Marijuana taxes near total for alcohol; testing under scrutiny

  • Brian Coyle, owner of AK Green Labs LLC, said testing needs to be “more uniform and accurate” in comments to the Marijuana Control Board in Anchorage on Nov. 14. (Photo/Naomi Klouda/AJOC)

So far this year, Alcohol and Marijuana Control Office investigations show more notices of violations were handed out to bars than to marijuana operations by a count of 57 to 44.

Tax revenue from marijuana operations this year through October is $1.5 million, while alcohol tax generated $2.2 million. Budgets for each segment for AMCO in 2017 came to $1.6 million for alcohol and $1.2 million for marijuana.

The numbers came from a budget report by Alcohol and Marijuana Control Office Director Erika McConnell to the Marijuana Control Board Nov. 14 when it met in Anchorage for the second time this year, at the Dena’ina Civic and Convention Center.

“Marijuana revenue is moving up in a close race,” observed board member Mark Springer of Bethel, who represents rural Alaska on the board.

Of all marijuana tax revenues collected at $50 per ounce, calculated since the first operators opened for business in 2016 until Sept. 30, the state has collected $3.7 million. In employment, figures show that 1,924 people were issued handlers’ permits, the certification required of all staff and sales people employed in marijuana operations throughout the state.

Some 18 marijuana operators were given notification of violations, a larger number by twice previous amounts, Enforcement Officer James Hoelscher acknowledged to the board. The violations ranged from continued missteps in advertising to tracking system errors. Businesses must account for all inventory in given time periods or receive a violation.

A larger investigation that took months and involved the Anchorage Police Department revealed three illegal operations that had made up their own business names and tried to pass as legal operations in Anchorage.

According to APD, three people in three different businesses were charged. Each faces multiple counts of fourth-degree misconduct involving a controlled substance and two unclassified felonies for continuing a criminal enterprise, said Renee Oistad, APD spokesperson. Oistad said she couldn’t give the names of the illegal operators because the cases haven’t gone to court yet.

A discussion followed by the board and Hoelscher about what could be done to bring penalties against people who break the state’s marijuana laws. Department of Law Attorney Harriet Milk said the board has the authority to levy fines for certain infractions outside of state court action.

Board Chair Peter Mlynarik agreed that, once Hoelscher forwards violations, the board will look at possible fines in the future.

One problem brought to light by marijuana industry attorney Jana Weltzin is the current lack of a system for revoking marijuana handler permits after employers catch them stealing marijuana products.

“It’s come to my attention from clients that they can’t revoke a bad employee’s permit after they steal from them,” Weltzin said. “I’m hoping you will address this sooner rather than later.”

Another matter brought to light by public testimony is the need for a more precise way of testing THC in marijuana products. Brian Coyle, owner of AK Green Labs LLC, said testing needs to be “more uniform and accurate.”

Director McConnell, in her report, said she wanted to create a scoping committee to take up questions and issues related to testing. The board unanimously agreed to establish the committee, and board member Brandon Emmett, an industry representative from Fairbanks, volunteered to be on it. McConnell will appoint additional members.

“Through our work on the edibles testing regulation and some of the testing issues that have been raised by licensees recently, I believe a thorough examination of the testing regulations is warranted,” McConnell had advised the board in her director’s report.

She wants to look at evidence of significant deviation in potency testing results of the same product by different labs, she told the board.

She also wants to see if products such as edibles have a 50-milligram THC limit or a 60-milligram THC limit.

Currently, regulations require one item from a production lot to be tested, such as cookies. But another section of the regulation requires testing for “homogeneity of each serving in a multi-unit package.”

McConnell posed the question about whether testing one item is enough when a production may include 2,000 cookies or pieces. And, if the product is infused with marijuana by injection, does each serving in a multi-unit package need to be tested?

These are some of the questions the committee will be taking up.

As the board meeting continues in Anchorage at the Dena’ina Center Nov. 15, it will review what remains of the 50 applications for operators and an agenda that includes considered whether to legalize onsite consumption.

Also on the agenda is a regulation considering random sampling of products, streamlining edibles testing and restricting who can have a financial interest in a business to those who are licensed to operate it.


Naomi Klouda can be reached at [email protected].

11/15/2017 - 10:05am