Cannabis

Marijuana board to take up onsite consumption rules

JUNEAU (AP) — Marijuana regulators in Alaska plan to consider rules this week for consuming marijuana products at authorized retail pot stores — a first among states that have legalized the recreational use of pot. Late last year, the Marijuana Control Board voted to allow people to use marijuana at certain stores that will sell it. But rules surrounding in-store use still need to be ironed out. No licenses have been issued yet. At its meeting in Anchorage on Wednesday, the board plans to consider three sets of proposed rules for onsite consumption. Whatever is settled on is expected to be put out for public comment. Board staff, board chair Bruce Schulte and board member Peter Mlynarik each proposed a set of draft rules to be discussed. Schulte said each is conservative in its approach and it will be up to the board to pull something together from the proposals. All three call for separation between consumption and non-consumption areas, with varying details for how that would look. Two, for example, propose a separation by a securable door. Differences between the drafts crop up in areas such as quantities and whether to allow for marijuana purchased for in-store use to be taken off site if not fully consumed. Schulte said he expects some discussion Wednesday about the timeline for approval of applications. He said concerns have been raised about the schedule. The board began accepting applications in February. A tentative timeline has suggested the first licenses for cultivation and testing could be approved in June, with the first retail and product manufacturing facility licenses approved later in the year. State lawmakers last week approved legislation allowing for national criminal history checks for license applicants. That bill will go to Gov. Bill Walker for consideration. Cynthia Franklin, director of the Alcohol and Marijuana Control Office, said the impact of waiting for that language has been "very minimal to none" because few applications have gotten to that point. One of her more immediate concerns is the level of office staffing to handle the workload. She said the office doesn't have enough staff and the idea of doing more with less is a fallacy. "You cannot have a highly regulated industry where people are carefully examining documents and then skimp on the number of people that are available to do that and have the expectation that that is going to have no effect on the time that it takes to process the application," she said.

Senate approves federal check bill for marijuana licenses

The Senate approved a bill on April 22 that would allow the state to request federal background checks for marijuana license applicants. The bill’s main focus revises alcohol regulations to streamline enforcement, a measure in review since 2012. The bill, sponsored by Sen. Peter Micciche, R-Soldotna, also changes statutory language to allow the Department of Public Safety to request federal background checks for commercial marijuana license applicants. Marijuana Control Board director Cynthia Franklin has held current marijuana license applications, saying the federal background checks are necessary to comply with statute, which forbids a marijuana license to anyone with a felony conviction in the last five years.  The bill will now move to a vote in the House. The bill has not yet been scheduled for a House hearing. The House will next reconvene at 2 pm, April 23. The original request for federal checks was in House Bill 75, sponsored by Rep. Cathy Tilton, R-Wasilla. HB 75, however, has foundered in conference committee after the Senate and House could not agree on other bill provisions concerning unorganized borough commercial marijuana. During the last week, in which the Legislature is in overtime past its 90 day mark, a conference committee on HB 75 has cancelled hearings for the bill four times. The sticking point concerns rural Alaska villages. The Senate bill would automatically opt unorganized borough villages out of commercial marijuana, as opposed to the rest of the state where statute makes commercial marijuana legal unless localities opt out. Village elders would have their own discussions about whether or not to allow marijuana businesses and decide whether or not to allow them. DJ Summers can be reached at [email protected]

Mat-Su Assemblyman proposes marijuana moratorium

The Mat-Su Borough could halt marijuana commercial activity in its unincorporated areas sooner than thought if a proposed moratorium passes the Assembly. Mat-Su Borough Assembly member Randall Kowalke introduced a temporary moratorium on commercial marijuana on April 19. The Assembly will accept public comment and vote on the moratorium on May 3. Depending on the results of an October borough ballot initiative that would ban commercial marijuana, the moratorium could extend indefinitely. Kowalke said he doesn’t intend the moratorium to be a roadblock. He said state regulatory authorities and the borough’s own zoning regulations make him want to take a pause. “My ordinance is rather straightforward,” he said. “It’s to call a time out.” The moratorium responds to zoning concerns, Kowalke said, as his district’s libertarian land ownership practices seem to have found their limit. The unincorporated borough’s lack of zoning laws has presented a tricky situation, he said. Commercial marijuana cultivation facility proposals are sprouting up in rural areas that could be classified as residential but have no legal distinction as such. Lakefront property owners and others have called him concerned about grandchildren running around in the vicinity of a marijuana grow. “My district has long prided itself on you buying a piece of land and doing whatever you want on it,” he said. “Those are some of the folks that have contacted me about the marijuana things.” Further, Kowalke said he’s concerned with the federal background check provision in statute. Marijuana Control Board director Cynthia Franklin has said she will not process marijuana license applications until legislation allows the board to request federal background checks. Two bills in the Legislature allow this, but the Senate and House cannot agree on either. The motivation, Kowalke said, is to avoid the ambiguity and “to give a time out to try to zone residential issues, give the state time to figure out background checks, and work with planning and zoning.” The borough already has a ballot initiative scheduled for October that would ban all commercial marijuana in the unincorporated borough. This temporary moratorium would halt commercial licenses until voters decide the measure — potentially making it a permanent ban rather than temporary moratorium. The moratorium would apply only to unincorporated areas. Palmer, Wasilla, and Houston, as established cities, would be left out. However, both Palmer and Wasilla have each passed commercial marijuana bans. If the temporary moratorium passes, only Houston will remain as a cannabis-friendly zone in the state’s second-largest population center. Operationally, this gave hopeful businesses time to begin their state licensing process. Over 30 applications to the state Marijuana Control Board have addresses in the unincorporated Mat-Su Borough. About three-quarters of those are for cultivation businesses. One such business hopeful, Bailey Stewart, said she’s already sunk her life savings into a retail marijuana operation in the borough. Stewart, vice president of the Matanuska Valley Cannabis Business Association, said the time in between now and the October vote is crucial. The state will begin issuing licenses in early June, provided the Legislature authorizes the federal background checks for applicants. If cultivators and retailers have the opportunity to begin a few months of sales — and pay municipal taxes — the October vote might swing in industry’s favor. “We had an opportunity to show the community that we weren’t going to be in their face,” said Stewart. “If the moratorium passes we’ll lose that opportunity before the October vote.” Stewart said she doesn’t think borough lawmakers are antagonistic to the industry. They simply don’t understand either the money involved in setting up a marijuana business or the potential tax dollars to be gained. The state collects a $50 per ounce excise tax on cannabis cultivators, and municipalities have implemented varied sales taxes, including a 5 percent sales tax in Anchorage with the ability to rise to 12 percent. Meanwhile, state licenses cost $5,000 on top of the payments for the leased cultivation, retail, or manufacturing premises. Marijuana entrepreneurs in Alaska have a precarious financial situation in a state with limited capital options. Federally insured banks will neither loan to them nor accept their deposits. State regulations forbid Outside investment. Many like Stewart bootstrap their businesses with savings.  “We’re talking about an industry that is financial sensitive,” she said. “When you’ve worked this hard for so many years, you don’t want to see your life savings go up in smoke.” Not only is the downtime between license issuance and the October ballot necessary for public perception, Stewart said, but recovering some of the initial investments as well. “I would have had the chance to recoup some of my costs,” Stewart said. “Now, they’ve already spent that money. A lot of them, it’s no going back.” DJ Summers can be reached at [email protected]  

LeDoux shelves House, Senate bills that would ban smoking statewide

Operators of marijuana clubs had reason to celebrate the unofficial national pot smoking holiday of April 20. A bill that would have banned smoking statewide in workplaces and other enclosed spaces won’t pass this year, and a version of the bill to be introduced in the next legislative session will leave marijuana consumption out. Both Senate Bill 1 and its House companion, House Bill 328 would have replaced Alaska’s current local control system with a statewide prohibition. Both bill’s definitions included any “plant intended for inhalation,” and would have applied to vaporization in addition to actual smoking. The bill also defined what constitutes a “public place” in a manner that would have included marijuana social clubs, which currently operate as neither a prohibited nor an authorized type of business. It would have also prohibited onsite consumption at retail marijuana cafes that was allowed by the Marijuana Control Board in its final version of license regulations approved last fall. HB 328 will not make it out of the House Judiciary Committee. The committee chaired by Rep. Gabrielle LeDoux, R-Anchorage, will not hold any more meetings for the rest of the legislative session, which is already running past its 90-day mark and into the 121 days allowed by Alaska statute. The Senate version also failed to pass after being added to a bill being advanced by LeDoux. LeDoux’s originally simple bill added one member to the Board of Barbers and Hairdressers in House Bill 289. The Senate Finance Committee stacked a controversial optometry bill and the Senate’s smoking bill onto it in the end of session chaos, however, and LeDoux withdrew the bill.  “That wasn’t intended to go through,” said SB 1 sponsor Peter Micciche, R-Soldotna, in a phone interview. “It was just a good example of the kind of silliness that goes on in this building.” The final version of the bill, which will be introduced again in next year’s session, has amended language that would not apply to marijuana cafes or social clubs as well as vape shops, he said. “It certainly wasn’t our intention to get in the way of the Marijuana Control Board and their work,” said Micciche. Micciche introduced the bill, which would prohibit tobacco or e-cigarettes in enclosed public spaces including places of employment, apartment buildings, hotels, and at schools and universities. It grants certain exceptions to tobacco stores where 90 percent of revenue comes from tobacco sales, but includes no language to exempt marijuana retail stores with the same sales configuration. The original bill was at odds with state marijuana regulations, which explicitly grant onsite marijuana consumption to retail stores if the Marijuana Control Board approves the request. The bill would also have outlawed the existing marijuana social clubs, which offer cannabis users a place to consume but in which no marijuana is sold. Onsite consumption provisions for retail stores are explicitly legal, but marijuana social clubs are in limbo. The Marijuana Control Board does not endorse social clubs, but has acknowledged it lacks the authority to allow them or prohibit them until the Legislature creates a license type for that business. DJ Summers can be reached at [email protected]

Banking woes easing for some legal pot businesses

SALEM, Ore. (AP) — In a once-empty office in Oregon's Department of Revenue headquarters, officials have created a mini-fortress. Recently hired workers sit behind bulletproof glass at a window inaccessible to the public. Police officers brought out of retirement roam the building with handguns on their hips. Security cameras monitor the hallways. The changes, paid for with a $3.5 million budget and prompted by the state's newly legal marijuana industry, are similar to those that Colorado and Washington made for accepting huge cash payments of pot taxes from businesses historically blocked from banking. Such security arrangements are a necessity for safety reasons, but new statistics suggest that could be starting to change. Federal data show that the number of banks and credit unions across the country willing to handle pot money under Treasury Department guidelines issued two years ago has jumped from 51 in March 2014 to 301 last month. More than three years into Washington's legal pot experiment, a large majority of businesses are paying taxes electronically, a sign of better access to bank accounts. The state is even poised to require electronic payments unless the shops can show a good reason to pay in cash. "People don't call me anymore and say, 'I'm opening a new business and I can't find a bank account,'" said Robert McVay, a Seattle marijuana business attorney. Marijuana's prohibition under federal law still presents a serious hurdle for pot-related businesses, which generally can't accept credit or debit cards due to card companies' fears about liability for money laundering or other offenses. Many legal pot shops in Washington, Colorado and Oregon — the only states with legal recreational sales so far — and dispensaries in medical marijuana states keep ATMs on site to facilitate cash transactions. Most banking access has been through local credit unions, which limits options for the businesses. It's still difficult to get loans, too, though some have been able to by putting up real property, rather than inventory, as collateral. Two years ago, the Treasury Department gave banks permission to do business with legal marijuana entities with conditions, including trying to make sure the customers are complying with regulations. Under the guidance, banks must review state license applications for marijuana customers, request information about the business, develop an understanding of the types of products to be sold and monitor publicly available sources for any negative information about the business. With that in mind, Washington officials began posting the sales activity of licensed marijuana growers, sellers and processers online — along with any warnings or fines issued to businesses caught out of compliance. The idea was to make it easier for banks or credit unions to discover red flags that might indicate illegal activity; such information is not posted online in Oregon or Colorado, where state officials refused to provide a breakdown of how many pot businesses pay their taxes in cash. Only two credit unions serviced Washington's legal marijuana industry early on — Seattle-based Salal and Spokane-based Numerica — but now several others have followed suit, and even big banks seem more tolerant of pot-related accounts, McVay said. Last December, only 10 percent of sales and business tax payments from pot firms were in cash. Three-quarters of businesses paying special pot taxes to Washington's Liquor and Cannabis Board in the first two months of 2016 did so electronically or by check, according to the state. No one is suggesting that states do away with their beefed up security arrangements or new cash-counting machines just yet. Oregon, for instance, has collected $6.84 million from the pot tax's first two months this year — exceeding expectations for the entire year — and more than half of the state's pot dealers paid that in cash. Of the $15 million-plus Washington collected from marijuana sales in February, roughly a quarter, or nearly $4 million, was cash carried through the lobby of the liquor board's headquarters in Olympia. Oregon isn't set up yet to accept electronic payments, and the Department of Revenue is even planning to build out a bigger, permanent site on its main floor to accept larger volumes of pot cash. Washington, however, is moving in a different direction. Language tucked into a budget deal Washington lawmakers reached last month allows the liquor board to require tax payments in electronic form, though it's unclear how soon it might do that. Calling it a "public safety concern," board spokesman Brian Smith said the agency wants to reduce the amount of cash coming through the lobby. The marijuana industry remains eager for a federal solution to their banking problem, and many hope that if California legalizes the recreational use of marijuana this November it might put enough pressure on Congress to change laws. "Some sanity has to be brought into this banking issue," said Beau Whitney, an industry economist in Portland who handles government affairs for a local dispensary. "At some point in time, this is going to be an industry that's going to be too big to ignore."  

Kenai zoning commission greenlights first marijuana grow operation

KENAI — Kenai’s first commercial marijuana business — Red Run Cannabis Company — has permission from the Kenai Planning and Zoning Commission to open a cultivation facility and shop beside the Spur Highway in Kenai’s Thompson Park subdivision, an area where commercial zoning sits adjacent to residential zoning. The store’s proximity to the neighborhood had led to opposition from some owners of nearby houses. After delaying Red Run’s permit at a March 23 meeting, the commission voted 5-1 to grant the permit on Wednesday. Commissioner Glenese Pettey voted against the permit, saying the store “is not in harmony with the surrounding properties, and it would be detrimental in the aspect of property values.” Commissioner James Glendening was absent. Red Run’s prospective location is an abandoned gas station and convenience store in a highway bordering strip of limited commercial zoning. The property’s owner Roger Boyd, a Red Run co-founder with Eric Derleth and Marc Theiler, said that his business would be appropriate for the zone, which he said was intended to create a transition between commercial and residential neighborhoods. Boyd also addressed fears that property values would be damaged by a nearby marijuana store. “The truth is that no one knows what the impact on property values would be,” Boyd said. “I would contend that our proposed business is no more a detriment to surrounding property values than the liquor store that was there for years, or the Eagle club down the street. “One thing I’m certain of, though, is that if you take this building that’s been empty for a couple years, a little grown-up around it, and we go in there and clean it up and put a vibrant business in it, that will have an effect of improving property values of both the residential and commercial properties in the neighborhood.” Another frequently-voiced objection to the business was that it would lead to a local increase in trespassing and crime. Theiler, who lives near the shop location and said he uses the bike path near the property frequently, said he has seen used condoms and syringes littering the alley behind the currently-vacant building, where the gas station lot borders the yard of Christine Cook, who has opposed the permit over safety concerns. Theiler said Red Run intended to fence off the rear alley. He argued that with the building occupied and with the light and camera systems the owners intend to install, illicit activity in the neighborhood would go down. Cook said she wasn’t ideologically against commercial marijuana but opposed locating it in a narrow area of commercial land close to a neighborhood. Patricia Patterson, owner of Soldotna’s Lucky Raven Tobacco store, said Kenai’s marijuana regulations had played a role in creating the disagreement between residents and the business by limiting the possible locations a marijuana business could operate in town. In early 2016, Kenai passed laws creating 500 foot set-backs for marijuana businesses from recreation centers, churches, correctional facilities, or drug abuse treatment centers, and doubling the state’s 500 foot setback from schools to 1000 feet, as well as choosing to measure the setbacks in a more restrictive way than the state. The planning and zoning commission created early drafts of the Kenai marijuana rules, which were amended and passed by the city council on Jan. 20. “It’s true — we have a lot of retail, a lot of commercial along the Spur highway with houses close by,” Patterson said. “That is the face of our community. I think it is something that might be hard for the neighbors to see. So it does come down to ‘that is the way we zoned.’ That was the recommendation, to do these big circles and big buffer zones that kept a lot of the (marijuana) retail out of the city of Kenai and put them towards the outside of Kenai. That was a choice that came from this committee.” Pettey said she intended to vote according to what she described as the original intent of Kenai’s marijuana regulations — to exclude cannabis businesses from residential areas, which she interpreted to include Red Run’s proposed location. “I believe it was the intent not only of planning and zoning but of city council to keep retail marijuana stores out of residential areas,” Pettey said. Bloom said he would “respectfully disagree, to some extent.” “By our planning and zoning table, a retail establishment would be allowed on this property by conditional use permit,” Bloom said. “That intent was to keep it out of residential neighborhoods, and I’d have to say that that property is not located in a residential neighborhood. It’s adjacent to one, but not within the residential neighborhood.” Commenting before the vote, some commissioners said they would vote for the permit based on its compatibility with the zoning code, but against their personal inclinations — a feeling expressed by commissioner Kenneth Peterson, who said he felt as if he was “playing devil’s advocate” by voting in favor. “When this first came up, as a resident of the city and a parent, I wasn’t sure how I was going to feel about it,” said commissioner Diane Fikes. “And then sitting on the commission, and having to realize that the city had said yes, the state had said yes, we want to do it... What we’re here for today is nothing on a moral or civic issue, but everything on a land use and a zoning issue. I believe everything has been met, and all the questions I have have been answered.” The Kenai conditional use permit will be open for appeal for 15 days. Red Run’s next license will come from the state Marijuana Control Board, which posted notice that the license had been received on Feb. 24, 2016. During the state licensing process, the Kenai city council will be able to vote on whether or not to object to the license. An objection would cause the state to deny the license. The council would also be able to object during Red Run’s yearly license state renewal. Theiler said that if everything goes according to plan, Red Run could have product for sale in September 2016. Reach Ben Boettger at [email protected]  

Senate panel OKs medical marijuana access for veterans; Alaska to see $561M in construction spend

A Senate subcommittee moved veterans one step closer to accessing medical marijuana in states where it is legal, which up to this point has been strictly prohibited under a 2011 Veterans Health Administration directive. The U.S. Senate Appropriations Subcommittee on Military Construction, Veterans Affairs, and Related Agencies voted to approve the Veterans Equal Access Amendment into the FY2017 Military Construction and Appropriations Bill. Sens. Steve Daines, R-Mont., and Jeff Merkley, D-Ore., introduced the amendment, which would prohibit any federal funds to be used to punish Veterans Affairs doctors from recommending or discussing medical marijuana with their patients. Alaska U.S. Sen. Lisa Murkowski voted in favor of the amendment. When Pennsylvania Gov. Tam Wolf signs a bill that will legalize medical marijuana in the state, the U.S. will have 24 states with legalized medical marijuana systems, and 17 states with allowances for medical use of cannabidiol oils. Even in states where medical marijuana is legal, however, veterans do not have access through their VA physicians because of the 2011 order. A 2011 Veterans Health Administration directive forbade VA doctors from recommending or even discussing medical marijuana with patients. The directive was set to expire on Jan. 31, 2016, but is still in effect as the VHA anticipated a congressional action to reverse the policy. The amendment in the FY17 appropriations bill will have to be renewed annually. The same amendment passed the same committee last year by an 18-12 vote with four Republicans joining 14 Democrats. This year the vote to approve the amendment was 20-10 with Sens. Lindsey Graham, R-S.C., and Roy Blount, R-Mo., joining the majority. Daines spoke out against the current policy during the brief debate, characterizing it as, “a violation of the 10th Amendment against states and the 1st Amendment against veterans speaking freely with their VA doctors.” Daines and 21 other legislators wrote a letter to Veterans Affairs Secretary Robert McDonald in 2015 urging him to let VA doctors discuss and recommend marijuana in states where it is legal. Speaker of the House Rep. Paul Ryan, R-Wis., has been amenable to certain marijuana legislation in the past. In 2012, he expressed a personal opposition to Colorado’s recreational marijuana legalization effort, but ultimately believes that the matter should be left to states rather than the federal government. Similar amendments to allow for veteran medical marijuana usage failed in the past, including the Daines-Merkley amendment last year. It failed in the House by a vote of 210-213. Rep. Sam Farr, D-Calif., introduced legislation in 2015 to allow Veterans Health Administration doctors to recommend medical cannabis, but the House Appropriations Committee rejected the measure. The House of Representatives has slightly warmed to medical marijuana, passing an appropriations bill in 2014 with an amendment by Farr that would have banned federal prosecutors from challenging state marijuana laws. It is also subject to annual renewal. Alaska construction spending totals $561M; $103B for VA forward funded for FY18 The committee approved the full $561 million in the president’s request for Alaska-related military construction spending, with more than half of that for the recently announced deployment of two squadrons of F-35s to be based at Eielson Air Force Base in Fairbanks. The totals break down as follows, according to Murkowski’s office: $295.6 million for seven construction projects supporting the 2020-2021 beddown of 54 F-35 A Joint Strike Fighters at Eielson Air Force Base. $155 million to construct the Long Range Discrimination Radar (LRDR) at Clear Air Force Station. $47 million to construct a hangar to house the Gray Eagle Unmanned Aerial Vehicles at Fort Wainwright. $29 million to expand and improve the Airborne Warning and Control Systems Alert Hanger at Joint Base Elmendorf- Richardson. $20 million to construct a new fire station at Clear Air Force Station. $9.6 million for electrical improvements to the missile defense fields at Fort Greely.  $4.9 million to construct a jet fuel truck offload facility at Joint Base Elmendorf-Richardson. A total of 54 new aircraft and an estimated 2,765 personnel will be part of the F-35 deployment, with construction to begin in fiscal year 2017, which begins Oct. 1. Veterans Affairs spending increased $14.7 billion over last year to a record $177.4 billion total. Veterans mandatory benefits received $103.9 billion in advance FY2018 funding. This includes veteran disability compensation programs for 4.4 million veterans and 405,000 survivors; education benefits for nearly 1.1 million veterans; guaranteed home loans for 429,000 veterans; and vocational rehabilitation and employment training for more than 141,000 veterans. Veterans medical programs received $66.4 billion in advance FY2018 funding. DJ Summers can be reached at [email protected]

Marijuana bill stalls in conference over rural opt-out

A bill standing in the way of marijuana license applications is still deadlocked in Conference Committee, as legislators argue over a bill provision that would opt rural Alaska villages out of commercial marijuana. House Bill 75, introduced by Rep. Cathy Tilton, R-Wasilla, and its Senate companion, a committee substitute Senate Bill 14, remain under consideration after an April 13 hearing that underlined disagreements but brought no conclusion. The committee broke to compile more information regarding unorganized villages that have opted out of alcohol sales. The bill would change statutory language to allow the Department of Public Safety to request federal background checks for commercial marijuana license applicants. A similar provision is included in SB 165, scheduled for a April 14 hearing in the House Judiciary Comittee at 1 pm, which could bypass HB 75 gridlock. Marijuana Control Board director Cynthia Franklin says the bill is necessary to process applications, as she isn’t comfortable completing licenses without a federal felony check. As per Alaska statute, felony convictions bar applicants from obtaining a commercial marijuana license. Both legislators and Marijuana Control Board chairman Bruce Schulte say they’ve received mixed input about whether they actually need the federal background check provision to be changed in statute and whether the specific background checks are needed at all. Marijuana industry attorney Jana Weltzin has threatened to bring a lawsuit against the state if it continues holding licenses if the bill doesn’t pass, calling federal background checks a “red herring.” “There are dueling legal opinions right now,” said Sen. Lesil McGuire, R-Anchorage, one of the three senators on the conference committee. “One theory is that we actually have to put into statute a requirement to authorize the Department of Public Safety to authorize federal background checks. “There’s another theory that says you don’t need that specific authority, it’s implied,” she said. Regardless, legislators said the bill’s background check provision is a must-pass. McGuire said, the Marijuana Control Board “itself has decided they don’t feel comfortable relying on the legal opinion,” and marijuana license applications are being held until HB 75 background check provision is implemented. Rep. Charisse Millett, R-Anchorage, said she hopes the Senate would consider dropping the most contentious bill provision if the chambers can’t agree, in order to remove the marijuana industry’s licensing roadblock. The sticking point concerns rural Alaska villages. The Senate bill would automatically opt unorganized borough villages out of commercial marijuana, as opposed to the rest of the state where statute makes commercial marijuana legal unless localities opt out. Village elders would have their own discussions about whether or not to allow marijuana businesses and decide whether or not to allow them. “There are good parts of this bill,” said Millett. “I don’t feel like we should let good work go to waste because we can’t agree on that.” Sen. Lyman Hoffman, D-Bethel, swayed the Senate in favor of the automatic opt out. Lyman said rural Alaska’s experiences with alcohol regulations that opted villages in leave a bitter taste in village mouths, producing violence and social problems. He said they want to make sure they don’t repeat the problems with cannabis. “Title 4 (alcohol regulations) was flawed,” Hoffman told the conference committee. “It started out with those communities wet, and they had to go through all that pain and suffering.” Hoffman prefers that villages start on the automatic opt out side so they can more carefully control the industry, if that is the elders’ and communities’ wish. Hoffman points to the number of unorganized borough villages that have opted out of alcohol as evidence that an automatic opt out would be safer. “They would have never had to go through that suffering and pain if Title 4 was flipped,” he said. House representatives felt that Hoffman’s concerns are legitimate, but that the realities of the marijuana industry make rural Alaska fears a moot point. Rep. Harriet Drummond, D-Anchorage, said that the expense of starting a marijuana business in general makes her question whether any cannabis operation will appear in rural Alaska anyway, and that village elders should instead focus on the black market. Retail businesses and grow operations demand capital and consumers. Moving the product either to an urban retail outlet or the required testing facilities, for which there are few license applications concentrated in Southcentral Alaska, would preclude the likelihood that marijuana businesses will crop up in rural areas. “Consider what it would take for a marijuana business to establish itself,” said Drummond. “I doubt that anyone is going to start a growing operation in a village of 200. I don’t think that opting out will be an issue because of the difficulty of establishing a marijuana business anywhere. It’s difficult to do in Spenard.” Hoffman agreed, but insisted the elders and village councils have the opportunity to discuss those issues amongst themselves before marijuana businesses are approved. “Those are the exact issues and dialogues that need to take place at the local level,” Hoffman said. “Why can’t we have those discussions in our communities? Just give us the opportunities to have that debate.” Drummond said the village elders would be in the mix anyway. Marijuana businesses in her home district of Spenard, which has both the highest concentration of alcohol licenses and marijuana license applications in the state, regularly confer with local community councils at the beginning of the licensing process. The conference committee adjourned to compile a list of villages that have opted out of alcohol and will reconvene at a later date.   DJ Summers can be reached at [email protected]  

Marijuana social clubs dwindle as legal confusion reigns

Anchorage’s Pot Luck Events is the only marijuana social club still operating without a legal challenge, as statewide puzzlement to their legality produces a patchwork of local controls. Fairbanks’ The Higher Calling and Homer’s Kachemak Cannabis Club have both closed, and the City of Kenai is seeking an injunction against Green Rush Events. The clubs, which allow dues-paying members to share and consume cannabis but do not sell it themselves, inhabit either a murky legal area or a clearly defined one, depending on whom you ask. The Marijuana Control Board and several localities have asked the state to clarify the law, but the Legislature’s only action on marijuana clubs has been a statewide smoking ban that incidentally applies to marijuana clubs and has stalled in the House Judiciary Committee chaired by Rep. Gabrielle LeDoux, R-Anchorage.  Marijuana social clubs are distinct from marijuana cafes. State regulations allow for onsite consumption at locations attached to retail cannabis stores. The state hasn’t yet issued any retail licenses, however, and these onsite marijuana cafes will have to wait until late 2016 to open along with the rest of the commercial marijuana industry once a legal crop is available to sell. In the meantime, localities deal with marijuana clubs on their own in the absence of clarity from the Alaska Legislature.   Down to one Of the state’s marijuana social clubs, Pot Luck Events alone is both open and without any pending legal challenge. In early April, The Higher Calling club in downtown Fairbanks closed its doors. Owner Marcus Mooers said the club closed due to low membership, not political pressure, having had too few members to sustain itself. Homer’s Kachemak Cannabis Club closed in March, on the heels of the Homer police chief’s conversation with Marijuana Control Board director Cynthia Franklin, during which she told him clubs are illegal. Chief Mark Robl said the club closed for internal reasons, the city had not initiated any kind of action to close it, and had planned to use enforcement as a last resort. Other clubs are still open, but only until the locality fulfills its intent to close them. In early April, the Kenai city council directed city attorney Scott Bloom to seek an injunction against Green Rush Events. The council decided the club violates an ordinance passed by the Kenai council in January that placed a moratorium on clubs. The ordinance specifies that in the absence of state clarity, it is taking matters into its own hands. “It is in the best interest of the City of Kenai to establish a moratorium prohibiting the consumption of marijuana and marijuana products in Retail Marijuana Stores and Marijuana Clubs, until further guidance is provided by the Marijuana Control Board or State Legislature ensuring minimum health and safety standards are met to protect consumers,” reads the ordinance. Bloom said Green Rush Events has since switched its business model; it now charges nothing for entry, and sells no beverages. Bloom will determine whether or not this violates ordinance and issue an injunction accordingly. In the meantime, the club is still open. Confusion reigns Authorities have no public consensus on marijuana social club legality. State marijuana officials disagree while local officials flip-flop between marijuana club prohibition and allowance. Franklin says clubs are clearly illegal, but city officials, newspapers, and the chairman of the Marijuana Control Board are under the impression they aren’t. Throughout the marijuana regulation process, Franklin has stayed resolute that marijuana clubs violate regulation, which forbids cannabis consumption in public places, defined as “any place to which the public or a substantial portion of the public are invited.” Club owners say Franklin’s interpretation is incorrect, as their clubs charge membership fees and are only open to patrons over the age of 21, making them private businesses, not public places. Franklin argues this makes them no more private than a movie theater.  Bruce Schulte, chairman of the Marijuana Control Board, has repeatedly emphasized that the board has not made social clubs illegal and awaits legislative action to establish the license type or to ban them. The board struck down a proposed club ban in 2015 and issued a ruling that it had no authority to regulate one way or another. Ballot 2, which legalized recreational marijuana in Alaska through a voter initiative in 2014, does not specify social clubs as a license type. The board’s authority to regulate clubs depends on the Legislature changing statute to add the license.  If clubs are indeed illegal, the state has remained silent at the enforcement level. No state law enforcement agencies have brought any charges against clubs or their patrons. This differs from other marijuana businesses that fell against state legal action. The owners of Discreet Deliveries, Alaska Cannabis Club, and Absolutely Chronic Delivery Company, three companies the state alleges sold cannabis without state licenses, were each charged with felonies in 2015. The uncertainty leaks down to the municipal level. When Kachemak Cannabis Club was burglarized in mid-February, Homer Chief of Police Mark Robl said his force wouldn’t take action against the club’s existence, the Homer News reported. “That’s the board’s position. Right now they’ve reached an impasse where these clubs are not expressly permitted or prohibited,” Robl said. “They’re allowing them to operate provided here’s no proof of other violations of law.” However, only weeks later on Feb. 25, Alaska Public Media reported Robl said he’d had a misperception that clubs were not illegal, and learned otherwise from an unnamed “Alcohol and Marijuana Control Board member.” In a later interview with the Journal, Robl revealed the member he spoke with was Franklin. Robl’s new legal interpretation had no chance to be implemented, however, as the club closed down of its own accord in March. The Fairbanks club went through a tangle of local control attempts. Fairbanks Councilman David Pruhs sponsored a measure that would have banned the club, then withdrew it in mid-January. Pruhs said the state needs to decide. “I am giving the people of this industry time to work with the state and rectify this one way or another. I don’t believe in shutting down a business so soon when there might be a chance that this could become a legal activity,” he said at the time. After the ban’s withdrawal, The Higher Calling continued operations until it folded in late March. Even with Pruhs’s ban withdrawn, however, the borough still had concerns. In an April 7 editorial, the Fairbanks Daily News-Miner responded to a proposed ordinance from Fairbanks North Star Borough Assemblyman Christopher Quist that would ban all marijuana businesses without state licensure. “It’s hard to blame Mr. Quist for wanting to provide that clarity at a borough level, given the number of businesses capitalizing on the loophole and the inaction on it thus far,” reads the editorial. “But the state is the authority that should make the determination, and the borough should take its lead from that decision. It’s past time for the matter of marijuana clubs to be sorted out.” The Anchorage Assembly had planned to discuss marijuana social clubs, but member Ernie Hall advised them during March 22 to halt marijuana considerations after a conversation with Franklin, during which he was advised that the state is still considering several marijuana-related items. State silence With most legislative bandwidth taken by a $4.1 billion budget deficit, the Legislature has stayed away from marijuana clubs. No bill to create a license type has surfaced, nor any plans to craft one. The only bill directly pertinent to clubs has stalled and shows no sign of movement before lawmakers adjourn. Rather than directly addressing the licensing issue, the bill incorporates a de facto public marijuana smoking ban into a larger anti-smoking measure. The pair of anti-tobacco bills had moved successfully through both chambers, but stalled in the House Judiciary Committee. House Bill 328 and companion Senate Bill 1, would enact a statewide ban on smoking in any public place except tobacco stores deriving 90 percent of their income from tobacco sales. The bill includes vape pens, e-cigarettes, and any other “plant intended for inhalation.” An amendment from Rep. Adam Wool, R-Fairbanks, that would exempt marijuana businesses hasn’t yet been adopted. LeDoux, the Judiciary chair, has not scheduled a bill hearing during the Legislature’s final week. DJ Summers can be reached at [email protected]

Marijuana, tobacco public smoking ban passes Senate

A bill that would ban onsite marijuana consumption passed the Senate on March 30, before a House companion bill has a hearing in the Health and Social Services Committee. In public comment and in Senate testimony and debate over the legislation aimed at tobacco products, none of the public or senators addressed its affect on state marijuana industry regulations. Both Senate Bill 1 and its House companion, House Bill 328, come from American Cancer Society pressure to ban smoking statewide, rather than Alaska’s current local control system. Both bill’s definitions include any “plant intended for inhalation,” and would apply to chemical vaporization in addition to actual smoking. The bill also defines what constitutes a “public place” in a manner that would criminalize marijuana social clubs, which are currently in legal limbo, as well as currently legal onsite consumption at marijuana cafes allowed by the Marijuana Control Board. Sen. Pete Micciche, R-Soldotna, introduced the bill, which would prohibit tobacco or e-cigarettes in enclosed public spaces including places of employment, apartment buildings, hotels, and at schools and universities. It grants certain exceptions to tobacco stores where 90 percent of revenue comes from tobacco sales, but includes no language to exempt marijuana retail stores with the same sales configuration. The bill is at odds with state marijuana regulations, which explicitly grant onsite marijuana consumption to retail stores if the Marijuana Control Board approves the request. Alaska is currently the only state with such provisions for some kind of marijuana consumption outside the home. These “marijuana cafes” ignited considerable industry excitement as an allowance for Alaska tourists, who currently have no designated area to smoke cannabis. Micciche’s bill would effectively isolate marijuana consumption to private, stand-alone homes, giving tourists nowhere to consume. The bill would also outlaw the existing marijuana social clubs. Anchorage’s Pot Luck Events and Fairbanks’s The Higher Calling offer cannabis users a place to consume, but in which no marijuana is sold, in exchange for a membership fee. Onsite consumption provisions for retail stores are explicitly legal, but marijuana social clubs are in limbo. The Marijuana Control Board issued a ruling on marijuana social clubs in 2015, declaring that the board had no authority to either prohibit or to enable such clubs unless the Legislature created a social club license type in statute. Since then, clubs have continued operations, and no legal actions have been taken against them or their members. The bill passed the Senate by a 15-5 vote. The concurrent HB 328, as widely cosponsored in the House as Micciche’s bill was in the Senate, has already been moving through committee hearings. Rep. Adam Wool, D-Fairbanks, had not yet offered an amendment that would grant the same exceptions to marijuana retail stores as to tobacco retail stores, as the bill’s last hearing before the committee ran short on time. The House Health and Social Services Committee will review HB 328 at 3 pm, March 31. Now that it has passed the Senate, Micciche’s bill will move to the House for consideration. Because a companion bill is in the House, SB 1 will not need to be reviewed in any committee in which HB 328 has already been heard. The bill will need final House passage and gubernatorial approval.   This is a developing story. Check back at the Journal for updates.   DJ Summers can be reached at [email protected]  

Murkowski asks AG to review gun rules for marijuana users

Sen. Lisa Murkowski picked up an issue Lower 48 states with legal marijuana still haven’t resolved in a March 2 letter to U.S. Attorney General Loretta Lynch. The letter asks Lynch to reexamine federal gun regulations inconsistent with state laws where marijuana is legal. Along with banking — federal laws prohibit bank involvement with marijuana businesses — gun ownership exemplifies a schism between federal and state laws concerning cannabis. A 2011 directive from the Bureau of Alcohol, Tobacco, Firearms, and Explosives specifically prohibits federal firearms dealers from selling to marijuana users, both medical and recreational. Private gun sales between individuals, which are not federally controlled, do not have this restriction. As of 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 has some of the least restrictive gun laws in the nation with an entrenched hunting culture both for recreation and subsistence purposes. Alaskans are not required to have a concealed carry permit so long as they are a legal owner under state and federal law, but they must apply for a concealed carry permit if they wish to carry in states where Alaska has reciprocity agreements. 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. According to a 2014 Washington Post report, 25 percent of 18- to 25-year-olds and 11 percent of those older than 25 in Alaska consumed marijuana within the past month. Murkowski didn’t support the voter initiative, which legalized recreational marijuana in Alaska in 2014, but she views the inconsistency as a state’s rights and safety issue. “If the cultivation, manufacture, and use of marijuana and marijuana products is to be lawful in Alaska,” the letter reads, “it must be undertaken consistent with the regulatory scheme, and proactive efforts should be taken to reconcile inconsistent federal laws with more permissive state laws.” A federal letter to states where marijuana is legal, called the Cole Memorandum, gives some guidance, but does not address firearm possession. Murkowski refers to the letter from ATFE Assistant Director of Enforcement Programs and Services Arthur Herbert that was distributed to federal firearms dealers on Sept. 21, 2011. The Herbert letter, Murkowski notes, specifically denies firearms possession to medical marijuana cardholders. “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,” Herbert’s directive reads. The bureau requires federal firearms license dealers to have their customers fill out Form 4473. This tracks address, date of birth, government-issued photo ID, and a federal background check, along with recording the serial number of the firearm being purchased. One question asks: “Are you an unlawful user of, or addicted to, marijuana, or any depressant, stimulant, narcotic drug or any other controlled substance?” Lying on a Form 4473 is a federal felony, punishable by up to five years in prison. Most individual firearms sellers are not federally licensed, but gun dealers and sporting goods stores are. Murkowski fears lawful marijuana users will turn into a class of criminals by answering “no” on the portion of federal firearms licensing forms. Gun buyers with medical marijuana cards, or even recreational users, would be opening themselves to criminal charges by providing a false statement in order to buy the gun. Murkowski wants the federal government to revisit the rules. “It is my judgment that denying Americans the personal Second Amendment right to possess firearms as articulated by the Supreme Court in (District of Columbia v. Heller) for mere use of marijuana pursuant to state law is arbitrarily overbroad and should be narrowed.” Murkowski’s office has not yet received a reply from the U.S. Attorney General’s office. Other states have battled with medical and recreational marijuana usage’s incompatibility with federal gun laws, which the National Organization for Reform of Marijuana Laws has considered one of the top priorities for lawmakers post-legalization. So far, none have successfully changed the effects of the ATFE’s cannabis usage prohibition, though some have changed state laws. In Montana, which legalized medical marijuana in 2004, state Attorney General Steve Bullock and the Montana congressional delegation roundly objected to the 2011 Herbert letter. Montana’s legislators looked for a fix. In 2014, Sen. John Walsh, D-Mont., tried to pass a bill that would bar any federal funds from being used to prosecute gun owners based on their status as medical cardholders. The bill failed. In Colorado, the Colorado Campaign for Equal Gun Rights tried to put a measure onto the November 2016 ballot that would bar Colorado sheriffs from refusing concealed carry permits to marijuana users. The campaign failed to collect the necessary signatures to put the issue onto the 2016 ballot. In 2013, Illinois passed a law allowing medical marijuana users to possess firearms, though a couple years later the state said it inadvertently sent out revocation letters to a few firearms permit holders with medical marijuana cards. In Willis v. Winters, a 2011 Oregon Supreme Court case, it was ruled that the “state law requires sheriffs to issue concealed gun licenses without regard to whether the applicants use medical marijuana.” This ruling means Oregon sheriffs are required to issue concealed carry permits to medical marijuana users, and the U.S. Supreme Court declined to hear the state’s appeal in what advocates celebrated as a victory for gun rights and medical marijuana users. DJ Summers can be reached at [email protected]

Pot permits wait on background check bill

A number of bills in Juneau are creating delays in completing approvals for marijuana business license applications. Prospective marijuana business owners began submitting license applications to the state on Feb. 24, with more than 200 received as of March 25, but their licenses will be held at the end of the process until one bill passes. Marijuana Control Board director Cynthia Franklin said her staff of four reviewers is still working on licenses, but that they run into a wall at the end of the process where criminal background checks must be performed. “The rumor that we’ve halted applications is false,” said Franklin. “We are working on them.” Without passage of House Bill 75, Franklin said her staff cannot request federal background checks to ensure marijuana licensees have not had any felony convictions in the last five years, a regulatory requirement. The bill gives statutory enabling authority for the Department of Public Safety to request the federal checks. Franklin said licenses are still in their early initiation phase. Only one of the 200-plus applications has reached the final stage of criminal background checks. Franklin said she believes the bill will have no trouble passing by April 19, and that the licensing timeline will not be significantly delayed. “We’re going to be just fine and dandy,” she said. In February, Franklin announced a revised timeline in which the state will issue licenses beginning June 7, an alteration from the voter initiative requirement of May 24. The state requires a “seed to sale” tracking system for all cannabis, meaning cultivators will have to possess marijuana licenses before even planting their first crop. Cannabis takes roughly 100 days to grow to maturity, so retail stores will not have legal product until mid-September at the earliest. Cultivation licenses have a hiccup of their own. HB 337 would require cultivators to pay a $5,000 bond to the state before their license is approved. If HB 337 passes, cultivators will have their licenses held until they provide proof of this bond. Franklin said she believes the bills will pass, but marijuana bills have moved slowly in a Legislature snowed under by a $4.1 billion budget deficit and an avalanche of budget cuts and tax proposals. HB 75, presented as an administrative fix-it bill from Rep. Cathy Tilton, R-Wasilla, amends statute to allow the state to request federal background checks, as well as opts unorganized borough villages out of commercial marijuana activity. State regulations require background checks for all marijuana business applicants. Specifically, rules approved by the state Marijuana Control Board will deny a marijuana application to an applicant with any felony on record in the past five years, any misdemeanor involving a controlled substance, weapons charge, or violence within the last five years, or a Class A misdemeanor relating to selling, furnishing, or distributing marijuana or operating an establishment where marijuana is consumed contrary to state law. Marijuana regulations do not currently specify Federal Bureau of Investigation background checks. Earlier Marijuana Control Board drafts incorporated this language, but the Departments of Law and Public Safety said such requests would require statutory changes, not regulatory ones. Franklin and Tilton argue an FBI background check is the only way to verify criminal records for federal or Outside convictions, which do not appear on Alaska’s court system.  The Municipality of Anchorage will need to play catch up with marijuana licenses. At a March 22 Anchorage Assembly meeting, member Ernie Hall recommended, based on conversations with Franklin, that the Assembly postpone marijuana business until the state has ironed out its own process. “There is a tremendous amount of work yet to be done at the state level,” said Hall, “which has been a concern on our part from the very beginning, that we would get our part of the work done and the state wouldn’t be up to speed. And that’s kind of beginning to become true.” Municipal attorney Bill Falsey confirmed that the municipality has discontinued its marijuana discussions until further notice, and that it has not received any completed applications from the state. To begin its own licensing process, the municipality must receive completed applications from the state. Both Fairbanks and Juneau have already approved conditional use permits for marijuana businesses, and are awaiting state license approval. 2016 pot tourism a moot point With delays, the cannabis market will miss virtually all of the 2016 summer tourists, one of the key demographics the industry hopes to capture. The Alaska cannabis industry has long maintained that tourists will find new reason to drop money in the Last Frontier now that recreational marijuana has been legalized. They won’t know until 2017, as the full marijuana industry rollout won’t present any legal sales until September at the earliest. With nearly 2 million visitors per year dropping $941 per person per visit, Alaska’s $2.4 billion tourism industry could be a vast revenue pool for the marijuana industry and its accompanying taxes. As of yet, the tourist industries have not marketed Alaska as a marijuana destination, or taken any kind of regulatory stance, until the industry has grown enough to establish marijuana as a selling point. Southeast Alaska communities and Fairbanks have expressed a drive for marijuana tourism dollars in the past, and are among the municipalities with the most lenient of local controls. Several Southeast communities have filed requests to lower the state’s 500-foot buffer zone from school and churches to 200 feet.  On-site consumption Hall focused on licensing, but also touched on marijuana social clubs and onsite consumption provisions. “It would be appropriate for the Assembly as a whole to kind of take a hiatus for a bit,” Hall said. “We’ve got our land use in place. We’ve got our licensing in place. We’ve got all of the major elements for marijuana in place. But when it comes to marijuana social clubs or on-site consumption, there’s a number of things that are happening currently.” Hall mentioned a “number of things,” but only one bill concerning these items is in the Legislature. An anti-smoking bill, HB 328, would effectively rescind the Marijuana Control Board’s on-site consumption provision, which allows retail marijuana establishments to apply for an on-site marijuana café license. The bill is aimed at tobacco use. Tucked into the bill’s definitions, however, is a ban on marijuana consumption anywhere but in private homes. Apart from banning tobacco, the bill would apply to any plant “intended for inhalation.” The bill has bipartisan support, with with co-sponsors from all over the state including the House majority and minority leaders.  Since being introduced on Feb. 22 by Rep. Dave Talerico, R-Healy, the bill has since been co-sponsored by the House Majority leader Charisse Millett, R-Anchorage, House Minority leader Chris Tuck, D-Anchorage, Reps. Bob Lynn, Bryce Edgmon, D-Dillingham, Bob Herron, D-Bethel, Lynn Gattis, R-Wasilla, Neal Foster, D-Nome, Cathy Munoz, R-Juneau, and Benjamin Nageak, D-Barrow. On March 24, Rep. Adam Wool, D-Fairbanks, planned to offer an amendment to the bill that would exempt retail marijuana stores from the provision the same way certain tobacco stores who maintain 90 percent of their revenue from tobacco sales are exempt. The meeting was cut for time, however, and Wool did not officially offer the amendment. Falsey said the municipality had planned to further discuss marijuana social clubs and on-site consumption provisions. “I think everyone understood that there was more to come on on-site consumption post February,” said Falsey. “The consensus seems to be now that we should wait to see what the state does.” Marijuana Control Board chairman Bruce Schulte, however, said the state has already decided, and that the board does not plan to revisit social clubs and on-site consumption. “We have taken the position that clubs are not our purview to either regulate or ban and on-site consumption requires only operating parameters,” he said. DJ Summers can be reached at [email protected]  

Cultivation dominates marijuana applicants

The first batch of marijuana business licenses is available to the public, and so far Alaskans have more interest in growing than selling. The Marijuana Control Board began accepting license applications on Feb. 24, but only made them available to the public March 14. Public figures from various marijuana industry and political groups have filed, including members of the Marijuana Control Board itself and the Alaska Marijuana Industry Association. The Marijuana Control Board received 198 different applications as of March 17, but many applicants submitted duplicates, an issue raised by Marijuana Control Board executive director Cynthia Franklin the first week after submissions began.  After duplicates are removed, the board received applications for 175 individual licenses, submitted by 136 individuals or groups of individuals acting as a single agent. By far, more Alaskans have applied for cultivation licenses than any other license type. Of 175 licenses, 117 are for cultivation: 40 for limited cultivation, which applies to grow operations 500 square feet and under, and 77 for standard cultivation, which has no upward limit.  Retail licenses number 43. Marijuana product manufacturing licenses — which include edibles — number six, while concentrate manufacturing facilities number seven. Only three people have submitted applications for testing facilities, which all cannabis products must pass through to be legally saleable. Both are located in Southcentral Alaska: two in Anchorage and one in the Mat-Su area. The numbers expose several cracks in the ongoing struggle for marijuana businesses to get their establishments running quickly in spite of zoning regulations and local government actions. Some applications are submitted in unincorporated Mat-Su Borough areas, which could outlaw commercial marijuana as soon as October by ballot initiative, while others are using only tentative addresses. The numbers put Alaska to roughly half the concentration of marijuana licenses in other states. As of now, if every license were approved, Alaska would have one recreational marijuana license per every 4,200 residents. Colorado has one marijuana license per every 2,200 residents, though that ratio includes medical facilities, which do not exist in Alaska. Many applications are co-located with retail marijuana dispensaries and cultivation facilities a popular duo. Several license applicants even go for a triple, co-locating product or concentrate manufacturing with retail and cultivation. The Marijuana Control Board received 50 of these stacked license applications, or 25 pairs. Notable applicants Among applicants is Brandon Emmett, one of two designated industry representatives on the Alaska Marijuana Control Board. Emmett has applied with two associates for three separate licenses in Fairbanks, including limited cultivation, standard cultivation, marijuana product manufacturing, and marijuana concentrate manufacturing. Kim Kole, a member of both the Alaska Marijuana Industry Association and the Coalition for the Responsible Legislation of Cannabis, has applied for seven licenses, all in Anchorage, more than any other individual or group of individuals statewide. These include five applications for retail establishments, each located at different addresses throughout Anchorage. Two include co-locations with standard retail cultivation facilities. Rather than trying to dominate the Anchorage market, Kole said she’s only trying to keep her place in line by getting the ball rolling on all potential locations. She said she didn’t end up securing several of the addresses for which she applied, which she expected. Licenses cost nothing to initiate, and potential landlords are constantly pulling out of potential leasing opportunities to marijuana businesses. “Honestly I’m surprised more people didn’t seem to do that,” Kole said. Among other notable applicants is Sherman Ernouf, law partner of Anchorage attorney and former Anchorage mayoral candidate Dan Coffey, has applied for an Anchorage standard cultivation license. Coffey also acts as filing agent for other marijuana license applicants. Regional preferences Of 175 licenses, Anchorage claims the largest interest for marijuana business, with 50 licenses in Anchorage and one in Girdwood. In Anchorage, more interest lies in cultivating than in selling, but only by a hair. The board received applications for 21 retail stores, 18 standard cultivation licenses, and four limited cultivation licenses. Anchorage will feature quite a few of the brewpub-style co-located marijuana outlets. Of Anchorage’s 46 license applications, 18 are located at the same address, meaning nine retailers in the area will be growing their own product on premises. Two of the three applications for marijuana testing facilities are located in Anchorage. The Interior has a clear preference for cultivation. Of 22 license applications located in Fairbanks, 12 are for cultivation: 11 standard cultivation licenses and one limited cultivation license. Only five individuals have made applications for retail outlets. The two applications for North Pole businesses are both for cultivation, one standard and one limited. Fairbanksans also submitted four product manufacturing applications and one concentrates manufacturing application. A dozen of Fairbanks’s licenses are concentrated in only four addresses. The Mat-Su Borough will have a measure on the October 2016 ballot that would ban all commercial marijuana activity in the unincorporated borough, but evidently, would-be marijuana entrepreneurs in the area are optimistic it won’t pass. Both Wasilla and Palmer have already passed bans on commercial cannabis activity, but a number of licenses have been filed for addresses in each area. Most are attached to addresses that fall outside city limits. Wasilla, like the rest of the state, focuses primarily on growing, with eight standard cultivation licenses and five limited cultivation licenses. Only three retail outlets have been applied for, along with two concentrate manufacturing facilities and one product manufacturing facility. Palmer reflects the same balance, with two limited cultivation licenses, two standard cultivation licenses, two retail stores, and one testing facility. DJ Summers can be reached at [email protected]

Cultivation licenses dominate marijuana applications

The first batch of marijuana business license applications is available to the public, and so far Alaskans have more interest in growing than selling. The Marijuana Control Board began accepting license applications on Feb. 24, but only made them available to the public March 14. Public figures from various marijuana industry and political groups have filed, including members of the Marijuana Control Board itself and the Alaska Marijuana Industry Association. The Marijuana Control Board received 198 different applications as of March 17, but many applicants submitted duplicates, an issue raised by Marijuana Control Board Executive Director Cynthia Franklin the first week after submissions began.  After duplicates are removed, the board received applications for 175 individual licenses, submitted by 136 individuals or groups of individuals acting as a single agent. By far, more Alaskans have applied for cultivation licenses than any other license type. Of 175 licenses, 117 are for cultivation — 40 for limited cultivation, which applies to grow operations 500 square feet and under — and 77 for standard cultivation, which has no upward limit.  There are 43 applications for retail establishments. Marijuana product manufacturing licenses, which include edibles, number six, while concentrate manufacturing facilities number seven. Only three people have submitted applications for testing facilities, which all cannabis products must pass through to be legally saleable. Both are located in Southcentral Alaska — two in Anchorage and one in the Matanuska-Susitna area. The numbers expose several cracks in the ongoing struggle for marijuana businesses to get their establishments running quickly in spite of tight zoning regulations and local government actions. Some applications are submitted in unincorporated Mat-Su Borough areas, which could outlaw commercial marijuana as soon as October, while others are using only tentative addresses. The current number of applications would put Alaska at roughly half the concentration of marijuana licenses per capita compared to other states that have legalized recreational use. As of now, only a few weeks into accepting licenses, Alaska would have one recreational marijuana license per every 4,200 residents. Colorado has one marijuana license per every 2,200 residents, though that ratio includes medical facilities, which do not exist in Alaska. Many applications are co-located; retail marijuana dispensaries and cultivation facilities, for example, are a popular duo. Several license applicants even go for a triple, co-locating product or concentrate manufacturing with retail and cultivation. The Marijuana Control Board received 50 of these stacked license applications, or 25 pairs.   Notable applicants Among applicants is Brandon Emmett, one of two designated industry representatives on the Alaska Marijuana Control Board. Emmett has applied with two associates for three separate licenses in Fairbanks, including limited cultivation, standard cultivation, marijuana product manufacturing and marijuana concentrate manufacturing. Kim Kole, a member of both the Alaska Marijuana Industry Association and the Coalition for Responsible Cannabis Legislation, has applied for seven licenses, all in Anchorage, more than any other individual or group of individuals statewide. These include five applications for retail establishments, each located at different addresses throughout Anchorage. Two include co-locations with standard retail cultivation facilities. Rather than trying to dominate the Anchorage market, Kole said she’s only trying to keep her place in line by getting the ball rolling on all potential locations. She said she didn’t end up securing several of the addresses for which she applied – which she expected. Licenses cost nothing to initiate, and potential landlords are constantly pulling out of potential leasing opportunities to marijuana businesses. “Honestly I’m surprised more people didn’t seem to do that,” Kole said. Among other notable applicants is Sherman Ernouf, law partner of Anchorage attorney and former Anchorage mayoral candidate Dan Coffey, has applied for an Anchorage standard cultivation license. Coffey also acts as filing agent for other marijuana license applicants.   Regional preferences Of the 175 licenses, Anchorage claims the largest interest for marijuana business, with 46 licenses in Anchorage, four in Eagle River, and one in Girdwood. In Anchorage, more interest lies in cultivating than in selling, but only by a hair. The Marijuana Control Board received applications for 21 retail stores, 18 standard cultivation licenses and four limited cultivation licenses. Anchorage will feature quite a few of the brewpub-style, co-located marijuana outlets. Of Anchorage’s 46 license applications, 18 are located at the same address, meaning nine retailers in the area will be growing their own product on the premises. Two of the three applications for marijuana testing facilities are located in Anchorage. The Interior has a clear preference for cultivation. Of 22 license applications located in Fairbanks, 12 are for cultivation — 11 standard cultivation licenses and one limited cultivation license. Only five individuals have made applications for retail outlets. The two applications for North Pole businesses are both for cultivation, one standard and one limited. Fairbanksans also submitted four product manufacturing applications and one concentrates manufacturing application. A dozen of Fairbanks’s licenses are concentrated in only four addresses. The Mat-Su Borough will hold a referendum on Oct. 4 that would ban all commercial marijuana activity in the unincorporated areas of the borough, but evidently, would-be marijuana entrepreneurs in the area are optimistic it won’t pass. Both Wasilla and Palmer have already passed bans on commercial cannabis activity, but a number of licenses have been filed for addresses in each area. Most are attached to addresses that fall outside city limits. Wasilla, like the rest of the state, focuses primarily on growing, with eight standard cultivation licenses and five limited cultivation licenses. Only three retail outlets have been applied for, along with two concentrate manufacturing facilities and one product manufacturing facility. Palmer reflects the same balance, with two limited cultivation licenses, two standard cultivation licenses, two retail stores, and one testing facility.   DJ Summers can be reached at [email protected]

Assembly eases Anchorage marijuana setbacks

The Anchorage Assembly freed up more marijuana space for Anchorage on Feb. 23, but further limited the already scarce zones in Chugiak and Eagle River. The new rules seem a win-win for the two Assembly members it concerned, Amy Demboski and Patrick Flynn.  The reconsideration holds the intent of the final Assembly land use package passed on Feb. 9 — which was packed with amendments adding additional restrictions to Chugiak and Eagle River — while partially responding to industry panic of overregulation in Anchorage. The reconsideration concerns setback distances between marijuana businesses and sensitive areas like schools, churches, and child-centered facilities like daycares. These distances will be measured by shortest pedestrian route through the municipality. The new amended land use package requires that Chugiak and Eagle River marijuana businesses maintain a distance of 1,000 feet from such areas, which now includes residential districts, dedicated parks, and the McDonald Memorial Center. In Anchorage, rules were somewhat loosened, though the breadth of sensitive areas could prove limiting. Marijuana businesses must maintain the state-mandated 500-foot separation from school, churches, correctional institutions, community centers, recreation centers, playgrounds, public housing, day care centers, and homeless shelters. Both area’s setback requirements will be measured by the shortest pedestrian route between the front entrance of a marijuana establishment and that of the special use property. This eliminates the “as the crow flies” measurement passed earlier — from property line to property line — which could conceivably have zoned marijuana business out despite being separated from sensitive areas by multi-lane highways or other obstacles. Atypical for public meetings involving marijuana, the meeting was quick and quiet, with little discussion among Assembly members and no public comment from the industry throng in the audience. Assembly member Flynn had called for reconsideration on marijuana zoning after noticing inconsistencies between an amendment he passed and those introduced by Assembly member Demboski in an earlier meeting finalizing land use requirements. One of Flynn’s amendments defined the pedestrian route measurement, while Demboski’s — one of 18 she introduced — specified “as the crow flies.” Industry in Anchorage and community councils in Chugiak and Eagle River had each expressed dissatisfaction with the original ordinance. Flynn, who plans to have direct stakeholder involvement in the marijuana industry, said he’d received outraged messages from cannabis entrepreneurs saying the original Anchorage rules zoned their planned buildings out overnight. Cannabis business attorney Jana Weltzin said the Assembly opened itself to legal challenge by making the industry “impracticable.” Marijuana land use is already restricted enough, industry believes, with a limited number of available retail and industrial buildings even by the least restrictive rules. Sara Williams, chief executive officer of Midnight Greenery, said she’d visited 47 retail properties in Anchorage without finding one both properly zoned and with a willing landlord. One business planner’s building would be just less than 500 feet from the nearest school by shortest pedestrian route, but just more than 500 feet if measured by lot line. In Chugiak and Eagle River, however, community councils said the rules didn’t go far enough. Largely conservative and with a sizeable bedroom contingent of military workers from Joint Base Elmendorf-Richardson, the area lobbied Assembly members Bill Starr and Demboski for more restrictive measures. DJ Summers can be reached at [email protected]

Anchorage Assembly to reconsider marijuana land use rules

Anchorage marijuana regulations could get a makeover only two weeks after their final passage by the Anchorage Assembly, potentially revising the 500-foot distance marijuana businesses must be from sensitive areas and how that distance is measured. The Assembly will hold a meeting on Feb. 23 to reconsider its marijuana land use ordinance, which established zoning regulations for cannabis businesses including setbacks from schools. The Assembly will not take public comments, as they are not required for ordinance reconsideration. Assembly member Patrick Flynn called for reconsideration after noticing inconsistencies between an amendment he passed and those introduced by Assembly member Amy Demboski. “One amendment defined distance based on pedestrian routes from front door to front door, the other based on lot lines,” said Flynn. “We as a policy making body need to come up with a final answer so that we can resolve that incongruity and give clear direction to zoning.” On Feb. 9, Anchorage tightened certain regulations while holding off on others. Among other restrictions, the new regulations redrafted the measurement standard between marijuana businesses and sensitive areas. The Assembly narrowly approved a 500-foot separation distance from schools, which halved the earlier proposed 1,000-foot separation. However, that distance is no longer measured by the shortest pedestrian route, but “as the crow flies,” from property line to property line instead of from entrance to entrance. As a result, many businesses’ previously selected retail and cultivation buildings became illegal overnight. Industry panic ensued. Flynn said he’d been contacted by several people in the marijuana industry whose buildings ride the line of legally and illegally placed; one business planner’s building would be just less than 500 feet from the nearest school by shortest pedestrian route, but just more than 500 feet if measured by lot line. Cannabis business attorney Jana Weltzin said the Assembly’s actions made three clients’ buildings illegal. Demboski and Assembly chairman Dick Traini did not respond to calls for comment. DJ Summers can be reached at [email protected]  

Marijuana industry faces steep lease rates in tight market

Marijuana business can expect a hefty square footage price for retail, cultivation, and manufacturing leases within the Municipality of Anchorage once they open for business. On Feb. 24, the Alaska Marijuana Control Board will start accepting business license applications. In the meantime, several industry sources report being charged several times the average per square footage lease rate for their planned marijuana operations, or entering into lease agreements that give a percentage of business profits to the landlord. This follows an observed pattern of real estate investment in both Washington and Colorado, where real estate brokers and media reported industrial warehouse space in marijuana-zoned areas being leased up to four times the average rate. A combination of market factors and regulations drive prices up for marijuana-friendly buildings and make owning such buildings a lucrative enterprise. On Feb. 9, the Anchorage Assembly passed an amended land use ordinance requiring setbacks between marijuana business and schools, churches, recreational facilities, and child-centered facilities. However, the assembly will reconsider those land use regulations at a Feb. 23 meeting. Market rates for these zones go up as scores of marijuana businesses vie for limited space. The land restrictions create pockets of proper zoning in B-3 business zones for retail and industrial zones for cultivation facilities, largely concentrated in Midtown-Spenard and South Anchorage. Wasilla’s recent ban on commercial marijuana intensifies the demand for space in Anchorage as Mat-Su entrepreneurs look for opportunities farther south. In turn, landlords see an opportunity to charge two or three times the average rate, in keeping with real estate patterns in other states where commercial marijuana has been legalized. Because of residency restrictions on licenses, Outside investors eyeing Alaska cannabis have no other route beyond real estate speculation, seeking to make profits through lease rates. Beyond profit motive, investors have a familiarity with real estate they don’t have for marijuana. Lower 48 real estate investors already control a sizable portion of Anchorage industrial space. Seattle’s Slattery Properties owns 15 industrial buildings in Anchorage, and has been present in Anchorage since 1989. Slattery Properties recently outbid Chris and Rick Euscher, who are planning the marijuana cultivation facility RC Tinderbox, on an industrial building, leading to some industry speculation that the company plans to corner the cultivation market. Michael Slattery, the owner of Slattery Properties, said his company is not actively courting the marijuana industry, and that his properties’ conformity with marijuana zoning requirements is happenstance. “We have not purchased anything outside of our core competency,” said Slattery. “The properties we have purchased add synergy to the other seven properties we own in the Cinnabar Loop (in South Anchorage). It’s not our intent to specifically target that industry.” Insurance rates are too high for Slattery to want a large portfolio of marijuana businesses — Lloyd’s of London charges rates up to 250 percent above average for marijuana-related coverage — and Slattery himself said he has “moral issues renting to marijuana types.” The building in question sits in South Anchorage, home to the vast majority of marijuana-zoned industrial space. Slattery has owned properties in Cinnabar Loop dating back to 1989, according to municipal records. Though the company isn’t looking for marijuana clientele, Slattery said he does “keep an eye” on market trends. “I’m not saying we’re going to be looking for them, but as market forces bring the industry out, if they’re socially responsible, and if they meet the regulatory requirements…they need to go somewhere,” he said. Real estate investment and the resulting price increases for marijuana entrepreneurs has been a fixture of the market since Colorado legalized recreational marijuana in 2014. Investor networks from the Lower 48 say real estate is often the first choice for potential investors, as it doesn’t require any knowledge specific to cannabis business and bypasses the residency restrictions in each state. “Probably some of the most prominent and prolific investment in the cannabis industry has been done in real estate,” said Steve Berg, who co-founded ArcView Group, an investor network geared explicitly for cannabis business investment. “The residency restrictions many states prohibit or at least restrict the ability of non-state residents to acquire interest. But there’s nothing to stop them from being landlords to a cannabis companies.” Berg said cannabis investors view real estate as the least risky and least restrictive ways to seed their money. Residency restrictions like Alaska’s — which bans all non-resident money from Alaska marijuana licenses — channels investment dollars that might otherwise have gone directly into business expenses. Cannabis businesses make for attractive tenants, Berg said. Beyond the newness and novelty, they are sound investments, with business plans and good profitability. If regulations or market conditions turn the business belly up, the investor still has the building. “From a risk-reward perspective, that’s very attractive to many investors that are coming out… If it plays out in Anchorage as it does in every other jurisdiction, the areas zoned for cannabis business inevitably see premium lease rates,” said Berg.” Already-legal marijuana markets experienced both an organic growth in marijuana-zoned building values and an increase in marijuana-specific premium rates from landlords. Real estate owners raised prices on marijuana industry businesspeople in Washington when it rolled out its recreational cannabis industry. In Washington in 2013, Seattle area landlords charged marijuana real estate deals of 150 percent to 200 percent premiums, reported the Seattle Times. "One unnamed party recently paid a $50,000 premium — above the lease rate — for a storefront outside of Seattle," read the Times article. "Greta Carter, a Seattle marijuana activist who passed on the tip, said the leaser paid it because the location was a prime spot, albeit grudgingly. 'We’re accustomed to paying a premium in the cannabis industry, but you cross a line when you want $50,000 up front,' she said." In Denver, the “green rush” spiked prices for properly zoned industrial areas to highs not seen since 2004, reported the Denver Post. In 2015, industrial lease rates climbed to $7.05 per square foot. Like Seattle, marijuana tenants were often asked to pay two or three times the average lease rate. DJ Summers can be reached at [email protected]  

Anchorage Assembly finalizes marijuana business regulations

Anchorage’s marijuana industry is set to begin, with a final package of municipal requirements coming weeks before the Marijuana Control Board starts accepting licenses on Feb. 24. Anchorage tightened certain regulations while holding off on others. New regulations increase buffer zones in Chugiak and Eagle River, add new buffer zone triggers to Anchorage marijuana businesses, bar small-scale commercial home grows, prohibit onsite consumption, and redraft the measurement standard between marijuana businesses and sensitive areas. Most restrictively, property buffer distances have changed. The Assembly narrowly approved a 500-foot separation distance from schools, which halved the earlier proposed 1,000-foot separation. However, that distance is no longer measured by the shortest pedestrian route, but “as the crow flies,” and from property line to property line instead of from entrance to entrance. This shortens distances some marijuana upstarts said they’d already counted on having nailed down, and nixes marijuana facilities adjacent to a sensitive area’s property line. “Many of my clients’ spaces were fine this morning,” said Jana Weltzin, a marijuana business attorney. “And as of tonight, many are now back to square one after months of careful property location scouting and efforts.” Weltzin said the Assembly’s final regulations make the industry impracticable — echoing earlier claims that the Assembly opens itself to legal challenge. Assembly members emphasized that the ordinances will be an ongoing project and certainly be revised as time passes. Members maintained earlier sentiments about wanting to start slowly with the new industry, rather than open floodgates too quickly and have to scale them back. Caution, they said, should not be misinterpreted as antagonism. “Politics is the art of the possible,” said chairman Dick Traini. “It’s a compromise. We’ve got a better document now. We’re going to have to tweak it. We want to see you guys successful.” 500-foot buffers Restrictions tempered an early concession to cannabis industry concerns. Introduced by assemblyman Patrick Flynn, an amendment recalls the city’s earlier insistence that it avoid federal scrutiny with a 1,000-foot buffer zone from schools. Flynn argued that the best way to thwart the black market is to make the industry as easy as possible for the regulated market. With a land crunch in Anchorage making retail and industrial space scarce, Flynn said the industry needs more lax rules to avoid being priced out of existence. “There’s just limited land available in the Anchorage Bowl,” said Flynn. “We’re already seeing a premium charged on facilities available under the 1,000-foot standard.” Members Amy Demboski and Paul Honeman both argued the federal government’s scrutiny should steer the Assembly to caution, but member Bill Evans said the fear is misplaced; if the feds want to bust marijuana businesses, they need little reason, as the substance is still federally illegal. Encouraging the regulated market, he said, will help the schools’ children more than a 1,000-foot distance. “The feds can (shut down a business) if they make it 10 miles away,” said Evans. “The regulated industry doesn’t sell to kids, whereas the black market does…the 500 (foot) limitation…is the safest way for the kids; 1,000 feet, I’m not sure there’s any magic, really, about that distance.” Cannabis less welcome in Chugiak and Eagle River Several amendments introduced by Demboski effectively zoned Chugiak and Eagle River out of the industry, according to marijuana industry stakeholders. Demboski, who attended meetings with Eagle River community council members last weekend, said she chose conservative rules specifically to meet the needs of the community she represents. Her district largely disapproved of legalization. “This is one of those moments, this night, there may be some things I would do differently if I was acting individually,” said Demboski at the meeting’s prelude. Eagle River residents looking to enter the legal marijuana market said they feel cheated as Anchorage taxpayers. “I feel like an overprotected Eagle River child that’s not able to participate in the recreational marijuana market,” said Jessica Jansen, co-founder of Canna Farm Co-op. Demboski submitted a battery of amendments with varying degrees of success. Some, like a 500-foot buffer for video arcades, died a quick death with a majority vote against it. Others received more consideration and more favorable votes. In the end, Demboski succeeded in securing a 1,000-foot buffer from an Eagle River community center, a removal of marijuana retail stores from all B-3 zones in Chugiak and Eagle River, and a 1,000-foot buffer from all dedicated parks in Chugiak and Eagle River. Other Demboski amendments applied to Anchorage at large and revived previous restrictions the Assembly’s Planning and Zoning Commission had stripped out of its recommendation to the Assembly. Demboski tried to reinstate a buffer trigger for dedicated parks — of which Anchorage has roughly 10,000 acres — but was voted down. The Assembly forwarded the special land use package to the Planning and Zoning Commission late last year, complete with the setbacks for parks, childcare centers, and homeless shelters. After a round of outraged industry comment, the commission loosened some of the proposals in their final recommendation to the Assembly. Another amendment introduced by Demboski added childcare facilities back into the buffer zone. The Planning and Zoning Commission had stripped this provision out of the assembly’s packet earlier after industry complaints that the measure would remove too much available land. These specifically apply to businesses license to provide care for nine or more children, according to Demboski. Demboski admitted during debate that she disagreed with the Planning and Zoning team’s recommendations, saying they “drastically altered” the Assembly’s “original intent.” The ballot initiative included an opt-out clause for localities, and several have already done so. Chugiak and Eagle River, however, are not their own municipalities or villages. Traini said closing off specific areas for specific businesses is allowed by Title 21. Pot clubs and home grows Pot Luck Events — the Anchorage marijuana club that allows members to bring and share product — will continue operations for now. The Assembly opted not to go through with ban on clubs, which are neither prohibited nor approved by state regulations. However, the Assembly did opt to prohibit state-regulated onsite consumption licenses, saying they plan to review the state’s final provisions when licenses become available. Assembly regulations also put a halt on small marijuana cultivators. An amendment to allow limited commercial marijuana grows in residential areas failed. Pete Petersen, the amendment’s author, said he wanted to acknowledge a reality of the black market and try to collect tax dollars the city may be missing. “The more of the black market growers that become legitimate business people, the more taxes the municipality is going to collect,” said Petersen. “Right now, there are no warehouses growing marijuana. All the marijuana being grown in Anchorage is grown in residential areas. It’s been going on for decades.” The amendment failed overwhelmingly on a 9-2 vote, however. Assembly members acknowledged the same black market reality, but said the dynamics change when people openly profit from it. “People do not want this in residential areas,” said Hall. “I understand what Mr. Petersen is saying. I think it becomes a totally different situation when you legalize them and everybody knows they’re there.” DJ Summers can be reached at [email protected]

Juneau bars some materials for marijuana concentrates

JUNEAU — Anybody attempting to make marijuana concentrates using butane, propane or any other such chemical had better think twice. Not only could using these gases result in a potentially deadly explosion, they will now result in misdemeanor charges, too. Without objection, the City and Borough of Juneau Assembly passed an ordinance Feb. 8 making it illegal for anybody without a license or permit to make marijuana concentrate — waxes, oils, etc. — using extraction methods that are not alcohol-, food- or water-based. This ordinance applies to all city zones; no permit or license, no gas-based extraction. Until Feb. 8, the ordinance allowed only for food- and water-based extractions, but Assembly member Debbie White motioned to include alcohol-based extractions, which she pointed out are not as dangerous as using explosive gases. “Alcohol is flammable, but it’s definitely not explosive,” she said. With a 5-3 vote, the Assembly approved White’s motion but not before consulting with Capital City Fire/Rescue Chief Rich Etheridge, who confirmed White’s point. “I think the risk is less than those explosive, compressed gases, but there is a risk similar as when cooking with alcohol or using it in your garage,” he told the Assembly. “There is a risk, but it’s not the level of using butane or those other methods.” Assembly members Loren Jones, Maria Gladziszewski and Mayor Mary Becker voted against White’s amendment. Jones said that he wanted the Assembly to clarify what it meant by “food-based” extraction, explaining that people are already making concentrates illegally. The only way the Assembly can make sure people are making concentrates safely is by “better defining ‘food-based.’” Assembly member Jesse Kiehl, a proponent of the ordinance and of White’s motion said that what Jones was asking for was beyond the scope of this particular ordinance. “In terms of dealing with this ordinance, that is dealing with things that go boom, any of these food products are OK with me because none of them go boom,” he said responding to Jones. “It makes sense that we should allow people to do alcohol-based extractions because it’s not going to make the neighbor’s house blow up.” The members of the Assembly weren’t the only ones talking about marijuana in City Hall Monday. The Assembly discussion regarding the concentrate ordinance was preceded by a lengthier public-comment period than usual. Four North Douglas residents, including Planning Commission Chair Nicole Grewe, spoke out against the Assembly’s decision to allow commercial marijuana operations to operate in D1 and Rural Reserve zones outside the urban service boundary. Though the Assembly established the zoning rules for marijuana businesses in early November, Grewe said it’s not too late to ensure neighborhood harmony. “We answered the where, but we didn’t answer the how,” she told the Assembly. Grewe also took issue with the fact that the Assembly had made the “random” distinction between D1 and Rural Reserve neighborhoods inside the urban service boundary and those outside it, which is the case for her neighborhood. Not all neighborhoods outside the urban service boundary are low density, she said. “I could subdivide my lot, put in two grow facilities, and force my neighbors to look at two marijuana farms, 1,000 total square feet,” Grewe said. “That’s not low density, not even close.” The Assembly didn’t discuss the zoning matter further, as it was not an agenda item.

Anchorage Assembly finalizes pot regs

Anchorage’s marijuana industry is set to begin, with a final package of municipal requirements coming weeks before the Marijuana Control Board starts accepting licenses on Feb. 24. Anchorage tightened certain regulations while holding off on others. New regulations increase buffer zones in Chugiak and Eagle River, add new buffer zone triggers to Anchorage marijuana businesses, bar small-scale commercial home grows, prohibit onsite consumption, and redraft the measurement standard between marijuana businesses and sensitive areas. Most restrictively, property buffer distances have changed. The Assembly narrowly approved a 500-foot separation distance from schools, which halved the earlier proposed 1,000-foot separation. However, that distance is no longer measured by the shortest pedestrian route, but “as the crow flies,” and from property line to property line instead of from entrance to entrance. This shortens distances some marijuana upstarts said they’d already counted on having nailed down, and nixes marijuana facilities adjacent to a sensitive area's property line. “Many of my clients’ spaces were fine this morning,” said Jana Weltzin, a marijuana business attorney. “And as of tonight, many are now back to square one after months of careful property location scouting and efforts.” Weltzin said the Assembly’s final regulations make the industry impracticable — echoing earlier claims that the Assembly opens itself to legal challenge. Assembly members emphasized that the ordinances will be an ongoing project and certainly be revised as time passes. Members maintained earlier sentiments about wanting to start slowly with the new industry, rather than open floodgates too quickly and have to scale them back. Caution, they said, should not be misinterpreted as antagonism. “Politics is the art of the possible,” said chairman Dick Traini. “It’s a compromise. We’ve got a better document now. We’re going to have to tweak it. We want to see you guys successful.”   500-foot buffers Restrictions tempered an early concession to cannabis industry concerns. Introduced by assemblyman Patrick Flynn, an amendment recalls the city’s earlier insistence that it avoid federal scrutiny with a 1,000-foot buffer zone from schools. Flynn argued that the best way to thwart the black market is to make the industry as easy as possible for the regulated market. With a land crunch in Anchorage making retail and industrial space scarce, Flynn said the industry needs more lax rules to avoid being priced out of existence.  “There’s just limited land available in the Anchorage Bowl,” said Flynn. “We’re already seeing a premium charged on facilities available under the 1,000-foot standard.” Members Amy Demboski and Paul Honeman both argued the federal government’s scrutiny should steer the Assembly to caution, but member Bill Evans said the fear is misplaced; if the feds want to bust marijuana businesses, they need little reason, as the substance is still federally illegal. Encouraging the regulated market, he said, will help the schools’ children more than a 1,000-foot distance. “The feds can (shut down a business) if they make it 10 miles away,” said Evans. “The regulated industry doesn’t sell to kids, whereas the black market does…the 500 limitation…is the safest way for the kids; 1,000 feet, I’m not sure there’s any magic, really, about that distance.”   Cannabis less welcome in Chugiak and Eagle River Several amendments introduced by Demboski effectively zoned Chugiak and Eagle River out of the industry, according to marijuana industry stakeholders. Demboski, who attended meetings with Eagle River community council last weekend, said she chose conservative rules specifically to meet the needs of the community she represents. Her district largely disapproved of legalization. “This is one of those moments, this night, there may be some things I would do differently if I was acting individually,” said Demboski at the meeting’s prelude. Eagle River residents looking to enter the legal marijuana market said they feel cheated as Anchorage taxpayers. “I feel like an overprotected Eagle River child that’s not able to participate in the recreational marijuana market,” said Jessica Jansen, co-founder of Canna Farm Co-op. Demboski submitted a battery of amendments with varying degrees of success. Some, like a 500-foot buffer for video arcades, died a quick death with a majority vote against it. Others received more consideration and more favorable votes. In the end, Demboski succeeded in securing a 1,000-foot buffer from an Eagle River community center, a removal of marijuana retail stores from all B-3 zones in Chugiak and Eagle River, and a 1,000-foot buffer from all dedicated parks in Chugiak and Eagle River. Other Demboski amendments applied to Anchorage at large and revived previous restrictions the Assembly’s Planning and Zoning Commission had stripped out of its recommendation to the Assembly. Demboski tried to reinstate a buffer trigger for dedicated parks — of which Anchorage has roughly 10,000 acres — but was voted down. The Assembly forwarded the special land use package to the Planning and Zoning Commission late last year, complete with the setbacks for parks, childcare centers, and homeless shelters. After a round of outraged industry comment, the commission loosened some of the proposals in their final recommendation to the Assembly. Another amendment introduced by Demboski added childcare facilities back into the buffer zone. The Planning and Zoning Commission had stripped this provision out of the assembly’s packet earlier after industry complaints that the measure would remove too much available land. These specifically apply to businesses license to provide care for nine or more children, according to Demboski. Demboski admitted during debate that she disagreed with the Planning and Zoning team’s recommendations, saying they “drastically altered” the Assembly’s “original intent.” The ballot initiative included an opt-out clause for localities, and several have already done so. Chugiak and Eagle River, however, are not their own municipalities or villages. Traini said closing off specific areas for specific businesses is allowed by Title 21.   Pot clubs and home grows Pot Luck Events — the Anchorage marijuana club that allows members to bring and share product — will continue operations for now. The Assembly opted not to go through with ban on clubs, which are neither prohibited nor approved by state regulations. However, the Assembly did opt to prohibit state-regulated onsite consumption licenses, saying they plan to review the state’s final provisions when licenses become available. Assembly regulations also put a halt on small marijuana cultivators. An amendment to allow limited commercial marijuana grows in residential areas failed. Pete Petersen, the amendment’s author, said he wanted to acknowledge a reality of the black market and try to collect tax dollars the city may be missing. “The more of the black market growers that become legitimate business people, the more taxes the municipality is going to collect,” said Petersen. “Right now, there are no warehouses growing marijuana. All the marijuana being grown in Anchorage is grown in residential areas. It’s been going on for decades.” The amendment failed overwhelmingly on a 9-2 vote, however. Assembly members acknowledged the same black market reality, but said the dynamics change when people openly profit from it. “People do not want this in residential areas,” said Hall. “I understand what Mr. Petersen is saying. I think it becomes a totally different situation when you legalize them and everybody knows they’re there.”   DJ Summers can be reached at [email protected]  

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