation on this board is not in the best interest of Alaska,” stated the letter signed by Walker and dated July 29. Schulte said he received a voicemail from Walker’s deputy chief of staff John Hozey on the afternoon of July 29 informing Schulte he was off the board. Schulte, a commercial pilot out flying at the time, said he left several messages but hasn’t heard back from Hozey for any explanation. “I honestly have no idea (why I’ve been removed),” said Schulte. “No explanation. No preface. I have no clue.” Hozey has not returned calls from the Journal asking for comment. Alcohol and Marijuana Control Office Executive Director Cynthia Franklin referred the Journal to Hozey for questions. Board members contacted they don’t know why Schulte had been removed, either. Grace Jang, Walker’s director of communications, had a slightly more detailed explanation for Schulte’s expulsion from the board than provided in Walker’s July 29 letter. “Board members serve at the pleasure of the Governor, and Governor Walker felt it was time for a change,” wrote Jang in an email. “Mr. Schulte’s approach to the staff and the administrative process was not satisfactory.” Peter Mlynarik, the board’s chair, said he was surprised by Schulte’s removal and couldn’t venture to get the cause. “I don’t know what the reason is,” he said. Mark Springer, the board’s Bethel-based rural representative, said he doesn’t know why Walker cut Schulte from the cannabis bench, but said that’s simply the nature of board service. “Governors work in mysterious ways,” said Springer. “When you serve on a board, you serve at the pleasure of the governor. And nobody knows what pleases a governor.” The removal comes shortly after Schulte being voted out of his role as board chair at the June 9 meeting and replaced with Mlynarik, the Soldotna Chief of Police, who is gathering signatures for a commercial cannabis ban in unincorporated areas of the Kenai Peninsula Borough. The next board meeting is scheduled for Sept. 7 when the first retail licenses are expected to be issued. The vacancy leaves the board with four members. Jang wrote that, “The goal is to fill the vacant seat before the September board meeting.” Schulte said he feels like his time on the board ended too abruptly and without having accomplished what he wanted to in terms of industry success. “When I think back on all the work that I put in, it was almost like a part-time job,” he said. “That’s 2,000 hours of my time I just pissed away. It’s a little disheartening.” Board member Brandon Emmett of Fairbanks, who has applied for a cannabis production license, said he does not know why Schulte was removed and hopes his replacement continues Schulte’s work. “Mr. Schulte is an ardent advocate for the marijuana industry,” said Emmett. “I admired his zeal for staying true to the voter initiative timelines and assuring the industry was fairly represented. I can only speculate as to the reason for his removal, but would hope Walker sees fit to insert a strong, responsible voice in his place.” Schulte served as the board’s chair and a designated industry representative seat from its 2015 inception through the June 9 meeting, during which he was replaced with Mlynarik by a board vote of 3-2, with himself and Emmett voting against.  Schulte said he believes his removal is an attempt to dilute direct industry representation on the board by installing a non-industry member to replace him, leaving only Emmett as an industry representative. According to HB 123, which established the Marijuana Control Board and was signed into law by the governor on May 12, 2015, the governor must appoint “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.” Schulte’s removal has opened a spot for another industry seat, but the governor’s Boards and Commissions office posted a notice for a replacement for an “industry/public board representative.” This designation is not in line with statutory designations that Schulte and Emmett filled. According to Schulte, “I was industry, Brandon Emmett is industry/public.” Emmett confirmed that he is the board’s industry/public member. When Walker announced the board’s makeup in 2015, his press release made no distinction. “Appointed to the two industry seats are Bruce Schulte from Anchorage and Brandon Emmett from Fairbanks. Per HB 123, the Governor needs to select two people for the initial appointments to the Marijuana Control Board with experience in the marijuana industry. This experience can be obtained through lawful participation in the marijuana industry or participation in an academic or advocacy role relating to the marijuana industry.” By way of explanation as to why a vacant industry seat is being advertised as an industry/public seat, Jang wrote, “At the time of the initial appointment of the board, we were required to seat two industry members. But after March of this year, one of the industry seats became flexible, so that either an industry or public member could fill it.” Schulte said he views his removal as evidence of industry antagonism by Walker’s administration. “I have witnessed some highly questionable behavior on the part of several in this administration and I can only assume from my own dismissal that Gov. Walker condones that questionable behavior, and that is truly shameful,” said Schulte. “I believe there is another agenda at work here — and it is definitely not what the voters asked for. The appearance of transparency is, in my opinion, a thinly-veiled façade intended to obscure the fact that they have no real intention of letting a lawful marijuana industry get started in Alaska.” Schulte said plans to remove both him and Emmett from the board have been in the works for months. “John Hozey himself did confirm to me that Franklin was trying to keep (Emmett) from being reappointed because she felt that it would weaken the industry’s position on the board,” said Schulte. As to anti-cannabis forces, Springer thinks the Legislature, if anything, should cause concern, rather than Walker. “I don’t think I’m being naive in saying I don’t believe the administration from the governor on down is trying to make an effort to put the kibosh on the industry,” said Springer. “Compared to trying to get a wildlife photographer on the Board of Game…people think we have problems?” Springer was referring to Guy Trimmingham of Hope, who was shot down by the Legislature 46-12 in April for a seat on the Alaska Board of Game based largely on his support for nonconsumptive uses of game such as wildlife photography. The board reviewed a regulatory addition in July that would have prepared for a four-member board. At the MCB’s July 7 meeting in Fairbanks, a regulation was advanced to the board that would have given the executive director Franklin the ability to cast a tie-breaking vote in the event of a board tie. Some of the Marijuana Control Board’s five members, who frequently cast 3-2 votes, voted against the measure and it was struck from regulation proposal language. If a vote is tied at 2-2, any license or matter before the board would fail. Schulte took the position of board chair at the expense of his position as president of the Alaska Marijuana Industry Association. He said he does not know whether or not he will return to the association. Though the board’s former industry representative, Schulte has not yet submitted a license proposal for the retail business he’d been planning to open in Anchorage. “I’m reevaluating my entire involvement with marijuana right now,” he said. “I’m fairly certain I’m not going to have the marijuana business I envisioned. I don’t think there’s a hope in hell I’m going to get a license here in the state.” The removal comes shortly after the public knowledge that Mlynarik, the Soldotna Chief of Police, is a registered signature gatherer for a petition that would put a commercial cannabis ban ballot initiative onto the Kenai Peninsula Borough ticket in October. Mlynarik has insisted that his personal involvement with the petition should not concern the industry, as his personal opinion and board behavior are separate issues. He said his voting record on license approval beginning June 9 should speak for itself, as he has voted in favor of each license. The situation, Schulte said, has soured him on the industry’s prospects for success. “If I were just any guy, thinking I want to start a marijuana business, I would tell that guy, ‘don’t spend a lot of money on it right now. You may be in for a really rude awakening.’”   DJ Summers can be reached at [email protected]

Marijuana board chair gathers signatures for borough ban

The recently elected chairman of Marijuana Control Board, Peter Mlynarik, is a registered signature gatherer for a Kenai Peninsula Borough petition that would put a commercial cannabis prohibition ballot initiative onto the borough’s 2016 ballot. Ballot Measure 2, which legalized commercial cannabis statewide in 2014, allows for local governments to submit their own controls on cannabis, including ballot initiatives that ban commercial activity. Several localities including the Mat-Su Borough, Wasilla and Palmer have already opted out. The borough ban, like that of the Mat-Su Borough, would only apply to unincorporated areas. Those cities that already have their own laws, like Kenai, would still have legal commercial cannabis.  Mlynarik and the board’s legal counsel said Mlynarik’s involvement with the borough initiative is simply a private exercise of citizenship, while others think it crosses a line. Mlynarik, who serves as the Soldotna Chief of Police, where commericial cannabis is banned, said he doesn’t feel his involvement as a signature gatherer should color his board chairmanship any differently than in the past. His actions as a private citizen, he said, should be viewed in context. “I think the main thing is to look on my roll and how I voted,” said Mlynarik. “I’m not always the most conservative vote on the board. All the licenses went through. I’m not trying to hold anything up.” Despite his chairmanship, he said, he still has personal concerns about young people's cannabis usage in his home borough. “My particular concern about the youth,” he said. “That’s always in the back of my mind. As a borough citizen, it was my concern that the people at least have a right to vote on it.” Mlynarik was elected as chair during the board’s June 9 meeting, replacing Bruce Schulte, one of two designated cannabis industry representatives on the board, sparking some industry fear that the board’s policies and regulations could change. The record supports Mlynarik’s claim that he has supported license issuance since the board began approving licenses on June 9, which another board member said is the most important part of the situation. The fact that Mlynarik gathers signatures for a citizen’s initiative “don’t mean (expletive deleted),” according to Mark Springer, a board member. “It’s a local government issue," said Springer. “He can do whatever he wants. He has voted to approve every license that’s been approved. He hasn’t expressed a deep prejudice against the licensing process. He’s not the sponsor of the petition. At the higher level, we’re issuing licenses. We’ve had Kenai (Peninsula Borough) applications. He voted yes on them too.” Other board members from the industry don’t like the development, saying a member should respect the duty of the board to encourage, not prohibit, the industry. “Although it’s legal to do this, it seems somewhat poor spirited to be in the position of highest authority on the board and also be attempting to end the industry for significant portions of the state,” said Brandon Emmett, an industry seat on the board. “It’s disheartening. I was very surprised.” Mlynarik consulted Harriet Milks, the board’s legal counsel, before gathering signatures. Milks said board members are within their rights to engage in local politics that involve the subject of their respective boards, and that she doesn’t think there is any legal issue with Mlynarik’s doing so. “I think it’s perfectly fine,” said Milks. “We are a representative democracy. We don’t expect our board members to check their opinions at the door when they enter. Participating in the election process is something we’re all for.” Cases of conflict of interest, Milks explained, are outlined in the Alaska Executive Branch Ethics Act. She said in the case of the Marijuana Control Board, behavior away from the board is irrelevant unless the board member has something to personally gain from an issue on which the board is taking action. “That act gets down to undue influence as a public official,” said Milks. “If we wanted people to have completely blank minds, we wouldn’t have people, we’d have a computer. We don’t want people to have their votes be bought or to have a sway in influence.” Milks and Mlynarik both compare signature gathering for the initiative to industry members Schulte and Emmett, saying his involvement with the petition shouldn’t be any more concern than their pro-industry actions are as they develop their own respective cannabis businesses. “It’s just as appropriate to do that as it is for a member of industry to do industry related things when they’re away from the board,” Mlynarik said. “And they stand to benefit. There is a monetary gain there. For me, there isn’t one. I’m not making any money from this.” Emmett does make a distinction, saying board members’ personal actions should not undermine the mission. “I think the MCB was formed to implement a regulated industry,” he said. “The overall perception is that marijuana is legal, and we need to implement it responsibly. Even though there are some diverse viewpoints, I feel that when he took the job as a regulator for the industry, it’s responsible implementation he should have in mind.”   DJ Summers can be reached at [email protected]    

Marijuana board revises cultivator limits

The Marijuana Control Board passed a revised regulation for Alaska cannabis cultivation licensees on July 14. After a regulation approved at the July 8 meeting crossed hairs with instructions from the Alaska Marijuana Control Office, the board changed rules for the cultivators who are currently active but still waiting for a preliminary inspection from AMCO enforcement officers. The new regulations allow a cultivation licensee in an active stage to have any number of immature plants upon their inspection, as long as the plants are tagged into the state’s tracking system, METRC. Currently, there are between 12 and 20 of these cultivators. Inspectors, who have studied similar rules in other states, must be able to have reasonable assurance that cultivators tagged the plants when they were eight inches in height. Cultivators may also have 12 immature plants – roughly speaking, plants not yet in a flowering state – of any size to serve as mother plants for clones. The measure passed on a 3-2 vote of the five-member board, with chairman Peter Mlynarik and Loren Jones voting against it. The board held a lengthy discussion of enforcement aims, botany and business cycles during the telephone meeting. The point of having initial height restrictions for plants, explained board director Cynthia Franklin, is to ensure “that someone didn’t cheat and bring plants in before they ordered their tags.” This follows Franklin’s earlier instructions to cultivators advising plants be in a range of six to 18 inches upon inspection. “We understand they will have grown by the time we see them,” she said. Industry representatives Bruce Schulte and Brandon Emmett argued in favor of having no height restrictions whatsoever for the immature plants a cultivator could have between ordering tracking tags and their AMCO inspection. Both Schulte and Emmett implored the board to loosen the height restrictions and instead specify that cultivators can have any number of immature plants. Height, they said, is a poor measure of a cannabis plants actual maturity, and restricting growers to a pre-tagging size limit would have bad consequences for the industry. “It’s difficult to describe the impacts of this change over time,” Schulte said. “If we have all these cultivators starting out with these plants at height restriction… we’ll see a spike, then business won’t have anything to sell for a month.” Schulte and Emmett pointed to Washington as an example, where such initial cultivation height restrictions contributed to a cycle of price swings related to an unstable supply of cannabis to retailers. Other board members argued the height restriction is necessary to curtail black market operators who could potentially stay in business as suppliers for licensed cultivators. “It gives people incentive to stay in the black market ‘til they transfer it to the legal market,” said Mlynarik. The board's next meeting will take place on September 7-8 in Anchorage, during which it plans to award the first retail licenses.  DJ Summers can be reached at [email protected]

Marijuana board calls meeting to revise grow rules

The Marijuana Control Board will need to immediately revise a regulation it passed on July 8, an action that’s become a pattern for a board creating an industry from scratch. The July 7-8 meeting reviewed public consumption provisions, awarded licenses, and made changes to enforcement officers’ powers. The board will convene an emergency meeting on July 14 to remedy a cultivation regulation flub that would potentially have bankrupted some of the earliest entries to the industry. “At the meeting the Marijuana Control Board will discuss and may amend preliminary inspection requirements regarding adopted policy decisions relating to licensing of marijuana cultivation facilities,” according to a public notice of the meeting, which will be held telephonically. “No public testimony will be taken during this meeting.” The board passed a measure during its July 7-8 meeting that would have limited cultivators to six so-called “mother plants” before their initial inspection. Mother plants are grown cannabis plants from which cultivators can cut whole stems, called clones, which will then grow on their own as viable plants of the same strain. The board made this regulation with the intent to create an equitable entry for Alaska cannabis grower and to avoid legal scrutiny. Alaska statute allows the personal possession of six cannabis plants for personal use. In theory, a cultivator could “gift” itself six viable mother plants and still be in the realm of legality. If interpreted literally, however, the regulation doesn’t mesh with directives from the Alcohol and Marijuana Control Office, or AMCO, for some cultivators whose licenses were in an “active” state prior to the board’s July 9 meeting. In a letter, AMCO outlined instructions for these cultivators. These include securing fire marshal approval, local government approval, meeting certain training requirement for the state’s tracking system, METRC, and ordering METRC tracking tags. AMCO appeared to have an understanding that cultivators would be cultivating clones in the time between license issuance and final inspection, but did not mention quantity limits, only size and tagging requirements. “Make sure that you are within approximately seven days of your inspection when you tag your plants,” read the instructions. “The plants will be approximately 6-18 inches tall on the day of your initial inspection.” Several cultivators across the state have spent the last month cutting clones to be in the ground, tagged, and ready for final inspection, including Kenai’s Greatland Ganja, Fairbank’s Rosie Creek Farm, and Juneau’s Rainforest Farms. Mike Emers, an owner of the already-established organic outdoor produce grower Rosie Creek Farm, said he already has large crop of clones beneath the 18-inch limit. If forced to throw them away, his outdoor cultivation couldn’t produce another viable crop with only six mother plants before Alaska’s short growing season ends. “There’s nothing I could do, the plants were already planted,” said Emers. “I have to get a crop in this year. I can’t have a different start date.” Leif Abel, owner of Greatland Ganja, operates an indoor grow facility, but said a six mother plant limit would bankrupt him. His roughly $500,000 facility depends on the large crop of clones he’s been cultivating since June 9 to recoup the investment, he said. “No other state has been asked to come online with six plants,” Abel said. “It’s like telling an oil producer to build all this infrastructure and then only pull five barrels of oil in the first year.” The board members believed they had only been voting on mother plants, rather than total plants. AMCO and the board will hold an emergency meeting on July 14 to correct the inconsistency.  “After the meeting was adjourned, I was informed by the chair that the board was confused about the action they took regarding how many plants could be on a cultivation premises at the first preliminary inspection,” wrote AMCO and board director Cynthia Franklin in a letter to staff and industry members.” The Marijuana Control Board has needed to undue several decisions in a similar manner in the first year of its industry oversight. In an emergency meeting, the Marijuana Control Board voted unanimously on Dec. 1 to reinstate a stricter residency requirement for marijuana business licensees, following Permanent Fund Dividend residency rules (one calendar year in the state) instead of voter registration rules. Earlier, a Nov. 20 meeting opened the Alaska cannabis market to more Outside presence than some industry members liked. That amendment had loosened residency requirements to voter registration standards, which only require an Alaska address and a 30-day wait. In draft regulations stages in September, the board passed regulations that would have banned marijuana social clubs where consumption but no sales take place. The board later reversed that vote and said it could neither ban nor endorse licenses for marijuana clubs until the Legislature creates the license type in statute, which it has yet to do. It was at this meeting the idea for onsite consumption provisions for retail stores made its way onto books, which allow retail stores to have adjoining rooms for customers to consume what they have purchased from the retail store. Onsite consumption Retail licenses are still a few months away from being issued while waiting on crops to grow. In the meantime, the board is still shaping how onsite consumption will look, and reviewed a draft of regulations. Some of the board’s members thought the onsite consumption draft strayed too far from the original intent to tie consumption to retail purchases. The draft would require retailers make distinct sales for marijuana to be consumed in their shop, rather than customers consuming some of what they bought for personal use. Retailers would sell up to one gram of flower or bud for onsite use, and have to monitor users for overconsumption. Consumers would not be allowed to leave the shop with anything they’d bought for onsite consumption, which public commentators and board members alike feared could lead to overconsumption. “We have turned this into marijuana bars, from the looks about it,” said member Mark Springer. “My desire is to see a space where people can purchase products and consume a legal portion of them, and then leave with the remainder held by them in a legal fashion. “I think that’s going to be a lot more palatable to the public than commercial marijuana clubs, which is what people see, and I can fully understand their concern about that.” Amendments offered by Springer and Brandon Emmett revised the onsite consumption draft. Springer’s amendment changed language to allow customers to consume from what they purchased as a regular retail purchase. Emmett’s would allow customers to take home their unfinished marijuana in a childproof container — the marijuana equivalent of a “doggie bag,” as assistant attorney general and board legal counsel Harriet Milks put it — thereby avoiding scenarios where customers smoke more than they can handle in order not to leave any behind. The board voted 4-1 to submit the new draft for public review. Only Loren Jones voted against. The amendments intended to address several public commentator concerns, not least of which came from the Municipality of Anchorage, which has not only the largest amount of retail stores applying for onsite consumption provisions but the only marijuana social club free of legal challenge. The Municipality of Anchorage weighted in heavily on issue with a detailed letter from Erika McConnell, the marijuana coordinator for the municipality.  “There is perhaps good reason that this step has not been taken in other states, as regulating a marijuana bar raises significant concerns,” the letter states. “There is as yet no physical test to determine marijuana impairment, leaving only subjective behavioral tests which will probably be inconsistently applied. Limiting onsite consumption to marijuana that is in the state’s tracking system will be difficult if not impossible. And the very nature of this concept encourages marijuana consumption outside the home which will increase the likelihood of public intoxication and impaired driving.” McConnell wrote that the city is still considering whether or not to allow onsite consumption in city limits. “At this time onsite consumption is prohibited in Anchorage by municipal code,” the letter reads. “The administration is continuing internal discussion on the issue of social consumption of marijuana — whether to allow it at all, and if so, whether to allow it through the onsite consumption provision or through the social club model.” Smoking and driving drives a large part of the fears from regulators regarding onsite consumption. The board takes the concerns seriously, but as of now the state has no statistics to prove that marijuana consumption either increases impaired driving or has no effect on impaired driving at all. “We haven’t gotten that far in our record keeping,” said an Anchorage Police Department representative. The most well established area for non-home marijuana consumption is Pot Luck Events in Downtown Anchorage. Pot Luck Events has no endorsement from the Marijuana Control Board, but exists in a still-hazy legal area that has allowed it to continue operating as a private club where paying members can bring their own cannabis and consume onsite. Anchorage police records don’t track DUI violations according to the substance ingested. Rather, to track for what impairing substance, police must backtrack each violation and check whether the offender registered 0.0 percent blood alcohol content, then further check violation records to find what substance was in question. Peninsula conditions and enforcement Several applications from the Kenai Peninsula were only approved conditionally. The Kenai Peninsula Borough submitted letters to the board asking that it require three conditions for each of the approved licenses. Under state regulations, the board has to approve such local conditions unless they are “arbitrary, capricious, and unreasonable.” KPB’s conditions require that the marijuana establishment shall conduct their operation consistent with the site plan submitted to the Kenai Peninsula Borough, that marijuana establishments allow no parking in borough rights-of-way, and that the marijuana establishment shall remain current in all Kenai Peninsula Borough tax obligations consistent with local law. The board eventually allowed the licenses, not wanting further delay, but not before a lengthy discussion with KPB legal clerk Johni Blankenship. The discussion distilled to a question of enforcement, specifically whether or not the state or the borough would have enforcement powers over parking, taxes, and site plans. Enforcement AMCO enforcement officers will now have the authority to cite and make arrests for unlicensed marijuana activity or other marijuana-related offences. The board narrowly passed the measure with a 3-2 vote, with Brandon Emmett and Bruce Schulte fearing unforeseen consequences for an industry already suspicious of law enforcement. “I don’t think we fully understand the scope of this proposal,” said Schulte. Franklin took umbrage at the idea the regulations would expand police powers. Enforcement officers are already fully sworn police officers, simply with special duties. The regulation would give them the power to have enforcement capabilities for regulatory matters as well as legal matters. “This is not expanding their authority,” Franklin said. “This is activating their authority. This is not about arresting people; this is about protecting our licensees. This is the authority to shut down illegal competition with our licensees.” Board chair Peter Mlynarik, himself the police chief of the Soldotna Police Department, said the more help, the merrier. “I don’t think you confront the problem by totally removing law enforcement from it,” Mlynarik said. “I welcome having additional people who would help out in additional cases like that.” Tourism Tourism may be good for green tours, but the chances for having a cultivator’s license approved seemed to improve the more the applicants expressed disinterest in tourism. Tourism has reached a height of curiosity among the board thanks to an Alaska Dispatch News article detailing “green tours,” which would take Alaska visitors to see commercial marijuana businesses including cultivation facilities. Companies in tourist-heavy Southeast Alaska have already begun cropping up. The board appeared to think the prospect of tourism companies could lead to security problems and license protests from neighbors. Members asked many applicants whether or not they would be interested in taking part in green tourism. Cultivators, each of whom were approved, invariably answered no, drawing satisfied responses from the board. Some companies have already had problems with curious rubberneckers, drawing questions about security plans from the board. “People have been showing up asking about it because they’ve read about it online,” said the proprietor of Farmer Jack’s LLC, an Anchorage cultivator. “We’ve been having to ask people to leave.” DJ Summers can be reached at [email protected]  

Juneau's first marijuana testing lab applies for permit, license

JUNEAU — When drafting their regulations for the growth and sale of marijuana, the Alaska Marijuana Control Board and the Juneau Assembly split the budding industry into four sectors: cultivation, product manufacturing, testing and retail. To date, the city’s Planning Commission has heard and approved conditional use permits for cultivation, manufacturing and retail businesses. Now, the last piece of the marijuana supply chain is about to fall into place. Southeast Alaska Laboratories LLC, Juneau’s first marijuana testing business based in Lemon Creek, has applied for its city conditional use permit and its state marijuana establishment license, and another business is following close behind. Glacier Analytics, a testing lab located in the Mendenhall Valley, should have its state license application and city permitting paperwork turned in by early next week, according to the business’ co-founder Mitch Knottingham. Loren Jones, a member of the Juneau Assembly and the Marijuana Control Board, said that these testing facility applications are a “big deal” for other marijuana businesses in town because without local testing, cultivators would be put in “limbo.” Jones, not speaking on behalf of the Marijuana Control Board, said that federal law currently prohibits the transport of marijuana using boats, planes or the U.S. Postal Service. This leaves transport via car the only real legal option for communities without licensed labs to get their products tested. Without access to the road system, however, this puts communities like Juneau in a bind. “If you’re in Mat-Su, you can drive your samples to Anchorage for testing,” Jones explained. “For communities in Southeast Alaska, rural Alaska, the Aluetian chain — all of those — it’s going to be problematic.” Now that Juneau has two prospective testing facilities preparing for business, growers and manufacturers here no longer have to worry about how they are going to transport their products to be tested. Jessica Dreibelbis, the CEO and manager of Southeast Alaska Laboratories, said this fact is not lost on most marijuana business owners in town. “When I put in my application, word got around pretty quick, and cultivators have been very appreciative,” she told the Empire in a phone interview Thursday. “They know without a lab here, it’s going to be very difficult for them to sell their product legally.” James Barrett — who co-founded and co-owns Rainforest Farms LLC with his brother, Giono — said that he was never particularly worried about having to ship his product for testing. He pointed out that in Washington and Oregon, both states in which recreational marijuana is legal, the feds have allowed for intrastate shipping of products. Jones observed this, too, and added that if other Alaska communities have trained their drug dogs like Juneau has (not to detect marijuana), then shipping might not be impossible to get away with — even if it is still federally illegal. “It’s not like we’re going to send a five-pound package of marijuana to the tester,” Jones said. “We’re talking about one-gram, two-gram samples.” But he also noted that shipping adds extra risk to business owners, who are already venturing into uncharted waters, so to speak. For Barrett, though, having a local lab is more exciting from a product development standpoint than anything. “If we have a lab we are close to here, we could have the lab analyze our products closely and help us develop them,” he said. With more direct access to labs, and without having to deal with the hassle of shipping, Barrett said Rainforest Farms would go beyond the regulatory mandatory testing to work on fine-tuning the taste and effects of its edible products. The Barretts and other cultivators are not the only people happy about Juneau’s two testing facilities. Both lab owners said they are excited to get their businesses off the ground. Knottingham is going into business with his wife, Rochele. He said they have wanted to get into the commercial marijuana industry for a while now, and testing seemed like a good fit, given that Rochele has a background in water-quality testing. “With Rochele’s background and the lack of labs in Southeast, it made way more sense for us and for the entire community for us to focus on a laboratory,” Mitch Knottingham said. Dreibelbis’ conditional use permit hearing is scheduled for the July 26 Planning Commission meeting, and Jones said Dreibelbis’ state license will likely be heard at the Marijuana Control Board’s September meeting. Dates won’t be set for Knottingham’s hearing until his permit and license paperwork has been finalized and submitted. • Contact reporter Sam DeGrave at 523-2279 or at [email protected]

Cannabis industry readies for next steps after first licenses approved

The first commercial licenses are issued, growers are gearing up to grow, the Marijuana Control Board is shuffling, and the Alaska marijuana industry is entering a new chapter. Nearly year after the Marijuana Control Board began its commercial cannabis rollout, on June 9 the board gave the go-ahead to over two dozen marijuana growers looking to stock retail shelves later this fall. The board approved just nearly 30 cultivation licenses, and did not outright reject any. It tabled three: two in the Mat-Su Borough, which will hold a borough wide ballot to ban commercial cannabis in October, and Stoney Creek Growers in Seward. The remaining standard and limited cultivation licenses are scattered from Fairbanks to Ketchikan. Fairbanks has the greatest representation of new cultivation licenses, consistent with the relatively cannabis-friendly attitude of the borough and city authorities. Unlike most other Alaska cities, Fairbanks requires no local license for marijuana businesses beyond a zoning requirement. The borough has approved over 30 cultivation facilities for zoning.  Newly licensed companies include Alaskan Greenery in Valdez; Dream Green Farms in Anchorage; Rainforest Cannabis Cultivation in Ketchikan; Northern Lights Indoor Gardens LLC in Sitka; Elevated Innovations LLC in Fairbanks; Parallel 64 LLC in Anchorage; Tanana Herb Co. LLC in Fairbanks; Alaskan Bud Brothers Aerogardens LLC in Kasilof; Pakalolo Supply Co. Inc. in Fairbanks; Green Rush Gardens LLC in Sterling; Peace Frog Botanicals LLC in Kenai; Coyote and Toad’s Garden LLC in Skagway; Permafrost Distributors in Nikiski; and Talisman Farms in Homer. Crucially, the board also approved testing facility licenses for CannTest LLC and AK Greenlabs, ensuring cultivators will be able to legally test their product when the board issues retail licenses in September. Though licenses have been approved, cultivators and laboratories still require state and city inspections to make sure the extensive security requirements and other required regulations are filled along with the normal city and state inspection building codes. Leif Abel, a board member of the Coalition for Responsible Cannabis Legislation and owner of Greatland Ganja cultivation facility in Kenai, said his cultivation facility should be ready for inspection in the next week. “We’re feeling good about everything,” Abel said. “We’re basically in the last two weeks or so of wrapping everything up.” Abel said the hard part is on the way, not behind them. “I’ll be accepting congratulations when we get everything planted and get that first crop up for sale in the fall,” he laughed. New chair elected The board elected a new chairman, switching from an entrepreneurially minded industry representative to a police officer with a record of caution on legalization. The board wrestled with personality conflicts from inception, as Bruce Schulte and Brandon Emmett, the two industry representatives on the five-person board, often disagreed the more conservative tendencies and suggestions of executive director Cynthia Franklin and fellow board members Loren Jones and Soldotna Chief of Police Peter Mlynarik. Now that regulations are operable, though far from perfected, the dynamic could shift. During the June 9 board meeting, the board voted 3-2 to replace Schulte as chairman with Mlynarik. The election immediately followed an executive session called by board member Mark Springer at the beginning of the meeting. Mlynarik’s election was sandwiched between the executive session and the tense resignation of administrative officer John Calder. Reading from a statement, Calder said he was resigning because of Schulte’s behavior. The then-chair silenced him before Calder could continue what began as a list of grievances.  Franklin and Calder did not respond to requests for interviews.  Mlynarik acknowledges he and Schulte don’t always agree, but said he doesn’t expect the board’s tendencies to change substantially. “I’m sure we have different outlooks on it,” said Mlynarik. “We come from different sides of it. I’m from law enforcement, he’s from industry, so obviously he’d like to see thing get cranked up. I think the board’s fairly diverse, so I don’t know if just changing the chair is going to change the direction of it. We move along on the majority of the vote.” Schulte said that the decision of the board didn’t surprise him. He, Mlynarik, and Springer had each expressed interest in being board chair when the board convened for the first time nearly a year ago. Because the June 9 meeting was a rare meeting in which all members were physically present, it was only natural to have a vote. Schulte agrees with Mlynarik that chairmanship doesn’t change the fact that one member still only has one vote. “I don’t think it’s quite as significant as how people would have it be,” said Schulte. “The challenge of the chair is to manage the flow of the meeting and to make sure each member is getting their voice heard and there’s no hijacking of the discussion. That’s going to be Peter’s challenge. I certainly found it challenging.” Schulte acknowledges that the new chair’s stances are more conservative than his own, but said he personally likes and respects Mlynarik. “We’re going to continue to disagree, but it’s going to continue to be a healthy, professional disagreement,” he said. Mlynarik, from a city with a moratorium on commercial marijuana, fills the statutorily designated role of public safety representative on the board. While industry members residually fearful of law enforcement might have some reservations about a cop on their regulatory board, Mlynarik said he won’t have any more influence now than before he was voted chair. “I don’t think there’s any changes from where I was,” he said. “I have one vote just like anybody else does.” The police chief has a wary regulatory style, opposed to Schulte’s more laissez faire tendencies, and found himself on the losing side of several 3-2 votes on the five-member board. His actions on the board contrast markedly with Schulte, who came from the activism front of the 2014 Ballot 2 Initiative, which legalized recreational marijuana sales in Alaska. A commercial pilot who admittedly uses cannabis in his off-season, Schulte serves as president of the Alaska Marijuana Industry Association, and fills the industry representative/at-large designated seat on the Marijuana Control Board. Mlynarik voted with Jones against allowing on-site consumption in retail cannabis shops. When the board took up retail stores, Mlynarik and Jones voted for stricter operational hours and voted against non-marijuana product sales when retail store merchandising came up. Other tiebreaker votes swung in his favor. He supported smaller servings sizes for edible products, and successfully introduced a regulation that bars anyone with a misdemeanor drug possession charge from applying for a commercial cannabis license for five years. DJ Summers can be reached at [email protected]  

Cannabis labs seek to serve growers off the road system

New products and strategies are being brought to Alaska to make cannabis testing simpler, but it will take more development before it can match other legal cannabis markets. Before cultivators can sell any of their products to the retail market, they must first send small product samples to licensed testing facilities to screen for potency and contaminants. Alaska’s size and population spread, however, combine with federal laws to make sending samples difficult at best and cost prohibitive at worst. Cultivators off the road system — which includes all of Southeast Alaska’s population — cannot fly samples, ship them through federal waters, or send them through the U.S. Postal Service or any private packaging services. Regulators and industry members are seeking creative solutions to lessen testing transport expenses, potentially by bringing the testing to the product instead of vice versa, through a rare Outside partnership in the Last Frontier. The Marijuana Control Board hasn’t provided any concrete guidance addressed for rural marijuana supply channels. The firmest has come from Executive Director Cynthia Franklin, who suggested at an April meeting that perhaps sending such small amounts of marijuana through the U.S. mail might not anger the feds, if they even notice. Then-board chairman Bruce Schulte said shipping is not the board’s focus; the board only wants to know the product was tested, not the particulars of its route to the testers. Currently, the board has no further solutions for rural communities or plans to implement some kind of lab standards. “There’s nothing special for anybody off the road,” said Soldotna Police Chief Peter Mlynarik, who was elected chair to replace Schulte at a June 9 meeting. “If these labs that are approved can take their testing equipment out and use it remotely then that could be an option, but as far as right now, it’s all the same for everybody.” The board has some time to sort testing matters in the roughly three-month period a marijuana crop takes to grow to maturity. “I assume we’ll be talking about that at our July meeting,” said Mlynarik. In the meantime, testing facilities are finding potential solutions where they can. Brian Coyle owns AK Greenlabs in Anchorage, one of two testing facilities in the city to be granted a license by the Marijuana Control Board on June 9. AK Greenlabs and CannTest LLC are the state’s lone testing facilities; a third in the Mat-Su Borough dropped out in the face of an upcoming borough ballot initiative that could ban commercial cannabis operations in all unincorporated parts of the borough. On June 22, Coyle signed a licensing agreement with California-based Steep Hill Labs Inc. to use the company’s testing process. Steep Hill Labs has been in the testing industry since 2008, operating several labs out of Colorado, California, and Washington. The Oakland-based company has contracted with the Amsterdam Cannabis Cup, one of the world’s premier industry events, and has a contract with Leafly, the cannabis strain database mobile app that tracks potency among other variables. The company is in the midst of developing Steep Hill Express, a portable testing platform that tests for potency and contaminants but not for pesticides or solvents. Jmîchaele Keller, Steep Hill’s CEO, like Alaska’s marijuana regulators, recognizes Alaska’s specific challenges for commercial cannabis supply and testing chains. “Alaska’s really unique because of its topography,” said Keller. “That presents unique challenges in the testing world. The reality is the size of the state is prohibitive both in distance and the amount of investment. Let’s say you want to have a lab in northern Alaska. Labs are very expensive to run. You can’t afford it based on the amount of customers you would have in that area.” Steep Hill’s equipment relies on near infrared spectroscopy, a less intensive and shorter process than the more common high performance liquid chromatography, or HPLC, used by other labs. Keller insists NIR spectroscopy gives accurate results, pointing to several successful runs in various cannabis competitions. Coyle even delivered a whitepaper presentation to the Marijuana Control Board in past meetings describing the statistical deviations Theoretically, a technician with a day’s training could operate the NIR spectroscope and give a potency reports the same day for a nominal fee. If the Marijuana Control Board approved offsite testing affiliated with licensed labs, Coyle could service the entire off road market without the legal problems of transport. However, Steep Hill would only partially address the problem. Cultivators will still have to send away for microbial and pesticides testing, though Keller said Steep Hill is developing those technologies as well. Even then, if cultivators off the road system wanted to sell in Southcentral population centers, they would still have to find way to deliver saleable quantities. Other testing plans fold sample delivery into existing security transport contracts. Cannabis security firm Valkyrie Security and Asset Protection has drafted a separate deal with Coyle’s AK Greenlabs to offer testing sample transport free of charge to those cultivators already contracted with Valkyrie for product transport. If already delivering product from Fairbanks cultivation facilities to the Anchorage retail market, Valkyrie will provide testing transport to AK Greenlabs as a bonus while collecting fees from the lab itself. Coyle’s licensing of Steep Hill testing equipment is related to a larger issue of laboratory standards. Typically, federal bodies oversee testing for consumable products. Because cannabis is still illegal at the federal level, cannabis testing labs have little guidance for proper procedure. Testing labs in Colorado, Oregon, and Washington developed largely without oversight when each of those states developed their medical marijuana systems. After recreational sales came online, some labs pressed regulators to have stricter standards for labs to ensure accuracy. Coyle has advocated a system of testing standards oversight to the Marijuana Control Board, called “proficiency testing” in the industry. This would require independent third party labs to provide their own testing against which licensed marijuana labs can compare their own results. Steep Hill spearheaded a push for proficiency testing in other cannabis markets. “All you need to do is look at Washington,” Keller said. “It’s a perfect example of how not to do it. There was no proficiency testing. There’s no random testing. No verification. All the evidence points to they are not doing that in certain labs.” Steep Hill successfully lobbied the Washington Liquor and Cannabis Board to revise regulations. Steep Hill had considered withdrawing from Washington entirely, saying they couldn’t compete in the market with the less scrupulous labs that passed suspicious amounts of product. A study by Dr. Jim McRae, a research associate at the Center for Study of Cannabis and Social Policy, challenged the Washington labs’ oversight with wide disparities in testing outcomes. Four of the fourteen labs certified by the state failed to reject a single specimen during a three-month period, while two had rejected 44 percent for microbial contamination. Similarly, five labs didn’t fail a single specimen for residual solvents. DJ Summers can be reached at [email protected]  

Bill allowing rural pot opt-out passes 37-1

After a hiatus, House Bill 75 reappeared on May 16 to sail through conference committee unopposed and passed 37-1 on the final day of legislative session.  The bill, sponsored by Rep. Cathy Tilton, R-Wasilla, began as an administrative bill to allow the Marijuana Control Board to request fingerprint background checks from the FBI. The bill morphed over time, however, as rural Alaska concerns arose over local control. The background check provision eventually passed through another bill, leaving HB 75 without the original intent. “This is a very scaled down version of both bills,” said Heath Hilyard, Tilton’s chief of staff. The current incarnation of HB 75 would allow established villages in the unorganized borough of the state to opt out of commercial marijuana activity, set a 12-plant household limit for personal home grows, and clarified that borough-wide bans would only affect unincorporated areas. The unorganized borough refers to the parts of the state not within the 19 organized boroughs. Local option HB 75 stalled in April over the Senate’s version of the bill, which would have automatically banned commercial marijuana in the unorganized borough. The new bill merely gives established villages in the unorganized borough the ability to opt out, a power it does not currently have under statute. Sen. Lyman Hoffman, D-Bethel, introduced the automatic opt out idea that caused the bill to stall, fearing marijuana could bring the same problems to the village alcohol brought. Title 4, the section of Alaska statute dealing with alcohol, gave villages no method to halt alcohol sales. Ballot Measure 2 created the same problem. Ballot Measure 2 passed in 2014 to legalize recreational marijuana commercial business. “As the ballot was written,” explained Hilyard, “there was no way for established villages to opt out.” At the last conference committee held April 13, Hoffman said, “Title 4 was flawed. It started out with those communities wet, and they had to go through all that pain and suffering.” The problem lies in the Ballot Measure 2 definitions, which don’t deal with established villages at all. Ballot 2 does give local authorities the ability to opt out of commercial marijuana, and several towns, cities, and boroughs have already used the local control options to enact temporary or permanent ordinances against some or all components of commercial marijuana, including Craig, Delta Junction, Palmer, Soldotna, Unalaska, Valdez, Wasilla, Kodiak Island Borough, and Mat-Su Borough. However, local control only applies to municipalities. “’Local government’ means both home rule and general law municipalities, including boroughs and cities of all classes and unified municipalities,” according to the measure’s definitions. This leaves established villages in the unorganized borough without any means of local control beyond Tribal councils or the Legislature itself. Tribal councils can enact local controls. According to Alcohol and Marijuana Control Office records, Metlakatla Indian Community has enacted a commercial marijuana ban by Tribal council action in accordance with federal laws. Native Village of Kipnuk has banned all marijuana sale or import for sale by Tribal ordinance. Jesse Logan, chief of staff for Sen. Lesil McGuire, R-Anchorage, said the state wants to avoid conflicts between Tribal ordinances, which don’t require public vote, and the state’s laws, which do.  “The Tribal authority is always in contention with the state,” said Logan. “Since the ballot measure was enacted by a vote of the people, it seems congruous to have the opt out provisions be subject to a vote of the people.” The Legislature does have the authority to act as the local authority for established villages, but rarely uses it. With upward of 100 established villages, the Legislature would be hard pressed to convene and deliberate each time a village wants to opt out. HB 75’s fix mirrors the way the Legislature solved the same problem with Title 4. It allows villages of 25 residents or more within a five-mile radius to submit a ballot initiative to ban marijuana if 35 percent of registered voters in the area petition for it. In this way, the bill gives local control to a public vote. Another of the bill’s provisions makes the local option non-area specific. This means a borough-wide ban would not apply to cities within the borough that keep commercial marijuana legal. Again, this portion of the bill mirrors Title 4 provisions, Hilyard said. For the Mat-Su Borough and Houston, the language is unnecessary to prevent borough law from overriding city law. Houston is the only incorporated city in the borough without a commercial marijuana ban. The borough itself enacted a moratorium on commercial marijuana on May 3, and will vote Oct. 4 to ban it indefinitely. The ballot measure specifies it will only affect unincorporated borough areas. Borough Mayor Vern Halter vetoed the moratorium on May 16. Halter said the borough has made marijuana regulations “cumbersome and confusing” and should welcome the income stream rather than creating codes it has little manpower to enforce. “We are a large and diverse borough outside our cities,” wrote Halter. “I have no problem with the cities regulating within their borders but it is better to allow the state to regulate outside our cities and for the borough to tax and receive revenue from the sales.” The veto had the lifespan of a fruit fly. The following day during its regular meeting, the borough assembly unanimously overturned the mayor’s veto, just as it unanimously voted in favor of the moratorium on May 3. Assembly members echoed member Randall Kowalke’s rationale when he introduced the moratorium in April. Kowalke said he wanted a “time out” for marijuana industry development, and that had concerns that cannabis businesses could crop up in de facto residential neighborhoods in the borough, which has no zoning laws. “I will not support anything that does not protect residential property owners from businesses being located within residential subdivisions,” said member Steve Colligan. “We don’t have zoning like Anchorage does. It’s a little more difficult.” Member Jim Sykes did add an amendment that sunsets the moratorium on Aug. 17, giving would be cannabis growers several weeks to grow in between the sunset and the Oct. 4 ballot. If the borough ban is successful, the sunset will mean little. Cannabis takes a minimum 100-day period to grow to maturity. 12-plant limit  The bill also sets a household limit of 12 cannabis plants, which follows Colorado’s lead but may or may not run afoul of cannabis law that predates Ballot Measure 2. Plant limits have been a touchy subject in the Legislature, Hilyard said, and parties have not yet agreed on anything more than that the state ought to have limitations. “Both regulators and law enforcement said, ‘we don’t care what the plant limit is, we just need one,’” Hillyard said. According to the measure, each Alaskan over 21 years of age may grow six plants for personal use, with no more than three plants in bloom at a time. The measure didn’t clarify, however, how that would extend to a household of several adults. Colorado allows personal marijuana grows of six per adult and a maximum 12 per household. Oregon allows only four plants per household. Washington allows no personal cultivation. Like the established village portion of the bill, Hillyard said the latest version takes cues from Title 4, trying to match cannabis with alcohol’s fine line between commercial use and personal consumptive use. Alaskans are allowed to brew up to 200 gallons of beer annually for personal use. Hilyard said the 12-plant limit is a rough proxy for the level of intoxication 200 gallons of beer could provide. Hilyard said the predominant legislative view holds that an ounce of cannabis roughly equals one pony keg of beer — five gallons — in its capacity for intoxication. In the hands of an experienced grower, 12 plants can yield roughly 10 pounds of cannabis annually, or 160 ounces. By this math, a 12-plant limit equivalent would equal 800 gallons of beer, four times the intoxicative power allowed to personal alcohol consumption. Hilyard said the limit seeks to establish a clear line between personal and commercial marijuana cultivation, specifically, not to allow a sizable black market grow that black marketers could pass off to personal use. Even at low quantity, cannabis has market value; 10 pounds of marijuana sold at the typical $250 to $400 per ounce black market price could be worth between $40,000 and $64,000, approaching twice the average Alaska per capita annual income of $33,062, according the U.S. Department of Census data. Allowing only 12 plants, however, digs into gray area of existing Alaska law. In 1975 in Ravin vs. State of Alaska, the Alaska Supreme Court decided that the Alaska Constitution’s right to privacy clause protects small cultivation and possession of marijuana. “We conclude that no adequate justification for the state’s intrusion into the citizen’s right to privacy by its prohibition of possession of marijuana by an adult for personal consumption in the home has been shown,” reads the ruling. The Ravin Doctrine neither guarantees marijuana possession nor sets definitive household allowance, but in several subsequent cases concerning the precedent Ravin vs. State of Alaska, the state ruled it would not make laws against small gardens under 25 plants. “There’s a gray area around the 12-plant limit,” said Logan. “Ballot 2 specifies that it won’t try to subvert Ravin, but Ravin offers protections to anyone growing up to 24 plants.”  

Lack of cannabis testing facilities presents bottleneck to sales

The Alaska marijuana industry first business licenses will be issued in June, and the most crucial kind have the lowest number of applications. Testing facilities — one of the four commercial cannabis licenses created under legalization — present a possible industry bottleneck. All cannabis products sold in Alaska must undergo tests in state-licensed labs. These labs are scarce due to investment and expertise hurdles, and are concentrated in Southcentral. So far, the Alcohol and Marijuana Control Office has only received three applications for testing facilities, only two of which will be operable. One of these applicants, Nick Braman, applied for a license in the Mat-Su Borough, which passed moratorium on commercial marijuana activity May 3. The other two licenses are located in Anchorage, creating a potential supply chain problem for marijuana markets outside the Railbelt. According to state records, both Washington and Colorado have 14 licensed cannabis testing facilities. Oregon has six. Marijuana’s designation as a federal Schedule I controlled substance create the industry’s largest business hurdles, including a lack of access to banking services. The same federal illegality affects testing in unique ways, and together with certain Alaska regulations could limit the amount of qualified testing facility directors. States in which recreational marijuana is legal have no standard set of best practices for labs to follow. Typically, federal agencies mandate and control testing for consumable products. Without a similar state program, Alaska testers say the business has little stability. “There isn’t a federal agency, like the (Food and Drug Administration) or something similar, that issue documentations,” said Jonathan Rupp of Canntest, one of the two proposed testing facilities in Anchorage. “They have organizations that sort these things out at the federal level. States are all on their own. There’s a lot of question marks around the testing requirements.” Alaska regulation requires testing, but provides no guidance for what specific tests must be performed for microbials, solvents, and potency. Lab investors say there are infinite varieties of testing procedures of varying simplicity and rigor. Developing a set of best practices could be easier if testers had the ability to learn from established markets in the Lower 48, but without an overseeing federal plan or the wherewithal to bring in experienced Outside testing investors, applicant Brian Coyle of AK Greenlabs said Alaska labs have to “start pretty much from scratch.” “I’ve reached out to those Lower 48 labs, but nobody’s saying, ‘here’s our policies,’” Coyle said. “We’re reinventing the wheel up here.” Testing facilities have unique capital problems associated with equipment in addition to the usual marijuana business concerns. State regulations allow neither direct nor indirect Outside financial interest in Alaska marijuana licenses. These regulations come in part from a desire to avoid federal money laundering charges; keeping capital within the state assures a measure of traceability. Alaska industry members also lobbied for the restrictions to prevent deep-pocketed Outsiders from overwhelming the market. Testing equipment varies in expense, and refurbished equipment can cost less than new. Jeannine Machon, business director for Denver’s CMT Laboratories, said testers need to invest roughly $500,000 at the minimum for a basic setup for only two of the most necessary equipment pieces. Alaska’s testing facilities will have a heavy initial investment for equipment. Alaska’s regulations require microbial, solvents, and potency testing from onset. Unlike Alaska, Colorado staggered the requirements for testing facilities. This allowed testers to develop revenue to put towards additional testing capability, Machon said. Coyle’s estimates match for his proposed Anchorage lab match. Though he’s still in development, he estimates his startup lab costs at roughly a half-million dollars. The equipment expense goes hand in hand with salary. Alaska’s regulations require testing facilities to have a lab director with a bachelor’s degree in chemical or biological sciences from an accredited college or university and have at least six years of post-degree laboratory experience, a master’s degree and four years of experience, or a doctorate and two years of experience. Finding qualified applicants who want to move to Alaska to run a marijuana testing facility can be challenging, he said. “There’s no Outside money. That doesn’t mean you cannot bring in an employee, but without attractive salaries that’s going to be difficult to bring in supervisors,” he said.  “It’s probably in the six-figure ballpark for someone like that. (My business partner) has some capital, but he doesn’t have unlimited pockets. My impression is we’re all in the same boat, on a shoestring, bootstrapping.” Without Outside scientific communities to lean on, Alaska’s local market needs to supply qualified lab overseers. Coyle, Rupp, and Braman are afraid the startup costs and procedural uncertainty prevent qualified Alaskans from entering the testing market. “There’s certainly a ton of talent in Alaska,” said Braman. “Frankly, I think there’s enough talent in the state that I’m surprised there aren’t more people starting up labs.” Coyle disagrees that the Alaska has a deep pool of scientists to choose from, or at least, as a deep a pool as it needs to sustain a robust testing segment. “The pool of chemistry and biological scientists is relatively small,” said Coyle. “I don’t think we have enough experience up here, that’s the bottom line. I think collaboration with people outside the state is the quickest way to get those best practices up here.” Transport Within the Marijuana Control Board, one member is concerned the lack of a robust, and accessible, testing system could harm the industry and help the black market. “You’re going to have two things if we don’t have labs set up,” said Brandon Emmet, a Marijuana Control Board member. “First and foremost, we’ll have a lot of pissed off people. Second, we’ll have an extremely robust black market. There’s literally going to be thousands of pounds of cannabis just hanging around. And people don’t like to sit on product they can sell.” The two Anchorage locations will be the only ones statewide if no one else applies for a license. For communities off the road system, few legal options exist to transport their product for testing, let alone to get it to market.  The Federal Aviation Administration has regulations against transporting marijuana even in states where it is legal. Mailing marijuana through the U.S. Postal Service is also prohibited, and private parcel services like FedEx have said they will not deal with cannabis transport either. Marijuana cannot be transported by land or water across state lines, or in federal lands or waters. All commercial marijuana transportation requires a manifest detailing origin and destination. Marijuana Control Board chair Bruce Schulte acknowledges that the regulatory structure doesn’t do any favors for rural Alaska. “We’ve created a regulatory regime that is very difficult to engage with people in rural communities,” said Schulte. “That’s just the reality. We could lower the testing bar, but I think we would get pushback from certain people on that.” However, Schulte said the board’s position on testing transit is rather lax. During an April 27 board meeting, board director Cynthia Franklin hinted that mailing the required four-gram sample size might fly beneath federal radar, or that a blind eye may be turned. Schulte said the board only concerns itself with what happens in the testing labs, not how the product arrives there. “As long as it’s tested, I don’t really care,” said Schulte. “We’re a regulatory board. Our concern is that people are meeting their testing requirements. How they get it to the lab…that’s up to them. That’s a business operation that at this point is kind of outside of our scope.” DJ Summers can be reached at [email protected]

Board advances in-store pot use

The Alaska Marijuana Control Board has voted unanimously to ask the public to comment on draft regulations allowing recreational marijuana users to enjoy pot products inside retail stores. The regulations are the first of their kind in the United States and are a rough equivalent to the nation’s first legal pot cafes. Once formalized, public comment will open in the coming weeks. After the public comment period expires, the board will consider the regulations again before approving or disavowing them for good. “I think this is probably one of the provisions that is going to give elected officials the most angst, and I don’t want to disappoint them by doing it wrong,” said board chairman Bruce Schulte before joining other members in approving the draft. When Alaska voters approved recreational marijuana use in 2014 with Ballot Measure 2, the state began a two-year process leading to the opening of the state’s first retail marijuana stores. The first commercial marijuana cultivation businesses will receive their licenses in the second week of June; the first retail businesses will begin selling marijuana in the second week of September. As the board began drafting regulations to define the new industry, prospective business owners approached the board and said they were concerned that tourists and renters might not have a place to use legal marijuana. The state permits the sale of marijuana, but consumption “in public” is prohibited, and the state has adopted an expansive definition of “public” that leaves few legal spaces outside one’s home. In response to concerns about selling people marijuana they have no place to use, the board voted 3-2 in November to carve a narrow exemption into the definition of “public.” That exemption allows retail stores to apply for an “onsite consumption endorsement” to their licenses. If a store receives that endorsement, it can set aside an area for people to consume marijuana. Under the draft regulations sent for public comment, the area must be enclosed, with a separate door, a ventilation system and oversight by staff. On-site consumers will be limited to a limited “menu” and held to a much tighter purchase limit than regular retail customers in order to prevent stoned driving and other problems with overconsumption. The on-site consumption area will also be restricted in ways similar to alcohol bars. Stores will not be able to give away marijuana, serve intoxicated customers, give “happy hour” discounts or discounts for special customers. In Juneau, the consumption area will also be subject to the City and Borough of Juneau’s strict antismoking rules, which prohibit indoor tobacco and marijuana use, even if an area is set aside for that use. Without a change to the CBJ’s regulations, a consumption area in Juneau would be open to edible and drinkable marijuana products only. When the board voted to create the on-site endorsement in November, board member Loren Jones, also a City and Borough of Juneau assemblyman, voted against the idea. On Wednesday, he joined all other board members in voting to send the regulations to public comment. He said by phone that his views on the endorsement haven’t changed, but he thinks it’s time for the public to have its say. “I’m hoping there will be enough comments related to the definition of public” to change the board’s mind, he said. In other business Wednesday, the board approved several companies planning to offer marijuana-handling training required of all marijuana licensees and store employees. As of April 20, the Alcohol and Marijuana Control Office has received 277 applications for marijuana licenses. One hundred and sixty-three of those are for cultivation facilities; three are for testing facilities. Retail and marijuana product manufacturing licenses (bakeries and the like) make up the remainder. The board is scheduled to meet next on June 9 to approve the first licenses for marijuana cultivation and testing businesses. • Contact reporter James Brooks at [email protected]    

Marijuana Control Board changes policy to speed licensing process

The Marijuana Control Board enacted a policy decision April 27 that will hurry along the licensing process that has been slowed since the state started taking applications Feb. 24. The board voted 4-1 to allow its Executive Director Cynthia Franklin to declare license applications complete before state and federal fingerprint background checks are completed. Only Loren Jones opposed the policy decision of the five-member board. Currently, Alcohol and Marijuana Control Office staff will not declare a license application “complete” unless it sends applicant fingerprints to both the Alaska Department of Public Safety and the Federal Bureau of Investigations for criminal background checks. Gov. Bill Walker is expected to sign a bill allowing this authority, though a legislative legal opinion said it wasn’t necessary in the first place. Without a complete state status, some local governments cannot begin their own local licensing process. “Complete” status has been an ethereal concept, and has changed in board conversations for months. Board Chair Bruce Schulte said the shifting concept of a complete license needed to be nailed down so both localities and applicants can move forward with their own plans. “The definition is highly subjective,” Schulte said. “I don’t think we’ve been doing the public a service by changing it every week and every month. We have a choice to make.” The state has a 90-day window to issue licenses once it has declared them complete. The completed license status is also necessary for local governments to start their own licensing process, which takes additional time beyond the 90-day period required for the state. By deeming licenses a complete status, the board allows applicants to move into the municipal licensing process. So far, Franklin said eight licenses of more than 270 statewide applications are currently in a stage where lack of criminal background checks keep them from being declared complete. These licenses will now move into complete status. Board members voiced concerns that the licensing timeline has strayed far from the original intent expressed in Ballot Measure 2, which voters approved to legalize recreational marijuana in 2014. To salvage the statutory intent of the 90-day completion-to-issuance deadline — operable licenses by the summer of 2016 — Schulte said the board should make every attempt to hurry the process along. “Our schedule is blown,” he said. “We’re not going to make the deadline. I think it’s incumbent on this board to do everything we possibly can to remedy that situation.” The longer the industry takes to be viable, the longer marijuana license applicants have to sit on their respective building leases without an income stream. Brandon Emmett, an industry and public representative, said the board exposes itself to more and more lawsuits for violating statutory intent the longer it takes to issue licenses. “I think it’s important we continue to process these applications,” said Emmett. “I think we’re going to see the public become increasingly more frustrated the longer and longer this gets drawn out.” Federal checks Marijuana license applications were in holding at the state level. Local licenses will require even more time after state licenses are complete, yet again pushing Anchorage’s first legal marijuana sale back. Ballot Measure 2 set May 24 for the industry’s state license approval deadline, or 90 days after applications opened on Feb. 24. Regulators said June 9 is the new target, but in Anchorage, the process will take additional time. Like most municipalities, Anchorage requires a special land use permit and a local license in addition to the state license. Franklin was holding state applications until the board can request criminal background checks through the Federal Bureau of Investigation. The state doesn’t have the authority to request such background checks, however, until the Legislature changes statutory language to allow it. Senate Bill 165, which revises alcohol laws and also adds the authority to request background checks, passed in the Senate on April 22 and is awaiting transmittal to Walker. Most in the marijuana industry agree that federal checks are a good idea, but their necessity has been questioned. Regardless of whether statutory language is changed, the Division of Legal and Research Services for the state’s Legislative Affairs Agency said licenses can move forward without it. A legislative legal opinion requested by Rep. Gabrielle LeDoux, R-Anchorage, says the Marijuana Control Board doesn’t require federal background checks. “Under current law,” reads the opinion, “there is no fingerprint requirement for registration or licensure as a marijuana establishment nor is there a requirement that the board do an FBI or similar criminal background check.” Until the board’s April 27 meeting, Franklin had planned to continue holding licenses until Walker’s signs SB 165. Under Alaska law, bills don’t take effect until the 90th day after a governor’s signature. Because Franklin would not be able to declare a license complete until then, municipal licenses in Anchorage would not begin until July or August. Anchorage For Anchorage and other municipalities, the policy decision will grease the licensing process. Erika McConnell works in the Anchorage Office of Economic and Community Development as special assistant to director Chris Schutte. Informally, McConnell works as a kind of marijuana whip, making sure the city’s offices work in concert with marijuana. McConnell said the municipal licensing process will take additional time beyond the state timeline. “Assuming they (the state) have all their ducks in a row, we’re looking at a process that will take approximately two months,” said McConnell. McConnell clarified that the municipality doesn’t need the actual state license to start its own process. Rather, it needs proof that the state license application is complete. The municipality will begin processing “as soon as the governor signs SB 165 and the AMCO can start doing background checks, and we can tell that the application is complete,” she said. Once it has proof of completion, the application is routed to agency reviewers and community councils, and eventually scheduled for an Assembly hearing. McConnell said the municipality is trying to work concurrently with the state process regarding cultivation and testing facility licenses. The state has decided to process testing and cultivation applications first, and Anchorage will naturally have these as first entrants to city reviews. All marijuana products sold in retail stores require testing prior to sale, and all marijuana plants require state tracking from seed to sale. In order for retail establishments to have legal product, these licenses must come out first. For the rest of the state’s marijuana applicants, this presents a bottleneck. Every cannabis product must be tested by a licensed facility, and only three such licenses have been submitted. Two are in Anchorage. The other is in the unincorporated Mat-Su Borough, which will vote on a commercial cannabis moratorium on May 3 leading up to an October ballot initiative that would ban commercial marijuana in the borough. As with the state, city officials have limited capacity to deal with what will be an application flood. The Alaska Marijuana Control Office has just under a dozen full time license review staff. McConnell said she expects 10-20 testing and cultivation licenses to come into municipal review in a burst once the state renews processing. As of April 12, hopeful cannabis entrepreneurs have submitted 65 licenses with proposed physical addresses in Anchorage and two in Girdwood. Anchorage’s license applications don’t veer as heavily in favor of cultivation as the rest of the state. 24 are for standard cultivation facilities, and four for limited cultivation facilities, which have an upward limit of 500 square feet. 29 license applications are for retail stores. DJ Summers can be reached at [email protected]

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