Marijuana Control Board finalizes first draft of regulations

The Alaska Marijuana Control Board has reached the end of an arduous first draft of proposed regulations for the cannabis industry. After another round of public comments, which will open in early October, the Legislature will have the opportunity to adopt them or change them as it sees fit.

The final leg of the race dealt with marijuana testing facilities, through which all cannabis products will have to pass before being licensed to sell. The board also crafted proposals for a five-milligram cannabis edible serving size and packaging requirements, which now include warning labels.

The board’s staff will make the necessary changes to the document and release it to the public either Oct. 2 or Oct. 5. The public will have the opportunity to provide written public comment on the first regulatory draft beginning Oct. 11, and have the opportunity for spoken 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.

Testing facility independence

Much of the discussion centered around a ban on license stacking with testing facilities, which prohibits families from holding certain license combinations.

Licensees may stack retail, manufacturing, and cultivation licenses, but no testing facility licensee may hold any other license type, or hold a direct or indirect financial stake in any other license type. This translates to a ban on intermarriage license stacking, as spouses must be listed as license affiliates, according to previous draft regulation regarding licensure requirements.

In practice, this means a husband may not own a retail license while his wife owns a testing facility. Some public comment expressed dissatisfaction with the rule, saying it would prevent interfamilial entrepreneurship within the industry, particularly in rural areas where capital is likely to be concentrated within families.

Board director Cynthia Franklin explained a strong desire to eliminate conflicts of interest and potential testing corruption.

“It was our great hope that the board keep testing facilities pristine,” said Franklin. “The idea behind keeping testing pristine is you don’t have someone who owns a cultivation facility, and the wife own the testing facility and maybe the wife’s testing facility has very favorable tests.”

Board member Brandon Emmett, vice president of the Alaska Marijuana Industry Association, said he understood the concern, but wanted to allow for families to diversify their interests with separate licenses.

“I’d like to give the industry the benefit of the doubt,” Emmett said. “Where we’re encouraging people to diversify their portfolios. If a family wanted to get into business…we want to give these people the opportunity to invest as they see fit.”

Emmett proposed an amendment that would allow ownership of testing licenses by spouses, but disallow the testing licensee from testing any product they have an indirect or direct interest in.

The vote failed 2-3. Board members Emmett and chair Bruce Schulte, the industry appointees, voted in favor, while Mark Springer, Peter Mlynarik, and Loren Jones voted against, saying that the potential for predatory testing would still exist.

“I think it’s very clear in the original language that you can’t have a financial interest in a any facility outside of testing,” Jones said. “The reason being, even if you don’t test your own, you’re still testing competitors.”

“Given the importance that testing is going to be for the industry,” said Springer, “I rather would have a laboratory that’s not only not conflicted but not distracted.”

Fears of random inspections and police

Board enforcement agents may conduct random sampling tests at the cultivator’s expense. Random inspections have been a theme of the draft regulation in each of the four license types, each time rousing concern that the board director and enforcement agents could use the process to harass and harm marijuana businesses.

As before, however, the board clarified that the public will have to trust that the board and its director are not enemies of the industry, and the industry will have to display the same faith in the board’s good will that the board has in the industry.

“If we are going to keep this language vague, let’s make it clear that it’s the intention of this board to work with licensees, and not thwart the will of the voters,” said Emmett.

Schulte said he believes the board is adequately on record stating that the board and its director have no intent to abuse testing allowances. The section passed unanimously.

The board’s allowance for police inspections brought up similar concerns.

The board unanimously accepted draft language that allows “a peace officer acting in official capacity” to inspect testing facilities, giving local police authority to enforce the board’s regulations if needed, depending on whether the local chief of police feels it necessary.

Public comment strongly objected to the measure, fearing harassment.

“We’re trying to encourage a historically illegal industry,” said Schulte. “Encouraging law enforcement to enter these premises sets up tension. I’m concerned we may be blurring the difference between law enforcement and regulation.”

Franklin explained the board’s limited resources, and the occasional necessity to rely on local police for enforcement simply due to budget constraints and Alaska’s sheer size.

“We have to rely on local PD every once in awhile,” Franklin said. “I understand people being upset and paranoid, but if the only people permitted to enter are the six (enforcement) officers we have employed, we very much are limited.”

Board member Peter Mlynarik, the chief of the Soldotna Police Department, reminded the board that officers wouldn’t be entering testing facilities uninvited or apropos of nothing. They would only have the authority to do so in response to a criminal complaint, which would require a warrant, or at the board’s request to perform inspections.

“We still can’t go in carte blanche through cabinets and whatever else without a warrant,” said Mlynarik.

Board member Mark Springer agreed.

“Where it says official capacity…doesn’t that imply that they’re actually there in response to a call or a complaint?” said Springer. “And even then, they have the constraints of probable cause. I don’t think anybody has to worry about police officers using the color of (this regulation) to say, ‘yeah, I’m going to go jack these guys up and keep them honest.’ I have enough faith in law enforcement in this state.”

Testing operational procedures

Much of the public comments concerning testing facilities concerned the difficulty of rural communities to sustain them, in a state where even attracting licensed nurses can be problematic for the bush.

According to the accepted proposal, testing facilities must have oversight from a clinical director with a combined 10 years of academic and on-site experience; a doctorate in chemical or biological sciences plus two years of experience, a master’s degree with four years of experience, or a bachelor’s degree with six years of experience.

Nothing in the language prevents a laboratory director from overseeing operations as a contractor, or voluntarily out of a sense of civic duty, according to Franklin.

The board also voted to leave out any language requiring testing certification, which could have bumped back the first retail cannabis sale.

According to Franklin, initial conversations with the Alaska Department of Environmental Conservation, which certifies such operations, said the certification itself would not be complete until up to six months after sales become legal in May 2016.

Certification of equipment and testing is not required, but testing itself is still mandatory for all cannabis products sold in Alaska. Tests for potency, communicable diseases, and pesticides will all be mandatory. If a randomly tested sample of a given batch of smokeable or edible marijuana product fails, the mother bath must be destroyed.

Failed batches, however, are entitled to appeal for a retest.

Revisited items

The board reviewed certain items that had been tabled from earlier meetings.

Among the most concerning to industry was a limit on edible product dosage size, cultivator packaging requirements, and cannabis concentration limits.

Dosage limits for edible cannabis products were set at 5 milligrams per serving, half the standard 10 milligram serving size specified in other states where marijuana is legal.

Board members argued medicinal marijuana consumers, who have a high tolerance, would suffer most directly from the regulation, as they’d be forced to purchase twice as much product.

Franklin argued that the conservative limit comes from widespread concerns about edibles in Colorado and Washington.

“Particularly in Colorado, there were significant issues after recreational marijuana was legal, a disconnect between high potency and large serving sizes designed for medical uses, and novice users,” said Franklin. “They also developed a campaign called ‘start low, go slow,’ recommending the five milligram starting serving.”

Packaging requirements still remain ragged as far as regulatory language goes, but the intent is that product cannot be identified upon leaving the retail store. Edible products must be packaged in heat-sealed, resealable packages to prevent children from getting into them. Bud and flower products must be placed in opaque packaging either by the cultivator or by the retailer.

The board amended an earlier regulation that had limited all marijuana concentrates to 76 percent. Under the new language, concentrates must be limited to 76 percent only if sold directly to a consumer. If sold to another cannabis business licensee, concentrates have no upward limit. Most directly, this applies to manufacturing licensees, who may want to use high concentration levels in edible products to better gauge for dosage levels and taste.

DJ Summers can be reached at [email protected].

11/24/2016 - 12:52pm