Cannabis

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]  

Wasilla says NO to marijuana shops

WASILLA — Southcentral Alaska’s cannabis business just got more concentrated in Anchorage. A big chunk of the Valley, long a byword for marijuana cultivation, is out. The Wasilla city council voted unanimously on Jan. 25 to ban all commercial marijuana within city limits, further narrowing options for Alaska cannabis industry to enter the newly legal market. The ban prohibits testing, processing, cultivation, and retail sales within Wasilla city limits, and also expressly prohibits consumption anywhere except a private residence with the owner’s permission. A state ballot initiative that passed in November 2014 legalized commercial marijuana activities in February 2015, but the ballot also specified that localities could opt out. In the Mat-Su, the city of Palmer has already banned commercial cannabis activities, and the Mat-Su Borough will have a borough-wide ban on its next public ballot. Industry representatives — who had packed the house alongside marijuana opponents — said the ban is yet another step in a slippery slope of local bans. “I want to puke,” said Midnight Greenery chief operating officer Tina Smith, a Wasilla resident. “This is the first step of banning it at the borough. We have the biggest grow in Alaska, right here. Once we start banning it, our industry is done. The more places opt out, the closer it gets to being closed entirely.” Daniel Bracken, a local pastor who led his congregation in speaking in favor of the ban, said the council made the right decision for the majority of Wasilla voters who voted against Ballot Initiative 2 in 2014. “I’m pleased,” said Bracken. “I think they made the right decision in respecting the will of the voters.” ‘I can do it here, or I can do it in Houston.’ Emotions ran high during public comment, both against the ban and in favor of it. Proponents of the ban had a running concern over providing a wholesome and safe environment for children. The congregation of local King’s Chapel Alaska turned up in force to voice concerns. Bracken implored the council to spare Wasilla’s children from an influence he associates with criminality and vice. A mother, formerly homeless, linked her previous poverty to her young intro to the substance. Like alcohol, said Wasilla man Leland Bogess, marijuana could work its way down to children and “infect” middle school and high schools. Youthful mistakes, others said, lead to lifelong regrets. “Is it fair for boys like these to grow up poor, hungry, uneducated, malnourished, and complete the cycle of their parents?” asked Chris LaCroix. Still other mothers, like pregnant Allie Van Eck, excoriated the council for even considered the “unfounded and unbalanced” ordinance that would take away her favorite anti-morning sickness aid, cannabis edibles. Medical users poured out stories of cancer pains and post-traumatic stress disorder cured by cannabis use. Cannabis industry proponents looked for the nuts and bolts approach to convince the council to vote down the measure. Cannabis industry advocates cited Colorado and Washington to remind Wasilla of the potential tax dollars and the potential tourist trade the marijuana trade could create for the city. Industry hopefuls insisted that regulated business is less a risk than a thriving black market without the security and age requirements of the regulated market. “Why are we possibly saying no to a viable industry here in our home town?” asked Smith, of Wasilla’s Midnight Greenery. “Give us a chance to show you the possibility before you shut us out.” Robert McMasters, who plans to open a 10,000-square foot cultivation facility in Wasilla, said he plans to produce enough cannabis to pay the City of Wasilla $200,000 in excise tax. “I can do that here, or I can do that in Houston.” For a few cannabis advocates, the ban simply amounted to a denial of what they see as an Alaskan right. “I don’t agree with our voted-upon rights being stripped away because one person doesn’t agree with another person’s personal decision,” said Chris Butters. ‘Not in my town.’ Council chose, in the end, to keep to what they said was their city’s will, not the state’s. The council passed the vote unanimously. Mayor Bert Cottle, who only votes in the event of a council tie, put the council’s feelings as a matter of the local popular vote. “In November 2014…48 percent of people in Wasilla voted yes, and 52 percent voted no,” Cottle said. “The same people who elected us every year are the one who voted. I guarantee you, if the vote had gone the other way, the discussion would’ve gone the other way.” Council member Stu Graham earned a roomful of hisses when he equated cannabis consumption with the privilege of driving or alcohol consumption, saying alcohol has little social value and implying neither would marijuana. “The citizens of Wasilla said, ‘not in my town,’” said Graham. “And that’s where we need to be.” Deputy mayor Gretchen O’Barr denied earlier comments from cannabis industry representatives that said a highly regulated market would be a more effective deterrent for underage consumption than the current black market. “Just because it’s a legal business doesn’t mean we can necessarily keep it from children,” O’Barr said. “I don’t see how any drug use in general can go down.” Council member Brandon Well said he sympathized with medical concerns brought up during public comment by medical marijuana users, but said medical usage is not the point. “This isn’t about medical marijuana,” said Wall. “Unfortunately we have a Legislature that’s completely filled with cowards that didn’t want to address medical marijuana when they had the chance. I agree with the notion that there are benefits to medical marijuana you’re not going to get with the big pharmaceutical companies, but what we’re talking about…is retail sales in city limits…I don’t see the win for Wasilla tonight.” Wall also added an amendment that specified marijuana consumption is solely limited to private property with the explicit consent of the property owner. Concerns over the accepting marijuana industry’s federally illegal cash-only market swayed council member David Wilson to vote in favor of the ban. “Being a schedule 1 ban, it is federally illegal, and banking institutions have not stepped up to accept that money,” Wilson said. “With that, it becomes and issue for the city if we were to tax that...I feel the city shouldn’t take on responsibility of those funds.” DJ Summers can be reached at [email protected]

Kenai finalizes pot regulations, doubles schools setback

KENAI — Prospective marijuana businesses in Kenai will have to observe 1,000-foot setbacks from schools, 500-foot setbacks from other sensitive areas — measured two different ways — a list of zones in which they can establish themselves with permission from the Kenai Planning and Zoning Commission, and two zones in which one business type can operate unpermitted. The Kenai City Council amended and unanimously passed the city’s final marijuana regulations during a four-and-a-half hour meeting Jan. 20. At the final meeting in which they could pass law that would be in effect before the state begins accepting commercial marijuana license applications on Feb. 24, the council edited and passed a set of marijuana regulations originally created by the Kenai Planning and Zoning commission. The regulations mandate minimum distances between marijuana businesses and schools, recreation centers, churches, correctional facilities, or drug abuse treatment centers. In the case of schools, this setback is 1,000 feet, measured from the outer wall of the marijuana business’s building to the property line of the school. The 500-foot setback from recreational centers is measured the same way. The 500-foot setback from churches, correctional facilities, and drug abuse treatment centers is measured from the marijuana business’s outer wall to the nearest pedestrian entrance. Five principals from area schools testified at the meeting to their personal support of the 1,000-foot school setback. The setback, which is double the state-mandated 500-foot school setback, was recommended by Kenai City Attorney Scott Bloom, who said it complied with the federal Drug-Free School Zone Act. Marijuana establishments will also be constrained by zone. Of the four state-licensed establishment types, only one will be allowed without planning and zoning permission, and only in two zones. Establishments licensed to test marijuana for contamination and potency will be allowed in Kenai’s light industrial zone — concentrated near the airport and a spot along the Spur Highway at the northern edge of town — and the heavy industrial zone — located near the Kenai River along Bridge Access Road. Holders of the other license types — for marijuana cultivation, retail, and the manufacture of marijuana products such as concentrates and edibles — will have to seek conditional use permits from the planning and zoning commission before opening in allowed zones. The change allowing unpermitted testing in industrial zones was proposed by council member Bob Molloy and passed unanimously. Motions by council member Terry Bookey to also allow planning and zoning-permitted cultivation and retail establishments in the industrial zones failed, with council members Brian Gabriel, Henry Knackstedt, Tim Navarre, and Kenai Mayor Pat Porter voting against both motions. Bookey made a successful motion to allow retail establishments with planning and zoning permission in the central mixed-use zone, where they had been banned under the planning and zoning commission’s draft regulations. The central mixed-use zone is located around the intersection of Bridge Access Road and the Kenai Spur Highway, and north of the Kenai Spur Highway across from Old Town. A resolution passed by the seven members of the Kenaitze Tribal Council requested that the Kenai City Council exempt Old Town Kenai, defined in the Kenaitze resolution as the area between Broad Street and Petersen Way, from all four commercial marijuana license types. The resolution stated “the Kenaitze Tribe has a firm belief that substance use negatively impacts our traditional ways of living, culture, and values” and referred to the tribe’s large presence in Old Town Kenai through its Dena’ina Wellness Center and Tyotkas Elder Center. Although the zone Bookey proposed opening to commercial marijuana lies near Old Town Kenai, it is mostly separated from it by the Kenai Spur Highway, with only a few highway-fronting lots directly bordering Old Town. Bookey said these would be accessible by vehicle from the highway, but not from Old Town. The change was made with opposing votes by Gabriel and Porter. Bookey also made a successful motion to allow small-scale marijuana growers to operate with conditional use permits in residential and limited commercial lots less than 40,000 square feet, which was opposed by votes from Navarre, Porter, and Gabriel. Bookey, who had recently been traveling out of state, said he had seen marijuana regulations at work in Washington and Oregon, and the experience — along with the finalized set of Alaska regulations expected to be signed officially by Lieutenant Governor Byron Mallot on Jan. 24 — had reassured him that marijuana could be commercialized safely. “With the regulation that’s going to be put forth for cannabis, I’m less scared than I was before — and I wasn’t that scared to begin with — about it getting to unintended users,” Bookey said. Reach Ben Boettger at [email protected]

Wasilla bans marijuana businesses

WASILLA — Southcentral Alaska’s cannabis business just got more concentrated in Anchorage. A big chunk of the Valley, long a byword for marijuana cultivation, is out. The Wasilla city council voted unanimously on Jan. 25 to ban all commercial marijuana within city limits, further narrowing options for Alaska cannabis industry to enter the newly legal market. The ban prohibits testing, processing, cultivation, and retail sales within Wasilla city limits, and also expressly prohibits consumption anywhere except a private residence with the owner’s permission. A state ballot initiative that passed in November 2014 legalized commercial marijuana activities in February 2015, but the ballot also specified that localities could opt out. In the Mat-Su, the city of Palmer has already banned commercial cannabis activities, and the Mat-Su Borough will have a borough-wide ban on its next public ballot. Industry representatives — who had packed the house alongside marijuana opponents — said the ban is yet another step in a slippery slope of local bans. “I want to puke,” said Midnight Greenery chief operating officer Tina Smith, a Wasilla resident. "This is the first step of banning it at the borough. We have the biggest grow in Alaska, right here. Once we start banning it, our industry is done. The more places opt out, the closer it gets to being closed entirely.” Daniel Bracken, a local pastor who led his congregation in speaking in favor of the ban, said the council made the right decision for the majority of Wasilla voters who voted against Ballot Initiative 2 in 2014. “I’m pleased,” said Bracken. “I think they made the right decision in respecting the will of the voters.” ‘I can do it here, or I can do it in Houston.’ Emotions ran high during public comment, both against the ban and in favor of it. Proponents of the ban had a running concern over providing a wholesome and safe environment for children. The congregation of local King’s Chapel Alaska turned up in force to voice concerns. Bracken implored the council to spare Wasilla’s children from an influence he associates with criminality and vice. A mother, formerly homeless, linked her previous poverty to her young intro to the substance. Like alcohol, said Wasilla man Leland Bogess, marijuana could work its way down to children and “infect” middle school and high schools. Youthful mistakes, others said, lead to lifelong regrets. “Is it fair for boys like these to grow up poor, hungry, uneducated, malnourished, and complete the cycle of their parents?” asked Chris LaCroix. Still other mothers, like pregnant Allie Van Eck, excoriated the council for even considered the “unfounded and unbalanced” ordinance that would take away her favorite anti-morning sickness aid, cannabis edibles. Medical users poured out stories of cancer pains and post-traumatic stress disorder cured by cannabis use.  Cannabis industry proponents looked for the nuts and bolts approach to convince the council to vote down the measure. Cannabis industry advocates cited Colorado and Washington to remind Wasilla of the potential tax dollars and the potential tourist trade the marijuana trade could create for the city. Industry hopefuls insisted that regulated business is less a risk than a thriving black market without the security and age requirements of the regulated market. “Why are we possibly saying no to a viable industry here in our home town?” asked Smith, of Wasilla’s Midnight Greenery. “Give us a chance to show you the possibility before you shut us out.” Robert McMasters, who plans to open a 10,000-square foot cultivation facility in Wasilla, said he plans to produce enough cannabis to pay the City of Wasilla $200,000 in excise tax. “I can do that here, or I can do that in Houston.” For a few cannabis advocates, the ban simply amounted to a denial of what they see as an Alaskan right. “I don’t agree with our voted-upon rights being stripped away because one person doesn’t agree with another person’s personal decision,” said Chris Butters. ‘Not in my town.’ Council chose, in the end, to keep to what they said was their city’s will, not the state’s. The council passed the vote unanimously. Mayor Bert Cottle, who only votes in the event of a council tie, put the council’s feelings as a matter of the local popular vote. "In November 2014…48 percent of people in Wasilla voted yes, and 52 percent voted no,” Cottle said. “The same people who elected us every year are the one who voted. I guarantee you, if the vote had gone the other way, the discussion would’ve gone the other way.” Council member Stu Graham earned a roomful of hisses when he equated cannabis consumption with the privilege of driving or alcohol consumption, saying alcohol has little social value and implying neither would marijuana. “The citizens of Wasilla said, ‘not in my town,’” said Graham. “And that’s where we need to be.” Deputy mayor Gretchen O’Barr denied earlier comments from cannabis industry representatives that said a highly regulated market would be a more effective deterrent for underage consumption than the current black market. “Just because it’s a legal business doesn’t mean we can necessarily keep it from children,” O’Barr said. “I don’t see how any drug use in general can go down.” Council member Brandon Wall said he sympathized with medical concerns brought up during public comment by medical marijuana users, but said medical usage is not the point. “This isn’t about medical marijuana,” said Wall. “Unfortunately we have a Legislature that’s completely filled with cowards that didn’t want to address medical marijuana when they had the chance. I agree with the notion that there are benefits to medical marijuana you’re not going to get with the big pharmaceutical companies, but what we’re talking about…is retail sales in city limits…I don’t see the win for Wasilla tonight.” Wall also added an amendment that specified marijuana consumption is solely limited to private property with the explicit consent of the property owner. Concerns over the accepting marijuana industry’s federally illegal cash-only market swayed council member David Wilson to vote in favor of the ban. “Being a schedule 1 ban, it is federally illegal, and banking institutions have not stepped up to accept that money,” Wilson said. “With that, it becomes and issue for the city if we were to tax that...I feel the city shouldn’t take on responsibility of those funds.”   DJ Summers can be reached at [email protected]

Anchorage regs would ban pot clubs, pesticides

The Municipality of Anchorage doesn’t exactly trust state regulations, but appears to see the new marijuana industry as a revenue source worth mining. An Anchorage ordinance would ban cannabis clubs and cafes, force retailers to foot the bill for cultivators’ pesticide use, and subject the Anchorage industry to city inspection on top of the required state inspection. Meanwhile, a separate ordinance establishes a retail marijuana sales tax that exceeds the city’s tax cap. The dual licensing ordinance would require Anchorage marijuana businesses to apply for a municipal license as well as a state license. Industry hopefuls say dual licensing is redundant, and along with the sales tax puts undue burden on retail businesses. Industry also fears city inspectors and law enforcement could use their powers to harass retail owners, mirroring concerns brought up during the state Marijuana Control Board rulemaking process.  City officials say they want more involvement with an industry that’s still federally illegal. Officials list “control over industry” in the “pro” column of an early dual licensing discussion paper, and ordinances are geared toward giving the city more control than it would otherwise have if it simply deferred to state regulations. Committee chairman Ernie Hall said the city is still waiting for Lt. Gov. Byron Mallott to approve state regulations on Jan. 24. “We’re still in a kind of never never land,” said committee chairman Ernie Hall. “Until the state regulations come out and the lieutenant governor signs it, we’re still kind of in limbo.” The Anchorage Assembly, however, is expected to vote on the dual licensing ordinance on Jan. 26, leaving only two days for draft revisions. Hall implored the cannabis industry to remember that Assembly process still leaves plenty of room for changes. “I want everybody to understand that this ordinance is being introduced. Don’t panic. There’s a process yet for this,” said Hall. The dual licensing and tax ordinances apply mostly to retail operations.  Municipal attorney Bill Falsey said the city’s intent is to focus on retail marijuana licenses to give Anchorage more control of the industry; much of the cultivation will likely be done elsewhere not subject to the city’s oversight. The ordinance would allow city officials to inspect and levy fines for marijuana business violators — just as in state regulations, which fine violators up to $10,000 — but Falsey said they’ve engineered a staggered fine structure to keep fines smaller for lesser offenses. “Ours will be tailored to different provisions,” said Falsey. “We’re going to have smaller violations with smaller fines, larger violations with larger fines.” Bruce Schulte, the chair of the Marijuana Control Board and ex-officio member of the committee, wondered why the city should have so much enforcement need beyond collecting revenue. “Why wouldn’t we just defer to the state?” asked Schulte. “I’m not sure what value we gain other than money into the city coffers. Or is that the goal?” Falsey said city enforcement should be able to enforce state regulations, as well as its own extra regulations, without having to go through the state board. “As we have municipal code enforcement doing purely municipal things,” said Falsey, “they may stumble on infractions on the licensing and regulatory side. When we have someone in power to do enforcement, they should be fully in power to enforcement.” The state marijuana board already pays half its licensing fees to the locality where the license is held, so the city will charge nothing for the license. The draft ordinance would ban both marijuana clubs and onsite consumption licenses, the latter of which the state specifically allows. Falsey said a ban is only a procedural necessity to bring the issue up when the Assembly meets. “The Assembly has asked that these issues be brought back to it,” Falsey said. “We know these questions are coming back to the assembly one way or the other.” The city already has an indoor smoking ban, but it has workarounds including private smoking clubs. Marijuana club Pot Luck Events has used this comparison frequently in defending its legality as a non-public place where cannabis consumption is permitted. Falsey said the Assembly might want its own ordinances regarding clubs and cafes. The state’s allowance for onsite marijuana consumption was not unanimous in the first place, he said, and the city might differ in opinion. “The onsite consumption and smoking clubs were highly contentious in the state regulatory discussions,” said Falsey. “Alaska is now currently the only jurisdiction anticipating whether or not there are marijuana café. Certainly the more conservative way would be to fall back on the Colorado Washington Oregon approach.” The city infractions mirror some of the state’s licensing requirements, as well as adding others where the city feels the state regulations didn’t address. The city’s hands could reach into other jurisdictions by applying certain rules like a pesticide ban. The ordinance would ban 59 different pesticides for marijuana cultivation, citing Oregon’s recent anti-pesticide provisions. City compliance officers could spot check retailers’ cannabis for pesticides. Since most cultivation will likely be done outside Anchorage, the city sees this as a way to control industry beyond what will likely be a heavily retail-based Anchorage market. Industry agreed with the sentiment, but not with method. The system makes retailers responsible — at $500 dollars a pop — for testing their product for pesticides. The cultivators who used the pesticides, however, would have no responsibility beyond souring business relationships with Anchorage retailers. “Cultivation sends samples, gets it tested,” said Kim Kole, a member of Coalition for Responsible Cannabis Legislation. “Retail has to sit on that product, and send out another sample for the testing facility again? It’s completely redundant and inefficient.” “We want to start the conversation going early,” said Falsey. Apart from fines and possible testing expenses, Anchorage’s marijuana industry will face a stiff tax schedule. The proposed marijuana tax would stick retail marijuana with a 5 percent sales tax, but allow city officials to increase the tax every two years by 2 percent. Conceivably, the tax could rise as far as 12 percent. Localities have already passed their own tax schedules. Fairbanks has passed a 5 percent marijuana sales tax and Bethel a 15 percent tax.    DJ Summers can be reached at [email protected]

The Anchorage Ban on Pot Clubs

City regulators want more control of the state’s marijuana industry than afforded by the Marijuana Control Board regulations. Dual licensing being drafted by the municipality's marijuana taxation and regulation committee would require Anchorage marijuana businesses to apply for a municipal license as well as a state license. Industry hopefuls say the process is redundant, while city officials say they want more control of an industry that’s still federally illegal. The ordinance could possibly outlaw marijuana clubs or cafes in the city, as well as impose additional testing requirements for retailers.  Committee chairman Ernie Hall said the city is still waiting on the finalized state regulations before nailing down the city rules. The Marijuana Control Board finished these in December. Lt. Gov. Byron Mallot is expected to sign them into regulation Jan. 24 after the Department of Law finishes reviewing them. “We’re still in a kind of never never land,” said Hall. “Until the state regulations come out and the lieutenant governor signs it, we’re still kind of in limbo.” The Anchorage Assembly is expected to vote on the ordinance on Jan. 26. “I want everybody to understand that this ordinance is being introduced. Don’t panic. There’s a process yet for this,” said Hall. Municipal attorney Bill Falsey said the city’s intent is to focus on retail marijuana licenses to give Anchorage more control of the industry; much of the cultivation will likely be done elsewhere not subject to the city’s oversight. The ordinance would allow city officials to inspect and levy fines for marijuana business violators – just as in state regulations, which fine violators up to $10,000 – but Falsey said they’ve engineered a staggered fine structure to keep fines light for lighter offenses. “Ours will be tailored to different provisions,” said Falsey. “We’re going to have smaller violations with smaller fines, larger violations with larger fines.” Bruce Schulte, the chair of the Marijuana Control Board and ex officio member of the committee, wondered why the city should have so much control beyond collecting revenue from fines.  “Why wouldn’t we just defer to the state?” asked Schulte. “I’m not sure what value we gain other than money into the city coffers. Or is that the goal?” Falsey said city enforcement should be able to enforce state regulations, as well as their own extra regulations, without having to go through the state board. “As we have municipal code enforcement doing purely municipal things,” said Falsey, “they may stumble on infractions on the licensing and regulatory side. When we have someone in power to do enforcement, they should be fully in power to enforcement.” The draft ordinance would ban both marijuana clubs and onsite consumption licenses, the latter of which the state specifically allows. Falsey said the language is conservative only because the Assembly wanted to discuss the matter. A ban is simply the vehicle to bring the issue up when the Assembly meets, a procedural necessity. “The Assembly has asked that these issues be brought back to it,” Falsey said. “We know these questions are coming back to the assembly one way or the other.” The city already has an indoor smoking ban, but it has workarounds including private smoking clubs, the structure for which existing marijuana clubs already resembles. Falsey said the Assembly might want its own ordinances regarding clubs and cafes. Its take could differ from the state’s, whose allowance for an onsite marijuana consumption provision was not unanimous in the first place. “The onsite consumption and smoking clubs were highly contentious in the state regulatory discussions,” said Falsey. “Alaska is now currently the only jurisdiction anticipating whether or not there are marijuana café. Certainly the more conservative way would be to fall back on the Colorado Washington Oregon approach.” The city’s dual licensing requirement stems, in part, from a desire for local control. The city wants its own enforcement to have authority to penalize marijuana businesses for infractions. This means mirroring some of the state’s licensing requirements in municipal code, as well as adding others where the city feels the state regulations are too lax. “In looking at this, there seemed to be a lot of synergies and efficiencies to be gained mirroring aspects of the state’s regulations already in municipal code,” said Falsey. Under the draft ordinance, city compliance officers could penalize marijuana  business for state issues like security, but also for new infractions. The ordinance proposes a ban on 59 different pesticides in marijuana cultivation. City compliance officers could spot check retailers’ producst to see if pesticides are present. Hopeful marijuana retailers agreed with the sentiment, but not with method. The system makes retailers responsible – at $500 dollars a pop – for a cultivator’s use of forbidden pesticides, and burdens the unwitting retailer with a stock backlog. “Cultivation sends samples, gets it tested,” said Kim Kole, a member of Coalition for Responsible Cannabis Legislation. “Retail has to sit on that product, and send out another sample for the testing facility again? It’s completely redundant and inefficient.” Falsey admitted the final ordinance would have to account for industry advice and said, “We want to start the conversation going early.” The state marijuana board already pays out a portion of its licensing fees to the locality where the license is held, so the municipal license will come at no charge. “The state ballot language requires that half those license fees come to us. Because we are due to receive 50 percent,” said Falsey, “our proposal in this ordinance is to charge nothing.” DJ Summers can be reached at [email protected]

Space is scarce for Anchorage marijuana business

The marijuana industry will have a tough time finding willing landlords for their would-be dispensaries and cultivation facilities, and the Anchorage Assembly may tighten restrictions even further. A land crunch already plagues the Anchorage housing market, and the marijuana industry worries it will whittle storefront options as well. Anchorage is proposing three separate ordinances that would create an additional municipal licensing requirement, a sales tax plan, and a special land use requirement. The land use requirement, industry fears, will hobble the industry’s startup by narrowing already elusive leasing opportunities. The Planning and Zoning Commission recommended a final draft of the land use ordinance to the Assembly on Jan. 4. The Assembly says it hopes to have the ordinances finalized before Feb. 24, when the Marijuana Control Board will accept the first cannabis business license applications. All Alaska cannabis businesses must follow regulations and licensing requirements the Marijuana Control Board finalized in December 2015. Ballot Measure 2, which passed in November 2014 and legalized recreational marijuana and marijuana businesses in February 2015, allows municipalities to craft their own rules, even to the point of banning aspects of marijuana businesses entirely. Industry stakeholders say Anchorage’s proposals are an effective, if not an outright, ban on marijuana business. “It legitimately feels as though they’re making all these ordinances specifically to make the marijuana industry fail,” said Bruce Schulte, chairman of the Marijuana Control Board and hopeful marijuana retailer. “It’s starting to look like death by a thousand cuts. Ultimately, they open themselves up to a legal challenge for making it unreasonably impracticable.” Marijuana business attorney Jana Weltzin said she would be willing to file such a suit if the Assembly approves certain restrictions. The municipality says it has no dark designs to choke the marijuana industry, but is only trying to regulate mindfully. Concerns over federal reprisal, the municipality says, outweigh certain allowances the state Marijuana Control Board made for smaller localities, such as a 500-foot buffer zone for schools. “There’s no hostility to the marijuana industry,” said municipal attorney Bill Falsey. “Our aim has always been to respect the wishes of the voters while coming up with sensible regulations.” Federal Drug Free Zone reemerges After backlash from industry figures during a December meeting, the Planning and Zoning Commission opened up more opportunities than the original draft, but also added additional restrictions for the Anchorage Assembly to vote on. Broadly speaking, the municipality wants to group cultivation and manufacturing facilities in industrial zones, and retail businesses in B-3 zones. The commission made some concessions to industry concerns of an earlier draft. In the new draft ordinance, marijuana bakeries will be able to maintain retail storefronts instead of being locked into industrial zones. The new draft also allows cultivation facilities in B-3 zones as long as they’re co-located with retail shops. This would allow for vertically integrated brewpub-style cannabis businesses. However, the commission also renews the federal Drug Free Zone standard. According to state regulations, schools, playgrounds, youth centers, religious assemblies, and correctional centers all maintain a 500-foot buffer zone from marijuana businesses. In the proposed Anchorage ordinance, schools, playgrounds, and public housing facilities require 1,000 feet from marijuana businesses, the federal standard. The Marijuana Control Board kept a 500-foot school buffer zone in part to recognize Alaska’s unique cityscapes. Smaller towns are often too closely-knit for any retail-zoned businesses to be more than 500 feet from schools or other trigger areas. Localities in Southeast Alaska even requested a 200-foot buffer zone from the board, fearing they could zone out marijuana businesses entirely. Falsey said the municipality still has concerns over the what’s known as the Cole Memo, which outlines the federal government’s marijuana enforcement priorities in states where it’s been legalized. Keeping it out of children’s hands is first and foremost. Falsey said the municipality believes Anchorage has enough space to be more cautious of federal scrutiny. “We’ve taken a hard look at the separation requirements,” said Falsey. “The Cole Memo indicates that federal enforcement may actively challenge local authorities…it’s not clear to us why Anchorage would need the reduced 500 foot school buffer zone that say, Ketchikan, would need.” Ultimately, this buffer zone concentrates marijuana businesses to a few areas. Midtown/Spenard has the most available retail marijuana-zoned space by far, with large pockets of pot-friendly zoning in South Anchorage. Industrial space is largely concentrated in South Anchorage. Downtown areas will be largely off limits unless the Assembly opens up B-2 zoning, which makes up a large share of downtown. Commissioners say the intent is to start low and go slow. It’s easier to loosen regulations than tighten them after the industry has established itself. “I think it is over restrictive,” said Tyler Robinson, chairman of the Planning and Zoning Commission. “The municipality’s policy, from what I can tell, is to be over restrictive out of the gate. Then if you need to open it up, then you open it up.” Willing landlords Businesses have had trouble finding space to occupy, caught between reticent landlords, zoning restrictions, and federal laws. Commercial real estate brokers said they’ve had plenty of marijuana businesses looking for buildings, but had to turn them down. Either the available buildings violate buffer zones, or they’re financed by banks that cannot do business with the marijuana industry. “The way they’ve made the rules, it’s impossible to go anywhere,” said Chad Graham, a commercial real estate expert working with Anchorage company Keller Williams. Graham said he control 45 percent of Anchorage’s industrial rentals, but virtually none is compliant with zoning restrictions. “I don’t have anything for (marijuana businesses),” said Graham. “You’ve got little churches or school next to warehouses everywhere.” According to Graham, industrial buildings in Anchorage have a 98 percent occupancy rate; retail space is looser. Much of the available space is still bank-financed; federally chartered banks refuse to deal in marijuana business, which is still illegal under federal law. Some landlords have offered some buildings, but at triple the going rate for square footage in order to mitigate a perceived, and well-founded, risk factor. In the Lower 48, the federal government has used racketeering laws to prosecute marijuana-related businesses, including landowners and accounting services. “The few that do open up that are lucky enough to find a spot that’s outside the buffer zones and not bank owned and has willing landlords will probably make a killing,” said Graham. “They’re going to have the whole market to themselves.” Other commercial real estate companies and representatives in Anchorage say it’s too early in the industry’s rollout to have much experience and so have no official position but that their landlords may be reticent. “The owners are very conservative in a lot of ways,” said Linda Boggs, an associate broker with Carr-Gottstein, one of the largest commercial real estate brokerage companies in the city. “From the nature of it, that can turn people off. We haven’t really been forced to take a position on it yet.” Marc Dunne, an associate broker with Jack White Real Estate, said real estate companies like Carr-Gottstein are conservative enough to make renting from them a moot choice. “There’s a lot of landlords like them,” said Dunne. “They’re patriarchs, they’re old school. Super visible. They’ll find other tenants with less brain damage associated with them.” Alaska commercial real estate listings turned up 27 available retail spaces between 1,500 square feet and 6,000 square feet, and 19 industrial spaces between 1,500 square feet and 10,000 square feet, not taking buffer zones and bank held buildings into account. Dunne said taking buffers and bank notes into account could whittle the number down to less than five properties for either retail or industrial space.

Retail legalization of marijuana will become reality in 2016

Rules governing the recreational cannabis industry were mostly settled at the state level in 2015, but 2016 will be Alaska marijuana’s true birth. Regulators will issue business licenses; cannabis businesspeople will open doors amid both known and yet-to-be-decided restrictions, and the state will punish, forgive, or ignore a fistful of gray market marijuana operations. In November 2014, voters approved a ballot measure to legalize recreational cannabis for adults over 21 and to create business license types for cultivation, manufacturing, testing, and retail. The Alaska Marijuana Control Board finalized regulations in November, and will open the books to business license applications on Feb. 24, 2016. Cannabis entrepreneurs exist in a state with limited capital, and Feb. 24 will bring creative funding opportunities. Banks will not fund marijuana businesses so private loans are vital. State regulations require investors to meet Permanent Fund Dividend residency requirements: a physical presence in Alaska for a calendar year. This effectively bars any above-board Outside investment in the Alaska cannabis industry for the first year. With expensive startup costs, Alaska’s marijuana industry could either begin underfunded or with a dose of unsavory financial practices to skirt investment regulations. Conversely, the business could turn out a surprising number of private investors from the Last Frontier. Cannabis consumers may be excited about store-bought bud in the coming year, but regulations could push back the first marijuana sale until late summer at the earliest. Licenses won’t be issued until May 24 at the soonest. Regulations require each plant to be tracked from seed to sale, meaning a retail store opening on May 24 wouldn’t have access to legally grown, legally tracked, and legally tested product; growers will have to start their process on May 24 as well. With cannabis’ roughly three-month growing cycle, retail outlets are more likely to have legal product in August or September. Though state regulations are complete, local regulations are still coming out. Some towns such as Ketchikan, Soldotna, and Palmer have already banned marijuana cultivation or sale in their localities. The Anchorage Assembly is currently waiting for zoning recommendations from its Planning and Zoning Commission, due Jan. 4. The assembly requires both zoning restrictions and a conditional use permit for marijuana businesses in additional to a state-issued permit, and is expected to have its own regulations completed by the Feb. 24 license application start. So far the proposed ordinances have been roundly condemned by the industry as overly restrictive. Some business may not make the cut into 2016 at all, depending on a string of trials and potential enforcement actions. In January 2016, four marijuana business owners will go to trial for selling or delivering marijuana without a license. Michael Crites, owner and operators of Absolutely Chronic Delivery Company, Charlene Egbe, owner and operator of the Alaska Cannabis Club, and Larry Stamper and Rocky Burns, co-owners and operators of Discreet Deliveries, were all charged with multiple felonies in October 2015. Each has secured legal counsel except Rocky Burns, who after bouncing between several Alaska attorneys has decided to represent himself in court. Marijuana clubs will also present a legal issue to the State of Alaska in 2016. Pot Luck Events in Anchorage and The Higher Calling Club in Fairbanks currently exist in a hazy gray market; they sell no marijuana, but the state claims their clubs amount to public consumption of marijuana, which is forbidden. The state has not taken any action to shut down either club. Soldotna club Green Rush Events closed in December. Owner Josh Bird claimed he halted operations due to increasing fears of law enforcement from local authorities.

Marijuana industry criticizes city zoning

State cannabis regulations might be finalized, but Anchorage rules are just heating up. The Anchorage Planning and Zoning Commission, which passes zoning recommendations to the Anchorage Assembly, wants to tone down a set of municipal land use rules that make state regulations look laidback in comparison. The Alaska Marijuana Control Board finalized state regulations Dec. 1, but Ballot 2 specified local controls; cannabis businesses in the Anchorage municipality will have to go through a municipal licensing process as well, including an additional operator’s license and a conditional use permit. Proposed zoning rules expand the buffer zones cannabis businesses must follow and assign several license types to scarce and expensive industrial zoning, as well as require community outreach plans for businesses. The commission has a deadline recommend a finalized package to the Anchorage Assembly by Jan. 4, 2016. It plans to make several changes before that date, as commissioners largely agreed with various industry criticisms. Fresh off the state package, Alaska Marijuana Control Board chairman Bruce Schulte told the commission the proposed plan treats marijuana businesses unfairly.  “The proposed zoning regulations could best be defined as hostile to the industry,” Schulte told the commission. “If it is the intent of the municipality is to ban all things marijuana in Anchorage, fine, let’s do that. Let’s not use the zoning process as a backhanded way of doing that.” Erika McConnell, the zoning and planning manager for the municipality, said the Assembly’s staff would rather err on the side of too restrictive than too relaxed. “We have tried to take a conservative approach,” McConnell said. “We’ve taken a conservative approach to see how things go, and then relax the standards later when we see there’s no problem.” Schulte was one of handful of industry stakeholders present who’d been heavily involved with state regulations, either as public commentators or as public officials, who showed up to argue similar points they’d brought up at Marijuana Control Board meetings. Overburdening the industry, some said, could bring in an industry-led lawsuit against Anchorage. “Ballot Measure 2 delegated specific rights to local government but it also stipulated that rules, taxes, and fees could not be so burdensome as to make the lawful industry unfeasible,” said Kim Kole of the Coalition for Responsible Cannabis Legislation. “That could very well leave the municipality of Anchorage open to legal challenge.”   500 feet from parks According to ordinance, business would not be welcome within 500 feet of Anchorage’s 223 parks, encompassing over 10,000 acres of municipal land in total. State rules only order marijuana businesses be kept 500 feet from child-centric establishments, halving the federal Drug Free Zone standard.    “You all know how many parks there are in town,” said Kole. “Once you put 500 feet around all of these additional municipal locations, businesses will essentially be zoned out of existence.” Marijuana business attorney Jana Weltzin said Anchorage’s limited land doesn’t allow for such restrictions as it might in other states like expansive Arizona, where Weltzin formerly represented marijuana business interests. “You should look at the state’s buffer zone list and just adopt those,” said Weltzin. “The topography of our land and the way we’re set up just doesn’t allow for us to sprawl out like other cities.” Commissioners broadly agreed with industry’s complaints. “I don’t feel that the separation from protected land use needs to be any more onerous than the state has them,” said commission vice-chair Anthony Cange.    Industrial vs. commercial zoning The proposal consigns cultivators, testing facilities, and manufacturers to industrial zones, which are both expensive and scarce in Anchorage’s limited land. Retail businesses would only be allowed in commercial zones. Anchorage has a scarcity of industrial property. McConnell said the rationale behind disallowing commercial marijuana sales in industrial land was to save as much of it at possible. Limited cultivators, who by state law are allowed up to 500 square feet of marijuana grow space, fumed at the proposal to stay in industrial zoning rather than commercial or residential.  “You tell me where there’s a 500 square foot industrial space in Anchorage,” said Theresa Collins, owner of Anchorage marijuana club Pot Luck Events. The Marijuana Control Board meant the limited cultivator license to allow for low-scale production; $1,000 for a garage-sized grow instead of the standard, unlimited $5,000 cultivator license. Offering cheaper limited grow operations, the theory goes, will draw the estimated 5,000 Anchorage area small scale black market growers out of the darkness and into the regulated industry. Warehouse space is simply uneconomical for the small growers. Schulte even advocated for a residential allowance for limited cultivators, though admitted the idea is “a tough sell.” The state board chair was uncomfortable with the concept of warehouse requirements for marijuana farmers entirely. “There’s a finite amount of warehouse space suitable for cultivators,” said Schulte. “It almost guarantees a failure of this industry in Anchorage.” Furthermore, the industrial zoning prevents a horizontally integrated business model. Marijuana edibles manufacturers would also be relegated to industrial zones, which thwarts a hard-fought state regulation allowing bakeries to experiment with cannabis confectionary. Retail marijuana businesses may only take place in commercial zones. A cannabis entrepreneur would not be able to open brewpub-style establishments that blend cultivation and retail, nor could they open confectionary establishments that blend retail and manufacturing. Commissioners appeared to agree with industry, questioning the rationale behind zoning restrictions. “I find it hard to wrap my head around separate locations,” said Cange. “I don’t see why retail and manufacturing can’t be co-located.” “Admittedly, we have a problem with industrial land,” said commissioner Jon Spring. “I don’t think allowing commercial marijuana sale in I-1 (industrial zoning) is going to make a big difference.”   DJ Summers can be reached at [email protected] 

Marijuana board reverses itself on residency

In an emergency meeting, the Marijuana Control Board voted unanimously on Dec. 1 to reinstate a stricter residency requirement for marijuana business licensees, following Permanent Fund Dividend rules instead of voter registration rules. The board also tried to loosen rules to allow more access to Outside money, but public process rules will hold that discussion until the board’s next meeting in February 2016. The regulatory package will now move to Lt. Gov. Byron Mallot for approval pending a review by the Department of Law to make sure the regulations follow statute. “This amendment essentially changes the residency requirements back to what were in the draft regulations,” board chairman Bruce Schulte said. This requirement plus the definitions of financial investment satisfies the demands of some in the local cannabis industry and the board’s legal advisers, who respectively fear “Big Marijuana” investors and federal money laundering charges, but frightens others about their prospects in a small market with limited capital. “I’m very disappointed in the inability to seek Outside investments,” said Tina Smith, chief operations officer for Midnight Greenery. “This is going to severely limit the number of licensees (applications) in February. It’s required that you already have a very significant amount of capital to even submit a license that has a chance of opening.” The adopted regulations require a marijuana licensee to be an Alaska resident by Permanent Fund Dividend definitions. Under these rules, non-Alaskans must maintain a physical presence and Alaska address for a calendar year and not maintain residency in any other state. Because of financial regulations, this effectively bars all transparent Outside financial contributions in the Alaska marijuana industry. According to regulations, no one can hold “direct or indirect” financial stake in an Alaska marijuana business without being listed as a licensee. The board’s action follows a last minute amendment at its Nov. 20 meeting that opened the Alaska cannabis market to more Outside presence than stakeholders were comfortable with, and overburdened the board’s small staff. Alaskans declared it the death knell for small Alaska marijuana businesses, and board members regretted the hasty amendment as too slack. That amendment loosened residency requirements to voter registration standards, which only require an Alaska address and a 30-day wait. Outside investors could theoretically become residents without leaving their current state, and board staff would have to verify that licensees have filled all the requirements. “In an effort to meet some of the suggested changes,” Schulte said, “the board may have inadvertently put staff in a position where they wouldn’t be able to execute the regulations.” After the board returned to PFD rules on Dec. 1, board member Brandon Emmett proposed an amendment that would “expand the pool of investment resources” and allow 12.5 percent Outside financial stake or ownership in Alaska marijuana businesses. However, the board had not requested public comment for this change or announced its presence on the meeting agenda. Assistant Attorney General Harriet Milks said the board could not consider the motion without the proper public input, and Emmett withdrew the motion. “I think the most important action today is to sign this and get it off to the lieutenant governor,” said board member Marc Springer. “We can talk about this in February.” The combination of residency requirements and total investment prohibitions are a step in the wrong direction, according to Outside industry figures, who share the same concerns as Smith. “That’s going to be a real problem,” said Kris Krane, former executive director for the National Organization for the Reform of Marijuana Law. “I’m sympathetic to the idea they don’t want outsiders dominating the state’s industry. But these are really expensive businesses to set up. You’d be hard-pressed to find a medium-scale cultivation operation for less than a million bucks. Some of the bigger ones are three, four million. There’s just not that much money in Alaska. How are you going to fund all that?” In other states, marijuana policy makers have bounced back and forth between different residency requirements, trying to fine tune the balance between locals who want to roadblock out of state competitors while still allowing a path for investment dollars. In Oregon, a bipartisan group of state representatives has publicly opposed the two-year residency requirement and 51 percent Oregon ownership regulation proposed in that state. “Our own thinking on these issues has evolved over time,” wrote a group of legislators to the Oregon Liquor Control Commission, which oversees marijuana regulation. “We now believe that broad residency requirements and significant limits on outside investment could do more harm than good.” Vincent Sliwoski, an attorney with Harris Moure, a Seattle firm specializing in corporate law including regulated substances, said strict residency requirements fail to keep outsiders outside. Well-financed investors find legal loopholes. “All residency requirements do is make people find ways around them, then you get people like me,” said Sliwoski. “They’re basically creating a bunch of hoops to jump though. This sort of trade protectionist policy isn’t helpful.” DJ Summers can be reached at [email protected]

Marijuana board finalizes industry regulations

The Alaska Marijuana Control Board accepted its final draft of the regulations that will govern the new industry, legalized by Ballot Measure 2 in November 2014. The new cannabis industry regulations include a concession to marijuana clubs that still leaves a hazy legal area to be sorted out later, maintaining a ban on Outside investment while loosening the residency requirement, revisions to concentration limits, allowances for retail operations and limited cultivator licenses, and clarifications to packaging requirements. The final draft of cannabis industry regulations do not satisfy every public comment, nor do they zip closed every potential legal challenge or hiccup, but Marijuana Control Board chairman Bruce Schulte believes their completion alone is a success, having learned from the mistakes of Lower 48 state regulations. “We’re the fourth state to do this,” said Schulte. “It’s not perfect, but I hope and think it’s as good or better than Colorado or Washington. Even if we’re better than the two who preceded us in regulation, that’s a win.” Lt. Gov. Byron Mallot will have the opportunity to adopt the regulations on Nov. 24. Voter residency adopted The board will hold an extra meeting on Dec. 1 to reconsider a last minute amendment that loosened the definition of residency. The amendment sent some industry members into panic and each of the board members who supported it into regret. “There wasn’t enough time to consider the contents,” said Schulte days after. “What was in the draft might be better than what we passed.” Schulte said the board needs to reexamine the issue of Outside investment for a better fix; if they can’t find one they like now, he said, they need to keep trying until a more creative solution appears. “If you don’t like the solutions you have in front of you, you need to keep looking until you find an angle that gives you better options,” he said. After banning Outside investment in the first half of the Nov. 20 meeting, the board broke open the dam for Outside money at the end of the day. The amendment meant Outside investors are welcome in the Alaska cannabis industry as long as they fulfill the residency requirements of Alaska voter registration and cancel whatever voter registration they hold elsewhere. By voting registration rules, residency only requires an Alaska address, and can be done electronically. Theoretically, a Californian investor could become an Alaskan under voting registration requirements by renting an Anchorage apartment and canceling his San Francisco ballot card. The board voted in favor of the amendment 3-2, with Loren Jones and Peter Mylnarik voting against. Marc Springer, Brandon Emmett, and Schulte voted in favor, but afterward said they mistakenly overshot their goal to allow some Outside financing options while still favoring Alaskans. Some Alaska business hopefuls reacted violently to the amendment, fearing industry domination from Outsiders with capital that dwarfs their own. “Alaskans had value, now they don’t,” said industry attorney Jana Weltzin after the amendment. “You know what they need you for? Employees. You’re all just employees now.” Springer had introduced the amendment following hours of debate limiting Outsider dollars, which industry representative board members Schulte and Emmett had stubbornly resisted. “We’ve systematically removed every source of investment for this industry,” said Schulte. “We’re quickly getting to the point there’s only 15 people who will be able to get into this industry.” Previous regulations specified that licensees must follow Permanent Fund residency rules, which require a full calendar year to establish eligibility as compared to voter registration that requires only 30 days and an Alaska address. Board members opposing the new rule said it would open floodgates to the exact Outside influx the board had spent months trying to avoid. “I really have a problem tying residency to voter registration,” said board member Loren Jones. “I think we’ll end up with an awful lot of owners that aren’t residents. I think that’s what we’re trying to avoid and what we’ve debated about.” Emmett said there would be no other way to turn on the money faucet. “Unless someone is on the license, and within the state, they can have no interest in the business,” said Emmett. “Unless we can go back and change that, we need to support this amendment.” Board director Cynthia Franklin bucked at the idea, saying the board does not have a robust enough staff to verify whether all the applicants have in fact cancelled all other voter registration. Without some Lower 48 money, however, industry stakeholders said it would be a moot point. “I think we’re headed to the point where you’re not going to have any applications to review,” Schulte said.  Marijuana bars in, marijuana clubs not quite out Over 500 pages of public commentary flooded the board by the Nov. 11 deadline, the bulk of it concerned with the same handful of controversial licensing requirements. Marijuana clubs, the hottest topic by far according to board members, will continue to be a gray legal area even if they lose ground to the marijuana retail onsite consumption allowance introduced by Bruce Schulte, which paves the way for a marijuana café-like establishment. Schulte’s amendment struck the previous draft’s prohibition on clubs, acknowledging the board’s inability to prohibit a nonexistent license type, and created a new addition. Subject to approval by the board, marijuana retail establishments can now request “onsite consumption allowances” when applying for a license. Unlike clubs, where paying members bring their own cannabis, retail stores would sell product to the onsite consumers. Retail stores will also now be allowed to sell non-marijuana consumable products such as snacks and beverages and refrigerated products. Though the new definition allows retail onsite consumption, it still doesn’t clear up the legality of existing clubs. Schulte clarified he is not endorsing clubs, simply acknowledging the board’s total lack of authority to prohibit or allow them. “The intent here is to solve a legal ambiguity,” Schulte said. “If we can’t regulate them, we can’t prohibit them.” Pot clubs, which do not sell cannabis but allow on-premise consumption and sharing, walk an unmarked path. The board, industry, and many local governments have openly acknowledged they want some kind of cannabis consumption venue, but Ballot Measure 2 created no such license. The Legislature would have to create the license type in order for the board to regulate clubs, and Schulte doubts that would happen. Creating a license subset in regulation, theoretically, takes pressure off a Legislature beset with a budgetary crisis, AK LNG Project plans, and little stomach to wade back into Ballot Measure 2 territory it established the board to oversee. The board prohibited marijuana clubs in the first draft regulation package to public outcry from industry and legal voices, including marijuana business attorney Weltzin, who directly challenged the Department of Law’s prohibition. Regardless of the new license allowance for onsite consumption, the currently operating clubs will continue. Theresa Collins, owner of Anchorage’s Pot Luck Events marijuana club, said she has no plans to shut her doors. Several arguments will need to be addressed as a result, depending on whether the board chooses to exercise any enforcement against Collins’ establishment or Soldotna’s Green Rush Events. Franklin hinted at some main concerns with marijuana clubs two nights prior, addressing the Alaska Municipal League regarding cannabis regulation. She supports a licensed consumption venue, she said, but not clubs in their current form. Franklin said leaders should discourage the black market, which she claims marijuana clubs enable by virtue of allowing unregulated consumption. If marijuana club users aren’t getting their product from retailers, she said, they could be buying dangerous and untested product from criminal producers. “There’s a danger that marijuana clubs will serve as a great place for black market dealers to move their product,” Franklin told the crowd of municipal officials. The untested product, she said, could cause health concerns. “What happens if there’s marijuana tainted with E. coli, and everybody at the club is passing it around and smokes it?” Franklin also makes an economic argument against clubs, in that they will unfairly compete with licensed establishments. Alcohol regulations prohibit bottle clubs, where people bring their own beverages, on the grounds that they will siphon business from licensed bars that must jump regulatory hoops. “A bigger question for you as local governments, is the effect that clubs have on legal businesses,” Franklin told the league. “The reason bottle clubs are prohibited is so that they can’t compete with licensed liquor establishments.” Clubs will eventually force a decision about what a “public place” entails, which forms the Department of Law’s core argument against clubs. Board member Loren Jones, the only dissenting vote to removing the club prohibition, worried about the same thing even in relation to the new retail consumption allowance. “A retail store is a public place,” said Jones. “It is a restricted public place but it is still a public place.” In response to marijuana-themed events in the summer, the board made an emergency definition of “public place” to cut down on open air smoking. Staff amended the definition to exclude retail establishments granted an onsite consumption provision. “’Public place’ means a place to which the public has access and includes, but is not limited to, streets, highways, sidewalks, alleys, transportation facilities, parking areas, convention centers, sports arenas, schools, places of business or amusement, shopping centers, malls, parks, playgrounds, prisons, and other portions of apartment houses and hotels not constituting rooms or apartments designed for actual residence such as hallways, lobbies, and doorways,” the regulation reads. Franklin and the Department of Law believe this applies to clubs as well, though clubs charge membership fees and only admit adults over the age of 21. Franklin said movie theaters are public places despite charging an entry fee.  “You’re not a member of the movie club when you buy a ticket,” Franklin said. “That’s still a public place.” As of yet, this interpretation has not been challenged or taken to an Alaska court for specific rulings resultant from any prosecutions, or any challenges from other establishments who charge membership or entry fees who otherwise might not be considered a “public place,” such as bars, strip clubs, cigar bars, or private social clubs. No charges have been made against pot club owners or members for public consumption. Club owner Charlene Egbe was indicted for four felonies for operating Alaska Cannabis Club, but each charge was for sale of marijuana, not for allowing consumption in a public place. Public consumption only carries a $100 fine. Franklin said an “enthusiastic prosecutor” could potentially assign all a marijuana club’s consumption onto the owner. Collins said she isn’t afraid of prosecution, because she’s perfectly within the confines of the law and doesn’t fill the definition of a public place. “You don’t pay a membership fee and sign a membership contract at a movie theater,” Collins said.  500 feet buffer remains unchanged The board failed to revise buffer limits for marijuana operations after a proposal to allow them within 200 feet of churches, which would have mirrored alcohol regulation’s church buffer. Regulations maintain a 500 buffer zone from children’s centers, schools, and churches. Schulte said he was responding to public concern. “My amendment is really in response to the communities where we have gotten specific feedback,” said Schulte. Emmett had even proposed Schulte’s original amendment down from 200 feet to 100 feet, an idea he got from the Fairbanks-North Star Borough Assembly itself, but the motion failed 2-3, with Schulte and Emmett in favor. Boroughs and local governments including the Fairbanks-North Star Borough spoke against the 500 foot buffer zone, which is only half the federal Drug Free Zone standard of 1,000 feet. Alaska’s small towns and villages, particularly Southeast Alaska communities with heavy tourism economies, will have difficulty finding child-free space in any of the areas zoned for business. In narrow Ketchikan, churches and daycare centers dot the downtown area on street level and second floors. Representatives from Sitka and other Southeast communities, cruise-based tourist destinations, expressed similar concerns. In Fairbanks, there are worries that the buffer zone will kill the tourism that comes through Fairbanks’ downtown area, which has cramped conditions similar to Southeast Alaska communities. Assistant attorney general Harriet Milks claimed the board’s “first loyalty” should be to the statute, not to public comment. “Anyone can send in 500 comments,” said Milks, “that doesn’t mean the issue is 50 times more important to the board.”  Broker licenses eliminated The board removed the entire subset of a brokerage license with an amendment introduced by member Peter Mylnarik. Brokerage licenses establish go-between options for cultivators and retailers or manufacturers. Under previous drafts, limited cultivators were required to sell only through brokers, causing public backlash from small growers who say the brokerage fees would kill their entire business. Mylnarik said he was aiming for consistency, as the board acknowledged for months that it cannot create a new license type not specified by Ballot 2. Earlier language had specified that broker licenses are a “subset.” Mylnarik argued that they are in fact a totally separate license, as they take no part in any of the activities associated with marijuana cultivation. Potency limits and retail particulars The board also reversed several contentious regulations it had made in earlier drafts regarding what retailers can and can’t do. To an audible cheer from the audience of potential retailers, the board voted 3-2 to allow marijuana licenses to sell branded merchandise. “I think it’s necessary for businesses to be able to brand themselves,” said Emmett. “If we ultimately want to have responsible actors, this incentivizes them to do so.” Schulte also clarified the packaging requirements for retail stores, creating marijuana’s version of a liquor store’s brown paper bag. Marijuana packages may be transparent in retail stores, but all product leaving the store must be in opaque, child-proof packaging. Previous drafts had a complicated array of cultivator requirements for packaging. Childproofing edibles packages was a main concern, but Schulte said children are only the responsibility of their parents, not marijuana licensees. “Ultimately, when someone’s in a home with children, they have to take responsibility for that,” he said. Potency limits also got a rewrite. Previously, marijuana extracts were capped at 76 percent, mirroring Alaska’s 151 proof alcohol limit. Schulte said the number doesn’t translate to alcohol, and the board revised marijuana concentrate to have no upward limit. DJ Summers can be reached [email protected]

Final regs allow Outside investment, marijuana cafes

The Alaska Marijuana Control Board accepted its final draft of the regulations that will govern the new industry, legalized by Ballot Measure 2 in November 2014. The new cannabis industry regulations include a concession to marijuana clubs that still leaves a hazy legal area to be challenged later, a ban on Outside investment, revisions to concentration limits, allowances for retail operations and limited cultivator licenses, and clarifications to packaging requirements. The final draft of cannabis industry regulations do not satisfy every public comment, nor do they zip closed every potential legal challenge or hiccup, but Marijuana Control Board chairman Bruce Schulte believes their completion alone is a success, having learned from the mistakes of Lower 48 state regulations.  “We’re the fourth state to do this,” said Schulte. “It’s not perfect, but I hope and think it’s as good or better than Colorado or Washington. Even if we’re better than the two who preceded us in regulation, that’s a win.” Lt. Gov. Byron Mallot will have the opportunity to adopt the regulations on Nov. 24.   Outside investors welcome if registered to vote in Alaska After banning Outside investment in the first half of the day, the board broke open the dam for Outside money at the end of the day with a last minute amendment. Outside investors are welcome in the Alaska cannabis industry as long as they fulfill the residency requirements of Alaska voter registration and cancel whatever voter registration they hold elsewhere. By voting registration rules, residency only requires an Alaska address, and can be done electronically. Theoretically, a Californian investor could become an Alaskan under voting registration requirements by renting an Anchorage apartment and canceling his San Francisco ballot card. Springer introduced the motion following hours of debate limiting Outsider dollars, which industry representative board members Schulte and Emmett had stubbornly resisted. “We’ve systematically removed every source of investment for this industry,” said Schulte. “We’re quickly getting to the point there’s only 15 people who will be able to get into this industry.” Previous regulations specified that licensees must follow Permanent Fund residency rules, which are much more stringent than voter registration. Board members opposing the new rule said it would open floodgates to the exact Outside influx the board had spent months trying to avoid. “I really have a problem tying residency to voter registration,” said board member Loren Jones. “I think we’ll end up with an awful lot of owners that aren’t residents. I think that’s what we’re trying to avoid and what we’ve debated about.” Emmett said there would be no other way to open up the money in the state. “Unless someone is on the license, and within the state, they can have no interest in the business,” said member Brandon Emmett. “Unless we can go back and change that, we need to support this amendment.” Board director Cynthia Franklin bucked at the idea, saying the board does not have a robust enough staff to verify whether all the applicants have in fact cancelled all other voter registration. “I think we’re headed to the point where you’re not going to have any applications to review,” Schulte said in response Alaskans who had lobbied to keep Outside money Outside are not enthused, fearing a takeover of well-financed Lower 48ers. “Out of state newly transplanted Alaskans will now own a majority of cannabis businesses in Alaska,” said Jessica Jansen, co-founder of CannaFarm Co-op."The board gave away the cannabis industry." Earlier draft proposals had tried to strike a balance between outright banning Outside investment, which could hamper the fledgling industry, and unlimited Outside investment, which could force Alaskans out of the industry by sheer volume of influx dollars. One such amendment had been introduced earlier and would’ve allowed up to 25 percent investment in Alaska marijuana businesses, but was voted down. The intent behind the amendment was to favor Alaskans in the industry, which stakeholders say is beyond a moot point with the new rule. “Alaskans had value, now they don’t,” said industry attorney Jana Weltzin. “You know what they need you for? Employees. You’re all just employees now.” The board voted in favor of the measure 3-2, with Jones and Mylnarik voting against. Even though Springer, Schulte, and Emmett supported the measure, after the meeting each expressed a note of regret. They had been trying to find a middle ground but perhaps overshot the mark, they said. “I really would have preferred to see something in the middle,” said Schulte. "I sort of agree with the effort to keep it controlled, so I'm concerned this could've gone too far."   Marijuana bars in, marijuana clubs not quite out Over 500 pages of public commentary flooded the board by the Nov. 11 deadline, the bulk of it concerned with the same handful of controversial licensing requirements. Marijuana clubs, the hottest topic by far according to board members, will continue to be a gray legal area even if they lose ground to the marijuana retail onsite consumption allowance introduced by Bruce Schulte, which paves the way for a marijuana café-like establishment. Schulte’s amendment struck the previous draft’s prohibition on clubs, acknowledging the board’s inability to prohibit a nonexistent license type, and created a new addition. Subject to approval by the board, marijuana retail establishments can now request “onsite consumption allowances” when applying for a license. Unlike clubs, where paying members bring their own cannabis, retail stores would sell product to the onsite consumers. Retail stores will also now be allowed to sell non-marijuana consumable products such as snacks and beverages and refrigerated products. Though the new definition allows retail onsite consumption, it still doesn’t clear up the legality of existing clubs. Schulte clarified he is not endorsing clubs, simply acknowledging the board’s total lack of authority to prohibit or allow them. “The intent here is to solve a legal ambiguity,” Schulte said. “If we can’t regulate them, we can’t prohibit them.” Pot clubs, which do not sell cannabis but allow on-premise consumption and sharing, walk an unmarked path. The board, industry, and many local governments have openly acknowledged they want some kind of cannabis consumption venue, but Ballot 2 created no such license. The Legislature would have to create the license type in order for the board to regulate clubs, and Schulte doubts that would happen. Creating a license subset in regulation, theoretically, takes pressure off a Legislature beset with a budgetary crisis, AK LNG Project plans, and little stomach to wade back into Ballot 2 territory they’d established the board to oversee. The board prohibited marijuana clubs in the first draft regulation package to public outcry from industry and legal voices, including marijuana business attorney Jana Weltzin, who directly challenged the Department of Law’s prohibition. Regardless of the new license allowance for onsite consumption, the currently operating clubs will continue. Theresa Collins, owner of Anchorage’s Pot Luck Events marijuana club, said she has no plans to shut her doors. Several arguments will need to be addressed as a result, depending on whether the board chooses to exercise any enforcement against Collins’ establishment or Soldotna’s Green Rush Events. Franklin hinted at some main concerns with marijuana clubs two nights prior, addressing the Alaska Municipal League regarding cannabis regulation. She supports a licensed consumption venue, she said, but not clubs in their current form. Franklin said leaders should discourage the black market, which she claims marijuana clubs enable by virtue of allowing unregulated consumption. If marijuana club users aren’t getting their product from retailers, she said, they could be buying dangerous and untested product from criminal producers. “There’s a danger that marijuana clubs will serve as a great place for black market dealers to move their product,” Franklin told the crowd of municipal officials. The untested product, she said, could cause health concerns. “What happens if there’s marijuana tainted with E. coli, and everybody at the club is passing it around and smokes it?” Franklin also makes an economic argument against clubs, in that they will unfairly compete with licensed establishments. Alcohol regulations prohibit bottle clubs, where people bring their own beverages, on the grounds that they will siphon business from licensed bars who must jump regulatory hoops. “A bigger question for you as local governments, is the effect that clubs have on legal businesses,” Franklin told the league. “The reason bottle clubs are prohibited is so that they can’t compete with licensed liquor establishments.” Clubs will eventually force a decision about what a “public place” entails, which forms the Department of Law’s core argument against clubs. Council member Loren Jones, the only dissenting vote to removing the club prohibition, worried about the same thing even in relation to the new retail consumption allowance. “A retail store is a public place,” said Jones. “It is a restricted public place but it is still a public place.” In response to marijuana-themed events in the summer, the board made an emergency definition of “public place” to cut down on open air smoking. Staff amended the definition to exclude retail establishments granted an onsite consumption provision. “’Public place’ means a place to which the public has access and includes, but is not limited to, streets, highways, sidewalks, alleys, transportation facilities, parking areas, convention centers, sports arenas, schools, places of business or amusement, shopping centers, malls, parks, playgrounds, prisons, and other portions of apartment houses and hotels not constituting rooms or apartments designed for actual residence such as hallways, lobbies, and doorways,” the regulation reads. Franklin and the Department of Law believes this applies to clubs as well, though clubs charge membership fees and only admit adults over the age of 21. Franklin said movie theaters are public places despite charging an entry fee.  “You’re not a member of the movie club when you buy a ticket,” Franklin said. “That’s still a public place.” As of yet, this interpretation has not been challenged or taken to an Alaska court for specific rulings resultant from any prosecutions, or any challenges from other establishments who charge membership or entry fees who otherwise might not be considered a “public place,” such as bars, strip clubs, cigar bars, or private social clubs. No charges have been made against pot club owners or members for public consumption. Club owner Charlene Egbe was indicted for four felonies for operating Alaska Cannabis Club, but each charge was for sale of marijuana, not for allowing consumption in a public place. Public consumption only carries a $100 fine. Franklin said an “enthusiastic prosecutor” could potentially assign all a marijuana club’s consumption onto the owner. Collins said she isn’t afraid of prosecution, because she’s perfectly within the confines of the law and doesn’t fill the definition of a public place. “You don’t pay a membership fee and sign a membership contract at a movie theater,” Collins said.   500 feet buffer remains unchanged The board failed to revise buffer limits for marijuana operations after a proposal to allow them within 200 feet of churches, which would have mirrored alcohol regulation’s church buffer. Regulations maintain a 500 buffer zone from children’s centers, schools, and churches. Schulte said he was responding to public concern. “My amendment is really in response to the communities where we have gotten specific feedback,” said Schulte. Emmett had even proposed Schulte’s original amendment down from 200 feet to 100 feet, an idea he got from the Fairbanks-North Star Borough Assembly itself, but the motion failed 2-3, with Schulte and Emmett in favor. Boroughs and local governments including Fairbanks-North Star Borough spoke against the 500 foot buffer zone, which is only half the federal Drug Free Zone standard of 1,000 feet. Alaska’s small towns and villages, particularly Southeast Alaska communities with heavy tourism economies, will have difficulty finding child-free space in any of the areas zoned for business. In narrow Ketchikan, churches and daycare centers dot the downtown area on street level and second floors. Representatives from Sitka and other Southeast communities, cruise-based tourist destinations, expressed similar concerns. In Fairbanks, there are worries that the buffer zone will kill the tourism that comes through Fairbanks’ downtown area, which has cramped conditions similar to Southeast Alaska communities. Assistant attorney general Harriet Milks claimed the board’s “first loyalty” should be to the statute, not to public comment. “Anyone can send in 500 comments,” said Milks, “that doesn’t mean the issue is 50 times more important to the board.”   Broker licenses eliminated The board removed the entire subset of a brokerage license with an amendment introduced by member Peter Mylnarik. Brokerage licenses establish go-between options for cultivators and retailers or manufacturers. Under previous drafts, limited cultivators were required to sell only through brokers, causing public backlash from small growers who say the brokerage fees would kill their entire business. Mylnarik said he was aiming for consistency, as the board acknowledged for months that it cannot create a new license type not specified by Ballot 2. Earlier language had specified that broker licenses are a “subset.” Mylnarik argued that they are in fact a totally separate license, as they take no part in any of the activities associated with marijuana cultivation.   Potency limits and retail particulars The board also reversed several contentious regulations it had made in earlier drafts regarding what retailers can and can’t do. To an audible cheer from the audience of potential retailers, the board voted 3-2 to allow marijuana licenses to sell branded merchandise. “I think it’s necessary for businesses to be able to brand themselves,” said Emmett. “If we ultimately want to have responsible actors, this incentivizes them to do so.” Schulte also clarified the packaging requirements for retail stores, creating marijuana’s version of a liquor store’s brown paper bag. Marijuana packages may be transparent in retail stores, but all product leaving the store must be in opaque, child-proof packaging. Previous drafts had a complicated array of cultivator requirements for packaging. Childproofing edibles packages was a main concern, but Schulte said children are only the responsibility of their parents, not marijuana licensees. “Ultimately, when someone’s in a home with children, they have to take responsibility for that,” he said. Potency limits also got a rewrite. Previously, marijuana extracts were capped at 76 percent, mirroring Alaska’s 151 proof alcohol limit. Schulte said the number doesn’t translate to alcohol, and the board revised marijuana concentrate to have no upward limit.   DJ Summers can be reached at [email protected]

Felony cannabis cases scheduled for trial in early 2016

The State of Alaska is charging four individuals with multiple felonies after each of their cannabis operations fell to Anchorage Police Department undercover work and ensuing raids. Trials won’t be held until January and pretrial hearings will be held in November and December. Rocky Burns, Larry Stamper, Michael Crites, and Charlene Egbe are each alleged by the state to have been operating illicit marijuana businesses in 2015, and were indicted in September. Burns and Stamper co-owned and operated Discreet Deliveries, a delivery service with operations in Fairbanks, the Mat-Su, Anchorage, and the Kenai Peninsula; both men were charged with seven felonies and one misdemeanor. Michael Crites operated Absolutely Chronic Delivery Co. and was charged with five felonies and one misdemeanor. Charlene Egbe, who operated Alaska Cannabis Club, was charged with four felonies and four misdemeanors. All defendants were released of their own recognizance on the sole condition they not sell any marijuana. Crites, Burns, and Stamper have stayed in Alaska, while Egbe has spent time in the Lower 48 on various speaking engagements for cannabis industry media outlets and publicity events. Anchorage defense attorney Keri Brady, who served as Anchorage district attorney from 1997 to 2007, represents Egbe, who uses the name Charlo Greene in public relations. Egbe is scheduled for a pretrial conference with Anchorage Superior Court Judge William Carey on Nov. 18 and trial Jan. 4, 2016. The Public Defender Agency will represent Crites. He is scheduled for a Nov. 23 pretrial conference with Anchorage Superior Court Judge Kevin Saxby and a trial Jan. 11, 2016. Cannabis industry business attorney Jana Weltzin represents Burns, while Anchorage criminal defense attorney Gregory Heritage represents Stamper. Both men are scheduled for a Dec. 8 pretrial conference with Anchorage Superior Court Judge Jack Smith and a trial Jan. 11, 2016. Money matters Lisa Kelley is prosecuting all four defendants. Kelley works from the Office of Special Prosecutions of the Anchorage division of the Alaska Department of Law. John Skidmore, director of the Anchorage Criminal Division of the Alaska Department of Law, said the State of Alaska chose Kelley as prosecutor because the matter is largely about revenue. “Kelley is assigned to cases that are about revenue fraud,” said Skidmore. “From the state’s standpoint, there are significant aspects of these cases that have an economic impact. That’s why they were assigned to Ms. Kelley.” Indeed, the major issue the state has with the defendants’ businesses appears to be a question of revenue rather than public safety. Draft regulations prohibiting both marijuana social clubs and delivery services will not be adopted into code until Nov. 24, and could be amended by the Marijuana Control Board in the meantime. The only certainty is that the defendants engaged in sale prior to the issuance of business licenses, and therefore prior to the existence of taxation framework. This past summer, Marijuana Control Board Executive Director Cynthia Franklin sent cease-and-desist letters to social clubs and delivery services, including Egbe’s Alaska Cannabis Club, Pot Luck Events in Anchorage, Wasilla’s Northern Heights, Kenai’s Green Rush Events, Crites’ Absolutely Chronic Delivery Co., and Burns’ and Stamper’s Discreet Deliveries.  Franklin’s cease and desist letters carried less than bulletproof legal weight because of the nebulous legal status of both marijuana clubs and delivery services, and was taken to be a legal suggestion rather than an order. In the cases of Egbe, Burns, Stamper, and Crites, the Anchorage Police Department conducted undercover operations during which they purchased quantities of marijuana from individuals employed by or operating within each respective organization. Organizations that engaged in no sale, however, have not been charged, though they received the same cease and desist letters from Franklin. Pot Luck Events and Green Rush Events, both social clubs, have been vocal about not allowing sale within their establishments, but only consumption and sharing. Consumption and sharing are legal under Ballot 2 language approved by voters a year ago, though public consumption particulars have yet to be fully fleshed out to apply to publicly accessible clubs. Pot Luck owner Theresa Collins said she never noticed police activity in her establishment, but that it must have happened to some extent. “I’m sure they were there,” said Collins, “but they obviously didn’t discover anything too illegal going on.” Further provisions in draft regulations penalize those who have made money in the marijuana industry prior to business license issuance, currently scheduled for May 24, 2016, at the earliest. “The board will not issue a marijuana establishment license to a person that … operated a marijuana delivery service, a marijuana club, or a marijuana establishment illegally without a license issued under this chapter, or otherwise violated AS 17.38, during the two years before the date the person files the application, unless the board finds that person has diligently worked with the board to comply with all current laws and regulations relating to marijuana,” the draft regulations read. Rocky road Burns adamantly claims he has made every attempt to fully “comply with all current laws and regulations,” and has been trying to get a concrete ruling of his company’s legality since he and Stamper began operating in January 2015. Weltzin argues the charges should be dismissed due to the ambiguity and lack of clarity in statute and regulations. “Nobody knows what’s legal and what’s not legal,” Weltzin said. “And even though he asked time and time again, (Burns) didn’t get any guidance from the state.” Burns filed pro se motions (representing himself) with the court to have his charges dismissed, his bail condition rescinded, and the venue of his trial changed. Burns filed motions Oct. 15, prior to obtaining Weltzin as legal representation. In both Burns’ original motion and Weltzin’s reply to Kelley’s denial of the motion, it is argued that Burns was only transporting and accepting money for marijuana equipment, not marijuana itself, and therefore the Superior Court has no jurisdiction to prosecute. Under Ballot Measure 2 language, the sale of marijuana accessories is legal. The definition includes “materials of any kind which are used, intended for use, or designed for…packaging, repacking, storing, vaporizing, or containing marijuana.” Burns claimed he was only selling vacuum-sealed bags, which only happened to contain a legal gift of one ounce or less of marijuana, which he claims is allowable under Ballot Measure 2. Even if illegal, Burns and Weltzin argue, the matter rests with the Marijuana Control Board, not the Department of Law. Burns claims the only concrete direction he received was a green light of sorts from Alaska Marijuana Control Board chairman Bruce Schulte, who stated during a Fairbanks meeting that Burns could continue operations, and that “nobody is kicking anybody’s doors down.” The board’s word, Burns believes, is the only relevant one. Ballot Initiative 2 put the governance of marijuana business under the authority of the Marijuana Control Board. A grand jury formally indicted Burns on Oct. 8, but information was filed Sept. 18. Because Burns filed his motion to dismiss charges Oct. 5, Kelley called the motion to dismiss “moot.” Kelley did, however, respond to several of Burns’ arguments in her rejection of the motion to dismiss, calling them “inventive interpretations of law and assertions that, at best, can be considered potential defenses” that are not themselves satisfactory to dismiss charges. Kelley argues the Anchorage Superior Court has “original jurisdiction in all civil and criminal matters.” Further, Kelley argues Burns was clearly selling marijuana, not marijuana accessories as he claims. Customers made online orders specifying particular marijuana strains, and the amount charged is greater by far than the cost of the $1.50 bag. “The argument that he was selling ‘mechanically sealed metal bags’ is undercut by the amount of money involved in the transactions,” Kelley wrote. “On Jan. 28, 2015, the officer paid $370, plus a $15 delivery fee, for one ounce of marijuana.” Weltzin filed a reply to Kelley and argued Burns’ main points filed in his motion to dismiss: that he was in compliance with existing marijuana laws and therefore the Marijuana Control Board’s authority. She reinforces Burns’ original argument that he was not selling marijuana but transporting marijuana accessories, as well as marijuana itself in compliance with weight restrictions under one ounce. Payment, Weltzin argues, was to recoup the expenses of delivery service, not in exchange for marijuana itself. She details the costs of Discreet Deliveries operations, and concludes the business was, in fact, operating at a loss. “The costs and expenses of facilitating the transportation of an ounce of marijuana breaks down to approximately $408 per ounce,” Weltzin wrote. “Not only was the real and actual cost of transporting the marijuana and marijuana accessory credible, it was actually delivered at a loss to the company.” In light of this, Weltzin argues, Burns should not be “targeted as a guinea pig for trial and error” by the state as a result of jurisdictional confusion. Undercover officers were charged similar prices for similar quantities of marijuana when they purchased one ounce of marijuana from Absolutely Chronic Delivery Co. for $360 plus a $10 delivery fee. In August, another purchased an ounce for $410. An undercover officer purchased one-eighth an ounce of marijuana from Alaska Cannabis Club for $50, and another purchased an ounce for $450. Weltzin said it is only coincidence that Burns charged an amount similar to the apparent market price of one ounce of marijuana. Weltzin did not comment on Burns’ other motions. Burn’s change of venue motion alleges he would not receive a fair trial in Anchorage, and requests to hold the jury trial in Palmer. “The tainted jury pool created in the Anchorage are through local media, quoting local heroes that are stipulating the current law, create a prejudice against the defendant,” the motion reads. Burns cites, as proof of an Anchorage vendetta against him, the fact his Fairbanks operation was raided by Anchorage Police Department. Burns also claims to have been a “victim of threats from a House of Representatives member, stating that he is a target. That Representative is in the Anchorage Borough Area.” Burns was referring to Rep. Cathy Tilton, R-Wasilla, with whom Burns had an email exchange in September during which Tilton wrote, “Your flippant arrogance has made you a target.” Kelley wrote a brief recommending the denial of Burns’ change of location request. “The majority of charges relate to conduct that took place in Anchorage,” Kelley wrote. “The defendant himself admits to conducting business all over the state. Further, the impartiality of an Anchorage jury has not yet been determined – such a determination can only come after a thorough questioning of potential jurors.”

Alaska a destination for cannabis tourists

Tourist dollars are coming, and it’s up to the Legislature and the Marijuana Control Board to maximize how many Outside greenbacks the Alaska “green rush” will rake in. With nearly 2 million visitors per year dropping $941 per person per visit, Alaska’s $2.42 billion dollar tourism industry could be a vast revenue pool for the marijuana industry and its accompanying taxes, but draft regulations could create hurdles unless changed. 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. Alaska Travel Industry Association president and CEO Sarah Leonard said her organization has taken no position on marijuana until local regulations are sorted out. Others are waiting for convincing proof of big bucks to focus on marijuana tourism. “Tourism marketing in Anchorage, and throughout Alaska, is focused on several key messages — mountains, glaciers, wildlife and authentic culture,” wrote Julie Saupe, president and CEO of Visit Anchorage, a tourism industry group. “For marijuana destination marketing to be efficient and effective, the tourism industry would need to see research that convinces us this activity is a key travel motivator for visitors to our state. “Until then, legal marijuana will likely be enjoyed by some visitors with or without specific sales and marketing efforts.” Alaska Marijuana Industry Association vice president Brandon Emmett, also a member of the Alaska Marijuana Control Board, says the industry will at very least hasten the trip for people who already wanted to come to Alaska. “Alaska is almost every outdoorsman’s dream,” Emmett said. “It’ll probably be the push they need to finally book the trip up here, once they know they can come up here and buy and partake in a legal environment.” Tourism professionals from the Lower 48 agree with Emmett, but are more hopeful that people will travel to distant Alaska on the lures of weed. “If there’s anything Washington and Colorado have shown us as a company, it’s that people are willing to travel to a place where it’s legal,” said Chase Nobles, co-founder of Kush Tourism, a Seattle-based company specializing in cannabis tourism information and tour organization in Washington and Colorado. “How many people have always wanted to go to Alaska? Well now they have legalized weed, so it’s ‘let’s go on a fishing trip, let’s go see Denali.’ It’s a great move for a great state.” The regulatory landscape has a few rough patches, however, that could make the tourism part of the industry more difficult. At the top of the list is the contentious legal status of marijuana social clubs. The Marijuana Control Board has prohibited marijuana clubs, which do not sell cannabis but allow on-premise consumption and sharing, in the first draft regulation package. According to Harriet Milks, assistant attorney general and the board’s legal counsel, clubs are outside the board’s authority until the Legislature creates a club license type. The board could potentially rescind the prohibition at its Nov. 20 meeting, or propose alternatives. Like Colorado and Washington, Alaska’s hotels are typically smoke-free. Because public smoking is banned, consumption is effectively limited to private homes, which was already legal under the 1975 Alaska Supreme Court’s Ravin vs. State of Alaska ruling. Social club advocates including Fairbanks North Star Borough worry tourists won’t drop as much money on pot if they have no place to smoke it. Industry voices came out in droves during an Oct. 15-16 public commentary period to ask the board to repeal the prohibition in its next regulatory draft, due Nov. 20. Board chairman Bruce Schulte guessed that comments regarding marijuana social clubs outnumbered all other subjects by a 3-1 ratio. Boroughs and local governments also spoke against the board’s proposed buffer zone, which prohibits any marijuana license from operating within 500 feet of any school, youth center, recreational center, or church where children congregate. “Every municipality that testified said that the buffer zones will kill our industry,” said Emmett. “It was coming from borough attorney, directors of zoning, everyone from Southeast saying ‘We get 2 million tourists a year, we need to capitalize.’” The 500-foot buffer is only half the federal Drug Free Zone standard of 1,000 feet, but Alaska’s small towns and villages, particularly Southeast Alaska communities with heavy tourism economies, will have difficulty finding child-free space in any of the areas zoned for business. In narrow Ketchikan, churches and daycare centers dot the downtown area on street level and second floors. Representatives from Sitka and other Southeast communities, cruise-based tourist destinations, expressed similar concerns. In Fairbanks, there are worries that the buffer zone will kill the tourism that comes through Fairbanks’ downtown area, which has cramped conditions similar to Southeast Alaska communities. “That buffer could kill that tourism industry,” said Emmett, a Fairbanks resident. “Where are these tourists going to go? You’re going to have a lot of young tourists come and be excited about participating in our legitimate market only to find it’s been zoned out.” Beyond finding places to smoke and places to sell, regulations theoretically don’t allow for 2016 tourist business at all due to tracking requirements. Alaska marijuana businesses, including retailers, will be issued business licenses on May 24, 2016, roughly on par with the beginning of Alaska’s short summer tourist season. Draft regulations, however, require a tracking number for every marijuana plant over eight inches in height to make sure they came from a legal, licensed source. Any sale-ready mature plants in May 24 will have come from illegitimate sources, as they’d been grown prior to the issuance of business licenses. This means marijuana retailers and cultivators will have to populate their shelves with eight-inch plants beginning May 24, rather than open a fully stocked retail store. Retail stores won’t likely begin to fill shelves with legally grown product until September, at the tail end of the 2016 tourist season. Marijuana tourism has grown in the Lower 48 states where recreational cannabis has been legalized, though the numbers are contested and the dollar figures hard to nail down. In Colorado, tourists rival in state demand. A 2014 Colorado Department of Revenue report estimated that out-of-state visitors made up 44 percent of retail sales in metro areas like Denver. In rural mountain counties where ski tourism is a main economic driver and local values are still fairly anti-marijuana, non-residents made up 90 percent of marijuana retail purchases.  “The retail demand is derived primarily from out-of-state visitors and from consumers who previously purchased from the Colorado black and gray markets,” the report reads. The report doesn’t analyze how many tourists came to Colorado who wouldn’t have otherwise. Proving a direct causal link between marijuana legalization and tourism increases is difficult, but there’s plenty of evidence to prove a correlation. Hotels.com has kept a running tally of travel searches in Colorado, Washington, and Oregon, and found significant increases in searches, if not travel. After recreational sales became legal in 2014, Denver saw a 73 percent increase in hotel searches for check-ins during the April 20 weekend, the pot smoker’s holiday, compared to 2013. Denver became the 14th-most popular domestic destination for Americans, according to the Hotels.com Hotel Price Index. The entire state of Colorado saw a 51 percent increase in hotel searches from 2013 to 2014. Similarly, Seattle saw a 61 percent jump in travel searches from the first half of 2014 to the second half when marijuana became legal. From a cultural vantage point, marijuana tourism is plainly booming. Companies like Kush Tourism, My 420 Tours, and Colorado Pot Guide offer inside tours of marijuana grows and dispensaries, citywide cannabis-friendly limousine jaunts, recommendations for marijuana-compatible lodging, simple maps of reputable retailers, and even geolocation-based mobile apps that mark nearby cannabis businesses.  Spirit Air formed an entire “The Smoking Sign is Off” marketing campaign around Colorado legalization in 2014, advertising “fares so low they’re barely legal in some states.” The trend extends beyond party buses, for the marijuana consumer of discriminating taste. Oregon dispensaries have begun marketing winery-style tours for cannabis farms, aiming for the existing Oregon wine connoisseur tourism market as a way to differentiate themselves from the state’s numerous retail businesses.

Limits on investment, clubs, potency among draft pot regs

The Alaska Marijuana Control Board released its first draft of regulation proposals for public comment on Oct. 5, speeding towards its Nov. 24 deadline. The public will have the opportunity to provide written comments on the first regulatory draft beginning Oct. 11, and have the opportunity for public comment at the board’s Anchorage meeting Oct. 15-16. The board will make another draft following public comment, and meet a final time on Nov. 20 to make changes before recommending the final package to the Legislature for approval on Nov. 24. Public comment and industry criticism of the draft regulations have focused on several issues, including limits on Outside investment, a prohibition on marijuana social clubs, limits for cultivators and retailers, licensing fees and requirements, and potency restrictions. Outside investment remains one of the most-discussed problems for much of the Alaska marijuana industry, both locally and nationally. Under the draft regulations, the board will not issue a marijuana license unless the shareholders and partners are legal Alaska residents, which requires a full calendar year of residency to establish. Anyone with a “direct or indirect financial stake” in the company must be listed as a licensee, and therefore follow the same residency requirements. The ban on Outside investment started a conversation about big business versus Alaska-first business versus federal drug laws. Due to federal law, Alaska banks and credit unions refuse to handle cannabis-related accounts or loans. Cannabis businesses without their own startup capital have few options for funding beyond bootstrapping or borrowing from private lenders. With high entry costs from license and testing fees, security requirements, and basic business expenses, already-wealthy Alaskans could dominate cannabis business while smaller competitors scramble for startup capital. Outside investment could narrow the gap between Alaska millionaires and mom-and-pop growers and retailers, but also bring in big competitors in the $3 billion national cannabis industry. Regulators, however, fear federal money laundering guidelines, and see Outside investment dollars as a possible route for dirty money from drug cartels or shady investors. Kris Krane, former executive director of the National Organization for the Reform of Marijuana Law, or NORML, said Alaska’s biggest hurdle is to workshop ways to allow Outside industry investment. Attracting the kinds of industry consultants and business opportunities available to Colorado or Washington, he said, depends on it. “By late this year and early next year, a lot of these groups will be looking to come to Alaska,” Krane said. “They won’t if that ban on interstate investment stays.” Alaska has no existing infrastructure of medical marijuana businesses like Colorado, Washington, and Oregon did when they legalized recreational marijuana. As a result of inexperience, Krane said the industry doesn’t fully comprehend the amount of investment capital needed to get businesses up and running. “These are expensive propositions,” said Krane. “If you want to put together a 65,000-square foot cultivation facility, you’re talking in the $5-$10 million range. By way of context, I’ve been part of a working group in California, and there’s some concern that California won’t have enough capital to sustain a full-growth industry. In a state like Alaska, this becomes a huge issue.” Board chairman Bruce Schulte noted that the board hadn’t gotten much input from stakeholders on possible solutions that would favor local licensees while allowing for Outside investment, and hopes to see creative solutions in public comments. The board’s most recent addition to the draft regulations prohibited marijuana social clubs, to public outcry from industry figures. Marijuana clubs, which do not sell cannabis but allow cannabis users to consume and share on premises, have been a legal gray area in Alaska. Use and possession of cannabis is legal, but business licenses for sale and cultivation will not be issued until May 2016. Cannabis clubs do not sell, manufacture, test, or cultivate, which Harriet Milks, assistant attorney general and the board’s legal counsel, said puts the entire business outside the board’s authority. The board voted in favor of the prohibition, meaning clubs will be illegal unless the Legislature creates a license type for them in statue during its next session. Milks characterizes it not as a ban, but as a simple declaration that board can do nothing without legislative action. Marijuana industry attorney Jana Weltzin of the Rose Law Group called Milks’ characterization “legally incorrect,” as the prohibition clearly establishes a penalty for marijuana clubs. Weltzin, however, mentioned no plans about pursuing legal action against the board, echoing Schulte’s cautioning that the industry can’t afford any regulatory tangles on its current schedule. Licensing fees themselves roused some public ire; the board made changes to the fee structure on behalf of small marijuana cultivators. The board will issue four license types, one of which has two subsets. Retail, standard cultivator, and manufacturer’s licenses will all cost $5,000, while limited cultivator and testing licenses cost $1,000. Limited cultivators, however, are also required to perform all sales through a broker, and are forbidden from selling directly to consumers. On top of licensing and testing fees, industry worries the broker requirement will force boutique growers back into the black market as a cost avoidance measure. Potential marijuana product manufacturing licensees voiced concerns about a draft regulation that prohibits commercial kitchens from experimenting with marijuana products. Would-be marijuana confectioners will be required to rent their own commercial space, with the accompanying marijuana license. Manufacturers alone will be allowed to purchase marijuana concentrates with THC levels greater than 76 percent. Anything beyond 76 percent concentration is forbidden to consumers, which board member Brandon Emmett believes is a safety risk. “People are going to try to make their own concentrates if you don’t allow (manufacturers) to make the best quality product,” said Emmett. “They just make hash oil at home, and you’ll see a rise in hash oil explosions.” Along similar edible lines, marijuana manufacturers dislike a proposed regulation that limits marijuana edible serving sizes to five milligrams – half the industry standard of 10 milligrams per serving. Because all edible products are limited to 10 servings apiece, this means customers will theoretically have to buy twice the amount, a boon to retailers but a disadvantage for medical users with high THC tolerances. Marijuana edibles, in fact, will be the only edible products available at retailers, in an effort to prevent convenience stores doubling as pot shops. The board passed draft regulations that prohibit retail cannabis establishments from selling cigarettes, drinks, snacks, coffee, tea, or anything consumable but non-cannabinoid in nature. The intent, according to board Executive Director Cynthia Franklin, is threefold: to keep minors from having a reason to enter the premises, regulate on-premise consumption, which would be made difficult by selling snacks alongside cannabis-infused edibles, and prevent “confusion to customers about which things contain marijuana and which things don’t.” DJ Summers can be reached at [email protected]

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