Retail legalization of marijuana will become reality in 2016

  • Nearly two years after voters approved legalization, retail sales of marijuana will begin some time in late summer. Most of the state regulations have been worked out, but many local jurisdictions are still deciding whether and to what extent to allow retail operations. Although licenses will be issued by May 24, all plants must be certified from “seed to sale,” meaning it will be a few months before legally-grown marijuana can be sold. Photo/DJ Summers/AJOC

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.

12/22/2015 - 4:07pm