DJ Summers

Alaska Communications posts 2018 revenue increase of 2.5%

Despite somesetbacks, Alaska Communications System Group Inc. reported financial gains for both the final quarter of 2018 and throughout 2018. Alaska Communications clocked a 2.5 percent growth in annual revenue, from $227 million in 2017 to $232 million in 2018. The tail end of 2018 saw growth as well. The company’s fourth quarter revenue grew from $54.9 million to $58.7 year-over-year. Alaska Communications’ business revenue accounted for the growth, increasing 3.9 percent from $139 million in 2017 to $145 million in 2018, offsetting flat annual revenue for the company’s consumer offerings. Alaska Communications spokeswoman Heather Cavanaugh pinpointed the company’s success as the result of large enterprise and carrier customers. “We have built a track record of performance in this area and we see very exciting opportunities for future growth,” wrote Cavanaugh in an email. “Serving customers in the carrier, federal, education and oil and gas verticals are all opportunity areas for us. Further, with the turn up of our partner’s fiber network serving select northwest Alaska communities, we are seeing new opportunities come our way in these communities.” While Alaska’s economy continues to impact businesses across the state, Alaska Communications said growth in government and on the North Slope drove revenue. “Our growth is driven by our larger enterprise and carrier customers,” wrote Cavanaugh in an email. The business revenue grew solely due to voice, while business broadband revenue declined. Cavanaugh said this growth came from a long overdue price renovation. “Our voice revenue increase is a function of us raising some of our prices in the last year where we had not seen any price adjustment for years, in some cases more than 10 years,” Cavanaugh wrote. “We had to get our revenues more aligned with market and costs.” Two of Alaska’s internet providers, Alaska Communications and GCI Liberty, experienced a revenue shortfall from federal funding sources in 2018. The Federal Communications Commission’s Rural Health Care program gives financial assistance to internet providers to expand and administer rural telemedicine options. After the FCC ran out of its $400 million annual funding pool, Alaska Communications was due nearly $12 million in unpaid as of March 31, 2018, and the company cited the unpaid bills as a reason it had to lay off 30 workers in December 2017. Cavanaugh explained that while the Rural Health Care program did negatively impact Alaska Communications, the company is making headway communicating with the FCC to recoup the costs. “We are making progress with the FCC which has approved substantially all our customer contracts for the last two years and we remain in dialogue about expedient processing for upcoming years,” Cavanaugh wrote. “In this regard, we want to acknowledge the assistance of our congressional delegation in helping us and others who have been impacted with their advocacy on behalf of Alaskans.” Furthermore, Cavanaugh said other federal programs have served as a pressure valve for Alaska Communications’ finances. “In addition to Rural Health Care, we also receive support under the E-Rate program that funds schools and libraries, and the Connect America Fund program that supports expansion of internet service to underserved areas,” she wrote. “These programs currently provide a stable level of support.” For the coming year, Cavanaugh wrote the company will flesh out plans to expand wireless service. “One opportunity for our company over the next several years is the provision of 5G wireless backhaul for a national carrier,” she wrote. “In 2018, we deployed about $2 million of capital toward this opportunity and expect to deploy between $7-8 million in 2019, all of which will substantially improve our fiber network in our major markets.”

Recession, federal payment cuts contribute to revenue decline at GCI

Alaska’s economic outlook and a major shortfall in federal reimbursements took a toll on GCI Liberty during 2018. The final stretch of 2018 yielded better results than the year before, but the company’s annual finances took a dip overall. GCI’s total revenue grew less than 1 percent in the fourth quarter of 2018 from $225 million to $226 million. However, total annual revenue declined 2.2 percent from 2017 to 2018, from $895 million to $875 million. In part, Alaska’s wobbly economy drove the decline, according to Vice President of Corporate Communications Heather Handyside. “Certainly we’re still seeing the effects of the sluggish economy in Alaska,” Handyside said. “You see that in the business side of the finances.” Handysides’ diagnosis is supported by the company’s annual report. Business revenues were entirely responsible for the overall decline. Business revenue dropped 4 percent year-over-year, from $458 million to $439 million. Of the business revenue streams, wireless, data and voice each shrank with the only increase in video. Alongside Alaska’s economy, GCI’s financials reflect a shortcoming from the federal government. “We took a dramatic cut last year with the Rural Health Care funding that was reduced from the amount we requested,” said Handyside. Federal law requires that internet providers serve rural healthcare facilities at the same cost as more populated areas. The Federal Communications Commission’s Rural Health Care program gives financial assistance to internet providers to expand and administer rural telemedicine options. A few bad apples spoiled the applications for GCI and Alaska Communications Systems Group Inc., Alaska’s largest internet providers. The Federal Communications Commission exhausted its $400-million annual pool of money to fund the Rural Health Care program and a federal investigation showed some non-Alaska companies inflating their rural internet rates to justify greater reimbursement. Those companies were fined, and the funding shortfall led to GCI receiving nearly $28 million less than it had requested for services rendered. GCI is currently in the process of appealing the FCC decision. The commission has opened up its rule-making process to comment. Handyside said the FCC may not have thoroughly understood the challenges inherent for Alaska’s internet providers such as the logistics of providing internet service across such distances and population sparsity, in particular. “Our goal would be for the decision to be reconsidered,” said Handyside, though she emphasized GCI has no idea when the FCC will consider and decide on the appeal. The loss of $28 million in expected receipts contibuted in part to the layoff of 87 employees announced April 4, or about 4 percent of its workforce. Despite the bruises from economy and federal government, GCI’s annual financials did display some bright points. GCI’s consumer revenue stayed level at $437 million year-over-year. This revenue’s stability relied entirely on data growth. Data revenue increased by 10 percent, from $146 million to $160 million, or exactly enough to offset declines in every other consumer revenue stream. Consumer wireless, video, and voice revenues dropped 2 percent, 10 percent, and 6 percent, respectively, from 2017 to 2018. Streaming services and the cord-cutting habits of American consumers in general contribute to the decline, but Handyside said myriad factors play into the shifts in consumer revenue streams. “There’s not one thing that explains it,” said Handyside. “On the consumer side of the house it fluctuates generally. This reflects having a lowering population.” Other numbers continue the trend. GCI’s cable modem subscribers increased 1 percent, but video subscribers declined 8 percent, and total consumer voice lines declines 9 percent. “I think people are finding more and more ways to watch the content they want to watch,” Handyside said. “We find there also a strong segment who want to watch things with predictability. We’re trying to continue to serve those markets.” Despite financial setbacks, Handyside said her company can point to some concrete successes in 2018, particularly with GCI’s rural 1 gigabyte internet service. “We’ve gotten our 1 gig service out to rural communities,” Handyside said. “Eighty percent of Alaska has access to 1 gig. The fact we have remote communities like Kodiak and Sitka have 1 gig service, that’s pretty incredible.”

Banks reinvesting boost in profits from 2017 tax reform

Though the fate of Gov. Michael J. Dunleavy’s budget looms over Alaska’s economy, federal tax reform and some positive trends are boosting bank leaders’ morale. “The future looks a lot better than it has,” said Wells Fargo Pacific Northwest Business Banking Division Manager Joe Everhart. Alaska’s financial institutions are reaping the benefits of a federal tax change put in place by President Donald Trump’s administration in 2018. Trump signed the the tax reform bill passed by Congress at the tail end of 2017. Among changes both to individual and corporate tax structures, the law lowered the corporate tax rate to 21 percent to more closely match the global average of 25 percent. Nationally, the change brought about record bank profits. According to the Wall Street Journal, national banking profits spiked in 2018 after the new tax law took effect. According to the Federal Deposit Insurance Corp., banking profits jumped 44 percent from 2017 to 2018 for a record profit of $236.7 billion. For the first time since 2006, no American bank failed during 2018. Alaska’s banks proved no exception to the national trend. For the five Alaska-based banks, net income rose an average 43.8 percent between the fourth quarter of 2017 and the fourth quarter of 2018, or right on par with the national average. Cumulatively, the five Alaska-based banks saw their net income increase from $60.9 million to $87.6 million. Alaska-specific information income from the FDIC isn’t available for national banks Wells Fargo, which has just more than 50 percent of state deposits at nearly $6 billion, and KeyBank, which is fourth in Alaska deposit market share with $1.2 billion. Banks welcome the chance to spread the good news. Wells Fargo is sinking the extra money back into the company and into philanthropy. “We raised the minimum hourly base pay for team members in the U.S. to twice the federal minimum wage, and we increased philanthropic support for our communities by 55 percent in 2018 to $444 million,” said David Kennedy, Wells Fargo Alaska’s public information officer. Everhart takes the tax change as a boost in what has been a gloomy few years for an Alaska economy beset with cash flow problems related to the 2014 crash in oil prices. Everhart said the new tax law accompanies some notable oases on the state’s economic horizon. North Slope oil development has picked up, giving both the promise of revenue and jobs. The Trump administration approved ConocoPhillips’ $1 billion drill site, at Greater Mooses Tooth-2, which began construction this winter, and its sister site Greater Mooses Tooth-1 began producing oil ahead of schedule this past September. Tourism could produce a jump in cashflow for the state economy. Cruise Lines International Association predicted cruise ship tourism will increase by 16 percent in 2019 with about 1.3 million cash-laden visitors. Northrim Bank topped the list of the Alaska-only bank beneficiaries of the new tax law in net income growth. Net income climbed 49 percent from 2017 to 2018 for Northrim, which has $1.22 billion in deposits, from $14 million to $20.9 million. First National Bank Alaska, second in deposit market share with $2.4 billion in deposits, had net income jump 48.5 percent from $36.4 million to $54.1 million in the same period. Mt. McKinley Bank in Fairbanks saw net income grew from $3.8 million to $4.7 million. The new tax law isn’t the only element pushing numbers up, either. Alaska banks also increased their loan portfolios across the board by an average 5.5 percent. McKinley Bank increased net loans and leases 9.5 percent from fourth quarter 2017 to fourth quarter 2018 — a good signal for an area still anticipating a financial boost from an incoming wing of F-35 fighter jets to Eielson Air Force Base. Northrim Bank President and CEO Joe Schierhorn agreed with both with the cheerier-than-normal economic outlook and means to reinvest it. Schierhorn said he can’t remember a time since the late 1980s when a tax reform yielded this kind of fiscal boost, and like Wells Fargo Alaska, has spread the cash around. “There are three ways of thinking about how to use extra income,” Schierhorn said. “You can return it to shareholders, invest back in infrastructure, or invest in employees. We did all three.” Northrim gave wage and pension bumps and additional education opportunities to employees, aa record-breaking dividend increase to its shareholders, and opened a new branch in East Anchorage. Like Everhart, Schierhorn points to increased production on the North Slope and to the cruise line forecast as hopeful elements in the 2019 outlook. “The projected tourism increase will be big,” Schierhorn said. “When you think about the shore-based business that cater to that segment, it could be significant economic driver.” Even though 2019 is beginning with good omens, bank leaders are still looking critically at Alaska’s political situation. Despite the profits and promise, Dunleavy’s cut-laden budget makes banking leaders uneasy. “When Dunleavy’s budget came out, it created a sense of cost,” said Everhart. “It came with $1.6 billion of cuts. You think about that, and in reality every $100,000 of cuts is one job. That $1.6 billion is 1,600 jobs we could lose.” Everhart’s tone and message adds to a widespread concern over Dunleavy’s budget from state employees and public unions in healthcare and education, but he clarified Wells Fargo isn’t making any moves till the Legislature hashes out the budget. Clearly, however, he seems to believe in better solutions to the Permanent Fund dividend question than budgets slashes. “We have a cash flow problem, not an economic crisis,” Everhart said. “The state still has levers to pull without the deep cuts currently proposed. The legislative process has still not taken place. It’s hard to ring the alarm bells until the legislative process completes.”

Owner dies day after state shut down her Anchorage cannabis club

One of the flashpoints of the nascent Alaska marijuana industry and its founder are both gone. Pot Luck Events — the Downtown Anchorage scene of industry war meetings during the furious regulatory development stages of 2015 and unofficial social nexus for the cannabis industry — was shut down after the unofficial marijuana holiday of April 20 following pressure from the state. The next day, April 21, owner and founder Theresa Collins died after a yearlong bout with ovarian cancer. Collins was a prominent organizer and advocate both before and after the ballot initiative that legalized recreational cannabis in 2014. As a sendoff, Pot Luck Events is planning a memorial for her April 29. Attempts to reach other partners in the business were unsuccessful. Collins lived just long enough to see her passion project shut down by a state action long in the making. In an April 19 letter, newly minted Alcohol and Marijuana Control Office director Erika McConnell told Pot Luck Events that the time had finally come to close. The law, she wrote, is significantly more developed now than in the summer of 2015, when Pot Luck Events balked at similar notices that their business was illegal. “Today, I can say with confidence that your business model is not supported by the law and you must cease operating as you have been,” she wrote. “It is AMCO’s hope and expectation that you will use this as an impetus to redirect your vision and resources toward lawful operations.” Though the closure and Collins’ death sent shockwaves through Alaska’s cannabis scene, officials said the move is as much about preserving the industry as punishment. McConnell backed her order with most of the same arguments the state has used to oppose marijuana social clubs, including fear of a hostile White House. President Donald Trump’s administration has shaken the cannabis industry nationwide, with Attorney General Jeff Sessions and White House press secretary Sean Spicer both denying medical marijuana efficacy and hinting at increased federal drug enforcement. “(Pot Luck Events) is vulnerable to federal enforcement,” she wrote. “And unless the board uses its enforcement powers to issue violations for your business, Alaska’s entire regulatory scheme could attract unwanted attention from the federal authorities.” McConnell also referred to a September 2016 opinion from state Attorney General Jahna Lindemuth that social clubs are illegal. “When Alaskans voted in 2014 to liberalize personal use of marijuana and to allow a commercial marijuana industry, they also voted to prohibit public consumption of marijuana,” said Lindemuth in a statement. “Unlicensed marijuana social clubs are public places like any other place of business — such as cafes, movie theaters, or retail stores — where marijuana consumption is not allowed by law.” Up till now, Pot Luck Events, the State of Alaska and the Municipality of Anchorage lived in a kind of staring contest. The Marijuana Control Board batted back and forth on the issue of marijuana social clubs when it was crafting industry regulations in 2015. It eventually decided that it had neither the authority to ban them or to allow them. The business model did not fall into the four license types defined by Alaska law. The board asked the Legislature to define the clubs in statute, but lawmakers never spoke an official word about the issue. Getting either police or regulatory enforcement onto the issue never happened, though officials tried subtler attempts. Former AMCO director Cynthia Franklin threatened to withhold a holiday party liquor licensed from the real estate owner because of the club’s presence on his property. Collins, however, refused to close. She was convinced it broke no laws as the club depended on private memberships and therefore did not qualify as a public space where marijuana use is forbidden. McConnell made it clear that Pot Luck’s closure doesn’t mean the state won’t still consider the much-debated and long-delayed onsite consumption provisions. “As you know the MCB will be reviewing new proposals for onsite consumption—they were scheduled for the last meeting, but approving licenses was given priority,” she wrote. “They are on the agenda for May 15.” The closure rides a new wave of enforcement actions, and could be a sign of things to come. “Enforcement is getting busy,” said Cary Carrigan, executive director of Alaska Marijuana Industry Association. “They’re certainly being more proactive.” The first months of 2017 have been marked by an increased enforcement presence. Marijuana Control Board meetings more heavily involve extended discussions of violations centered around unclear regulations, including the statewide seizure of imported CBD products. Retailers are getting more warnings. On April 17, two days before the Pot Luck closure letter and just before the unofficial marijuana holiday of April 20, AMCO sent a letter to a cluster of cannabis businesses in the state warning them that the kinds of celebrations they were planning would land them in hot legal water. “Over the past week the AMCO Enforcement Unit has discovered an alarming amount of social media advertisements for 4/20 celebrations at marijuana retails stores that are in violation of 3 AAC 306.360 (d). Games, competitions, raffles, etc. are strictly prohibited at marijuana retail stores,” the letter read. “Please be advised that if a 4/20 event held on your premises includes activities that violate any section of 3 AAC 306 further enforcement action may be taken against your license.” Carrigan said he understands the impetus for enforcement, but that the industry is rankled that it seems more geared toward licensees. The state’s regulations, he said, are so often unclear that it seems like misdirected effort to go after otherwise law-abiding business owners while outright lawbreakers go unpunished. As in prior Marijuana Control Board Meetings, Carrigan mentioned cannabis delivery service ACDC and the several unlicensed dispensaries. “I just wish they were more stringent with people way outside the law, cracking down on the black market,” he said. Correction: The original version of this story incorrectly named Theresa Collins as Theresa Peterson. We apologize for the error. DJ Summers is contributor to the Journal and author the Business of Cannabis, set for publication in 2018. He can be reached at [email protected] or followed on Twitter @djsummers87.

Blood Bank officials say FDA found no evidence to back complaints

Complaints aired last year against the Blood Bank of Alaska are unfounded, according to bank leaders, but the results of the Food and Drug Administration investigation aren’t yet public. The FDA visited the Blood Bank of Alaska from March 6 through March 14. During the course of the inspection, BBA leaders said the governing agency found nothing to support a series of misconduct allegations brought against them by several former and current employees in two separate complaints to the FDA in 2016. BBA leadership said the results prove what they have said all along. “The results clearly showed that we crossed all our Ts and dotted our Is and did everything right,” said CEO Bob Scanlon. Last August, two sets of employees filed two separate complaints with the FDA, alleging that BBA was practicing improper and sometimes dangerous blood drawing techniques and inventory controls. They did so as the result of having overextended themselves for their new building on Airport Heights Road, one complaint alleged, for which they needed to sell blood to California blood bank LifeStream. This led to overdrawing and over recruiting donors and a dangerous blood shortage in the summer of 2016, the complaint asserted. Board of directors chairman Ryan York and CEO Scanlon have consistently denied the allegations. Last fall, they mounted an internal investigation, performed by several of the bank’s board members, that concluded none of the accusations had any merit. York welcomed the FDA’s audit as confirmation. “The results of the investigation showed overwhelmingly that the accusations were unfounded,” he said in the release. “The FDA is the highest law in the land for blood banks and now they have independently confirmed the results of the internal investigation. We all knew all along this would be the case but it’s nice to now have their results finalized.” Due to FDA policies, audit specifics are an unknown quantity. According to Scanlon, the audit carried out was routine, not specifically geared towards addressing previous complaints filed against the blood bank. During the 2016 press conference revealing the results of the internal investigation, Scanlon had said he spoke with the FDA about the complaints. At the time, he said they had no interest in pursuing a special audit. “Based upon the knowledge they had, they did not see anything of a nature that would threaten the safety, purity, or potency of the blood supply,” he said. “That’s why they didn’t appear immediately.” At the time, the FDA would not comment on whether or not it was planning or would carry out a special investigation. If the FDA’s most recent audit results are indeed finalized and do indeed disprove the complaints against the blood bank, the public can’t know until further notice. Though BBA praised the finalized results as verifying its own investigation, the FDA is characteristically mum on the issue. “The FDA, by policy, does not discuss possible or ongoing investigations,” wrote FDA spokesperson Lyndsay Meyer. Scanlon acknowledges that without a visible report from the FDA the public might still have questions. He said because BBA didn’t receive any comments of concern from the FDA, the bank wasn’t provided anything in writing to show the Journal as evidence that the complaints have no basis. “Once we receive the letter I’ll ask them what the protocol is,” he said. The FDA will have addressed some, but not all, of the complaints alleged by former and current employees. Annual FDA inspections of blood banks look at operational issues, including blood drawing practices and storage code requirements. On these points, Scanlon said the blood bank brought up no concerns. “This is the most detailed type of audit the FDA does,” Scanlon said. “They take possession of all our procedures. They then look at all the training records. They will then observe the staff as they perform their functions. They’ll check things like maintenance records on our equipment. They’ll check temperature reading on equipment, everything.” However, Scanlon also acknowledged not all of the complaints would be under the FDA’s authority. Neither the FDA nor the American Association of Blood Banks monitor or mandate blood inventory levels — the issue that served as a catalyst for BBA attention in 2016. Further, whatever financial troubles are alleged in Soriano’s complaint are a matter of their own. “They would not address or make a determination on the volume of blood that’s on hand,” he said, and also that “financials are under the purview of the blood bank’s individual auditor.” This loops into an earlier issue with the blood bank’s financial auditors, Anchorage firm Swalling and Associates, which used financial information from before BBA’s export agreement with California blood bank LifeStream, the alleged source of inventory problems in Soriano’s complaint. DJ Summers is a correspondent for the Journal. He can be reached at [email protected]

Enforcement, industry members ask for cannabis rule clarity

Alaska’s cannabis industry needs to get enforcement off its back if it wants to develop quickly enough to take advantage of the summer tourism season, but that will depend in large part on the ongoing process of clarifying regulations. “I think these are the growing pains of the new industry,” said Alcohol and Marijuana Control Office chief enforcement officer James Hoelscher. “This is something we’re going to have to deal with. Regulations need changing after we see them in action, evaluate them from the beginning to the end…then we can bring it forward to the board for them to clarify. I don’t think there’s an easy way around that.” Hoelscher and industry leaders agree there is a vicious cycle at work. In response to short staff at the Alcohol and Marijuana Control office and foggy Marijuana Control Board regulations, business owners will sometimes interpret regulations to the best of the own ability — which often leads to violations, which can take anywhere from four hours to two weeks worth of time for AMCO to investigate, Hoelscher said. The already slowly developing Alaska industry gets set back even further when AMCO and the Marijuana Control Board take time sorting through the complications. The Alaska industry is slowly but steadily growing. There are now 72 operational cultivators, retailers, testers and manufacturers in the state, with more on the way. Explanations for the pace of Alaska’s cannabis industry development — which lags behind the booms of Lower 48 states that legalized marijuana — range widely, with a kernel of truth in each. Alaska’s unique geography and transportation hurdles contribute, along with a lack of easily accessed in-state capital, an understaffed AMCO and local opposition from towns and municipalities. At the most recent Marijuana Control Board meeting on April 5-6, stakeholders spent the first hours begging the board to hold a May meeting. The industry needs every supply advantage it can get, they said, or the black market will pick up the slack when tourists flood Alaska’s coasts and towns come June. Growers, many of whom are still sorting through kinks after the first growing cycle, need time to develop crops. Industry attorney Jana Weltzin even suggested waiving renewal fees for licenses not in an active status to spur growth. “When the tourism season hits, we’re going to leave a big gap for the black market,” she told the board. “There are black market actors who have no intention of slowing their operations …they are going to be putting in large orders from the United States.” Shortly after, Hoelscher spent several hours with the board sorting through a range of regulatory violations issued to businesses who seemed to misunderstand rules about transportation, manufacturing, and packaging. Regulations and interpretations Clarity is at the heart of much of the regulatory confusion. Getting people to follow the rules, Hoelscher said, means making the rules understandable. “What I’m talking about is making them easier to understand,” Hoelscher said. “Any regulations written by anybody should be easy to understand. We should not have the opportunity for people to operate in gray areas.” Cary Carrigan, executive director of the Alaska Marijuana Industry Association, said the industry simply hasn’t sorted through the regulations yet. “The process has moved so ponderously in the past two years” he said, “that we’re getting to a point where we have regulations and we have to make sure they’re workable. People rather than waiting are trying to interpret them to the best of their ability. The amount of time that went between when they made these regulations and now, there was no time for interpretation.” The board spent a fair deal of time of April’s meeting sifting through the regulations and proposing rewrites where needed. Transportation continues to be a problem for Alaska’s geographically disparate marijuana industry. Hoelscher mentioned several citations. Some manufacturers have picked up product from cultivators, which the regulations do not allow. Transportation through air cargo is still a problem, with companies using federal airspace, and federally-funded municipal airports like Juneau, to ship cargo throughout the state. Other regulations needed clarity following citations. Cultivators had been cited for selling keif — marijuana dust often produced in the trimming process — which the regulations say is reserved for manufacturers only. Packaging and advertising still needed clarity as well. AMCO has cited businesses owners for advertising through social media without appropriate warnings and for advertising free or discounted products. AMCO had also observed companies selling cannabis products in child-proof, re-sealable packages inside brown paper bags, which meets regulatory requirements, but only after a demonstration from retail shop Arctic Herbery and a discussion. Hoelscher made it clear that the enforcement staff’s job is to follow the letter of the law; interpretation is for the board and for legal counsel. “Unless the law is clear, many make the assumption that operation within gray areas without staff or board clarification is an acceptable practice, which it is not,” explained Hoelscher. “If licensees are unsure of the statutes or regulations, they should contact our office for clarification.” Contacting the office, however, is not a viable option in the thick of business operations, stakeholders said. Nick Miller, a board member, retail shop owner and president of the Anchorage Cannabis Business Association, said reaching AMCO staff for clarification isn’t always possible. “When I get into that situation, it’s because I’m in the middle of doing something and it’s unclear, and I need a timely answer,” he said. “I have nothing to do but go ahead with my plan. I relate it back to the staffing issue. If someone is planning something, or wants a clarification … there should be a hotline you can call.” A hotline, though, won’t likely come too soon. AMCO is already under budgeted for what it says it needs, and has repeatedly requested additional staffing funds from the Legislature. Until then, leaders are trying to put together help for business owners. Miller said ACBA recently established a committee to create a reference handbook for businesses, comprised of the lessons more experienced members have learned. Similarly, Alaska Marijuana Industry Association executive director Cary Carrigan said his organization wants to help with clarity. “If people have problem with interpretation of regulations, we ask them to contact us,” he said. “We’re trying to make sure all the corners of the state know what’s going on.” History of violations The Alaska cannabis industry has racked up a long history of stepping through blurry lines. The board and AMCO have spent arguably as much time dealing with controversies and regulatory violations as writing regulations or reviewing and issuing licenses. Before the Marijuana Control Board was even established, the state was faced with the alleged pot delivery services Discreet Deliveries and ACDC (which is currently advertising on radio for deliveries), along with former broadcaster Charlene Egbe’s alleged unlicensed dispensary Alaska Cannabis Company. Shortly after the Marijuana Control Board was created, a new gray area arose with cannabis social clubs like Green Rush Events and Pot Luck Events, where patrons pay a membership fee to bring their own cannabis to consume on site. This demanded a hasty rewrite of code, several board meetings and missives, and requests that the Legislature step in to help — which it has not done. Later, enforcement ran into more problems as green crosses started popping up across the state, allegedly signs of unlicensed pot dispensaries. More recently, Alaska gained national attention when AMCO enforcement seized several retail shops’ CBD oil products imported from Colorado, not tested or packaged or tracked in Alaska. Owners received violations and each claimed that they assumed the import and sale were legal, though none verified this with AMCO staff before importing or selling the products. Companies began selling pre-rolled joints, which again demanded board time and a regulation rewrite to determine whether they should be classified as a manufactured product. Summer fun The summer of 2017 needs to grease as many skids as it can not only in getting the industry up and running but in avoiding federal scrutiny. President Donald Trump’s administration sent shockwaves of fear through the industry when both press secretary Sean Spicer and Attorney General Jeff Sessions made comments hinting at increased enforcement of federal marijuana laws. In this light, enforcement officials say it’s probably better to err on the side of caution. “It is a heavily regulated industry, and it’s done that way for a reason,” said Hoelscher. “If they’re trying to rely on their own understanding … they might be doing more harm than good.” Alaska’s cannabis entrepreneurs do have support from their congressional delegation and from their governor. In an April 3 letter, the governors of Alaska, Colorado, Oregon and Washington addressed Sessions and U.S. Secretary of the Treasury Steve Mnuchin about the perceived threat of an uptick in federal marijuana prosecution in states where marijuana is legal. Together, the governors asked the Trump Administration to “engage with (them)” before changing the way the federal government enforces marijuana laws. “We understand you and others in the administration have some concerns regarding marijuana,” reads an April 3 letter cosigned by the governors of Alaska, Colorado, Oregon and Washington. “We sympathize, as many of us expressed apprehensions before our states adopted current laws. As governors, we have committed to implementing the will of our citizens and have worked cooperatively with our legislatures to establish robust regulatory structures that prioritize public health and public safety, reduce inequitable incarceration and expand our economies.” To date, 29 states and the District of Columbia have legalized either adult use or medicinal cannabis. Colorado and Washington legalized adult use of marijuana in 2012, while Oregon and Alaska legalized it in 2014. In 2016, another four states did the same. DJ Summers is a correspondent for the Journal currently working on a book on cannabis due out in 2018. He can be reached at [email protected] and followed on Twitter @djsummers87.

Marijuana board returns to onsite consumption regulations

The pursuit of retail onsite consumption of legal cannabis in Alaska is not going away. The Marijuana Control Board, which crafts all regulations for the state’s cannabis industry, voted to begin a regulation project for onsite consumption only a month after voting down a set of regulations that would have advanced it. Alcohol and Marijuana Control Office staff will review the regulations and post them for public comment before March 20, when Erika McConnell is set to take over the position of AMCO director. Onsite consumption provision for retail stores in Alaska would allow a separate, independently ventilated room for customers to purchase and consume product from only that store. For Alaska’s 2 million annual tourists, industry stakeholders say onsite consumption provisions are essential, as tourists will have nowhere to smoke without them. In February, the board erred on the side of caution and voted by a split of 3-2 not to advance a set of regulations. Though he supported the initial idea of onsite consumption, board member Mark Springer’s typical swing vote went against moving the idea for safety reasons. “It will draw a big spotlight on us,” Springer said. “We don’t want to be waving a red flag in front of federal law enforcement, at least not now.” Springer voted on March 7 to open it back up when member Brandon Emmett introduced the motion. Even though the board will consider a regulation package, it doesn’t mean Alaska shops will definitely be able to open pot cafes anytime soon. The board’s vote simply opens the plan back up to public comment. “What we killed in the last meeting was the standards which they must meet,” explained member Nick Miller. “I’m not sure it’s a reversal. They’re at least willing to talk about it for a regulations project. That doesn’t mean it’s going to pass.” Springer said he would never kill a discussion — even though he meant to kill the issue entirely in February. Like many industry members, Springer believes Gov. Bill Walker’s administration could have some antipathy to the developing industry. It isn’t certain he’d vote in favor of it next time, but he did say that next time could be different. “We voted to kill the regulations last time,” said Springer. “I’d never vote against a regulations project. We’ll see what it has in it, whether there’s been any change in the tide.” Emmett’s plan didn’t come easily. This marks the latest in a series of procedural issues with onsite consumption. Both the board itself and the Alcohol and Marijuana Control Office have flubbed regulations or misunderstood them. Prior to the February meeting, AMCO staff failed to send out a public notice on the onsite consumption regulations three times. Acting AMCO director Sara Chambers described these as “staff errors” and has apologized for the delays on several occasions. “I have only been with the agency since January 10, so I am not sure why the errors occurred,” wrote Chambers in an email. “However, they were purely administrative in nature, and we are working to ensure that systems are in place and proper training of staff is provided so similar problems are avoided in the future.” When it halted the regulations in February, the board itself overlooked the fact that it had already approved several business licenses that had plans to ask for an onsite consumption provision. In the end, the board had to take a vote that in effect clarified what it had voted to do during the February meeting. For much of the meeting, the board spun itself on a Robert’s Rules of Order hamster wheel, confused as to whether or not it had previously banned all onsite consumption for good, banned it only temporarily, allowed onsite consumption for five businesses, or allowed it later on for whatever businesses submitted an acceptable plan. Chambers and board members each clarified that their intent had never been to approve any onsite consumption applications until the board made a framework. Board member Loren Jones said he disagreed with the entire concept of approving onsite consumption licenses without a regulatory plan — which board staff said was the implications of its former vote. “This board cannot on an ad hoc basis, by default, approve something that has so much potential in the public and in an industry without a set of rules,” said Jones, the public health designated seat on the board. “I can’t accept that the staff would even think we would approve an onsite consumption outside of a set of regulations.” In the event that onsite consumption gets the go-ahead from the board, customers will have joints to smoke. To start the meeting, the board OK’d pre-rolled joints, or prerolls, to be sold in stores. Previously, the board had questioned whether prerolls were a manufactured project or simply a packaged product. The problem has to do with licensing. If prerolls were a manufactured product, they would have to come from a manufacturing facility, meaning there would have to be an extra step or transport, expense, and red tape between growing pot and selling it in a scrap of paper. “Based on those regulations, they can,” explained cannabis retail Miller. “It should be clarified that nothing can be mixed or included in that marijuana…then it becomes a product.”

Legislature considering bills to advance state mariculture

Alaska is getting closer to having a more robust seafood farming industry, potentially adding another billion dollars to the state’s economy over the next few decades. The House Fisheries Committee perused a pair of bills on March 7 that would make changes to the Department of Commerce, Community and Economic Development’s mariculture revolving loan fund and allow for more enhancement projects for Alaska king crab and other shellfish. The worldwide market, some believe, needs Alaska’s infrastructure to develop. “There will be a demand for Alaska farmed shellfish products,” said Rep. Dan Ortiz, I-Ketchikan, who introduced the bill. “What we need to do is put the pieces in place to meet that demand.” The fund makes loans available for shellfish farming, and the bill would expand those loan opportunities in order to jumpstart the industry. The fund itself takes no money from Alaska general fund, so it has no fiscal note. Rather, the treasury collects on loans interest to keep the program self-funding. Rep. Louise Stutes, R-Kodiak, set the bill aside “until a future date.” Mariculture has gained steam recently as a potential economic driver. Recognizing seafood production as Alaska’s largest source of private employment, lawmakers and leaders are looking to expand the industry’s output. In early 2016, Gov. Bill Walker appointed an 11-member mariculture task force specifically to figure out how to grow shellfish and sea plant growth in the state. “The goal of this task force is to bring key stakeholders together and determine how the state can help this industry prosper with Alaska-grown products,” the governor’s press release read. To that end, representatives from fishing districts are trying to find ways for shellfish farmers to get more access to funding. “These days we’re all aware that economic diversification is going to be a necessity to get the state to move forward, to help get the state back on the road to a sound economy,” said Rep. Dan Ortiz, I-Ketchikan, who introduced the bill to the House Fisheries Committee. “We need to diversify. We need to find ways to make us less dependent on a one-engine economy. There’s an opportunity in the seafood industry with mariculture development. There’s some real prospects there.” In practice, the bill would open up shellfish and seafood farming to organizations, instead of just individuals as is currently law. Neuman said he didn’t see why companies that can’t get private financing would be a good idea for the state. Ortiz answered that he didn’t think the industry is established enough to justify funding, and that’s what he’s trying to change — currently, the fund has only loaned out $500,000 in principle to five individual shellfish farmers, out of an available $4.4 million. “This bill expands the opportunity, creates more players in the game that might source this fund,” said Ortiz. “I think you would agree that if we have capital sitting there for the purpose of developing the economy, we want to see those funds utilized.” The bill specifies that the farms and hatcheries funded must either benefit a common property fishery — like the state-sponsored salmon hatcheries do — or otherwise benefit the “public interest.” The bill is trying to solve what Ortiz staffer Elizabeth Bolling described as a “bottleneck.” The revolving mariculture fund was originally intended to encourage small farmers to get into the business of shellfish. However, the Alaska Department of Fish and Game requires all seed to be purchased from Alaska. This requirement makes it difficult for these farmers to purchase a steady supply of seed and feed. With this in mind, Walker’s mariculture task force wants to open more opportunities for larger organizations, including hatcheries, so that they can produce the building blocks for the smaller farmers. Julie Decker of the Alaska Fisheries Development Foundation, a task force member, said she expects a need for more money. “We’re at sort of a chicken or the egg scenario, in that the industry is very small,” she said, “and to actually support that infrastructure is very difficult. This funding mechanism would allow for hatcheries to have a more stable source of funds to get going and allow for shellfish enhancement projects going.” Decker’s organization believes that Alaska’s mariculture can grow to a $1 billion industry within 30 years — if the state can pave the way. “We know we don’t have money, but we do have these assets like the revolving mariculture loan fund,” she said. “If we align it with where the industry’s needs are, we can develop it faster.” The public seems to like the idea, including the United Fishermen of Alaska, the state’s largest industry group. Most comments spoke highly of the kind of stability a developed mariculture industry would bring. Smaller farmers like John Kaiser, who owns Cordova’s Rocky Bay Oysters, are in favor of the bill. “As farmers we do need seed,” said Kaiser. “There were not that many farmers able to take advantage of it initially. This is a larger pot of money. If it were to be used correctly by even larger entities, I’d have no problem with that. If this would provide the seed…I would not see a problem.” Angel Drobnica works for the Aleutians Pribilof Islands Community Development Association, one of six Community Development Quota groups that represent 65 Western Alaska villages. Drobnica, another mariculture task force member, said her communities could benefit from some consistency in their seafood production. “Fisheries can be unpredictable and unstable,” she said. “Some of the most stable communities have year round processing plants. We believe that mariculture can play a significant role in bringing this stability to fisheries-dependent communities.” Ortiz also introduced a companion bill, HB 128, which would allow non-profit hatcheries to engage in enhancement projects and restoration projects for shellfish species, including red and blue king crab. With ocean acidification issues and overfishing concerns, Alaska should be putting effort into repairing and controlling some of its most valuable seafood products, proponents argued. Like HB 76, the bill requires that all such enhancement projects would have to benefit a common property fishery, and outlines permitting requirements.

Pendulum ticks toward commercial fishermen as Cook Inlet meeting wraps

The Board of Fisheries pendulum may have swung, but it’s still attached to the same clockwork. The triennial Upper Cook Inlet Board of Fisheries meeting ended March 8, leaving behind a big fish goal for the Kenai River late king salmon run, potential expanded hours for the Cook Inlet drift and setnet fleets, and a brand new early run king salmon plan on the Kenai River. Though the tone was mild compared to that of 2014, the same grudges against the Alaska Department of Fish and Game, the board, and among rival user groups are bubbling away. After three years of buildup following an emotional 2014 meeting, the 2017 marathon was sparsely attended and largely civil, focusing mainly on what ADFG Commercial Fisheries Division Operations Manager Forrest Bowers called “minor changes.” “This early run king plan, that’s probably the biggest change outside the large fish goal,” Bowers said. “With the late run sockeye plan, there was a long discussion but at the end of the day it didn’t really do much. The late run king plan, I mean, again, long discussion, relaxed the August restriction a bit, but it’s fundamentally the same.” Commercial fishing board or not? The fundamental sameness Bowers spoke of could be defining feature of the 2017 meeting. In spite of a big board shakeup and three years of heated fishing seasons, the same undercurrents remain. Fishermen cluster together to speculate on board politics and count votes, or to speculate on the inner leanings of the Alaska Department of Fish and Game, or the board process itself. Rival user groups invoke science, economics, and Alaska to back their proposals. For fishermen, perception is reality, and the next three years might well be a kind of film negative of the previous three years where that perception is concerned. Gov. Bill Walker put an end to a long-running board dynamic in 2015 when he ousted former chairman Karl Johnstone, who commercial fishermen continue to revile for pushing proposals that would benefit sportfishing interests. With three new board members — Israel Payton, Alan Cain, and Robert Ruffner — the perception has shifted somewhat. Commercial fishermen are happy with the changes, while sportfishermen say the inexperience level is contributing to the board’s tendency to be misled. Most at the meeting credit Johnstone’s absence with a renewed intellectual curiosity on the board’s part. “I think it’s more thoughtful,” said new board Chair John Jensen, a commercial fisherman from Petersburg. “There’s a lot more thoughts, more questions than usual. The questions are amazing. People really understand what we’re talking about.” As usual though, there is an equal and opposite reaction. “With no compelling evidence that there is an impending financial disaster in the Upper Cook Inlet commercial fisheries, this Board of Fisheries, all appointees of Governor Walker, has significantly weakened the 40-year directive of a sport fish priority for king and coho salmon in Upper Cook Inlet, potentially triggering untold damage to a billion-dollar economic driver in Southcentral Alaska,” stated a letter from the Kenai River Sportfishing Association. Certainly, the perception of commercial leanings within Walker’s administration has some merit. Walker appointed former commercial fisherman Andy Mack as his commissioner of the Department of Natural Resources. Walker also appointed purse seiner Sam Cotten as commissioner of the Alaska Department of Fish and Game, and through his position has taken many actions to advance the interests of Alaska’s small boat fishermen on the federal North Pacific Fishery Management Council. However, he also voted in favor of actions the sportfishing industry will benefit from, including a Recreational Quota Entity program for halibut chart guides that would allow them to purchase commercial quota. Meanwhile, stakeholders are watching new board members carefully for voting habits — some commercial fishermen claim to have already isolated some emerging patterns in Israel Payton, while sportfishermen have carefully scrutinized Robert Ruffner’s actions. Ruffner was defeated by a single vote in 2015 after sport groups led by KRSA defined him as a commercial fishing advocate who also upset the regional balance by not hailing from Anchorage. When Walker had the chance to fill three positions, KRSA backed off and all were unanimously confirmed in 2016. Minor changes What minor changes happened benefitted commercial fishermen more than sportfishermen. After several years of infighting between user groups, the board threw a few small bones to commercial drift and setnet sockeye fishermen. Early in the meeting, the board reworked the “1 percent” rule to allow more potential fishing time for East Side set netters with a narrow 4-3 split vote of the board’s seven members. The new rule closes commercial sockeye harvest when less than 1 percent of the season’s total sockeye harvest is taken in two consecutive periods after Aug. 7. Formerly, 1 percent rule took effect on Aug. 1, so the change could allow a week’s more fishing time for the commercial fleet. The paired restrictions between setnetters and the sport fishery tied to Kenai River king salmon abundance that were advanced by KRSA and passed in 2014 also got a makeover, but weren’t fully repealed. Setnetters have no more hours restrictions after Aug. 1, when the Kenai sport fishery closes, and have two additional 12-hour openings when the sport fishery is at no bait or catch and release. ADFG managers, of course, can close the fishery whenever they feel a need. Upper Cook Inlet drift fishermen also benefitted from the meeting, though only enough for high-profile drifters to describe it as “token.” Commercial fishing managers can open Central District hours for the drift fleet from July 16 to July 31, potentially giving more sockeye harvest than can be had on the inlet’s edges within the coho salmon “conservation corridor” that was also created in 2014 in order to protect northern-bound coho salmon. The Kenai River early-run king salmon plan could be the only proposal that escaped user group conflicts. The early king run on the Kenai River was indeed an outlier in the often contentious board process, a collaboration between Kenai River Sportfishing Association, the Kenai Area Fishermen’s Coalition and the Kenai River Professional Guides Association. Falling king salmon runs have plagued the state for the better part of a decade, and while improving in some places, the fishermen want to protect the early king salmon run on the Kenai River as much as possible. According to a new plan, if managers project fewer than 2,800 to 5,600 early run Kenai kings longer than 75 centimeters, the fishery is closed. If it is between the sustainable escapement goal and the optimum escapement goal of 3,900 to 6,600 salmon, the managers can close the fishery or allow catch-and-release. If it’s within or greater than the optimum escapement goal, managers can allow bait and retention of fish of a size the department deems appropriate. The measure also abolishes the slot limit, “All three groups got together and said, for this one stock, we need something,” said Kenai River Sportfishing Association Executive Director Ricky Gease. “We came together, put aside our differences — and they exist, we’re at each other’s throats on a number of issues — we came together and said for the good of management, we want to rebuild it. We’re going to forego harvest opportunity for the betterment of this stock.” Science-based management The perception that the board is managed on science continues to shift and bend according to who is on the benefitting end of management actions. Competing user groups each invoked the “best available science,” even when the science could be clearer. “Are we going to manage based on science, or are we not going to manage based on science?” asked Gease. “This should not be about politics, this should be about the science and the biology,” said David Martin, president of commercial fishing group United Cook Inlet Drift Association. Some science is more clearly defined, more up to date and more solidly available on which to base management. But the department budget has been slashed by $10 million in the last few years. In some cases, rival groups will even draw information from the same studies to justify two competing management proposals. This played out with many drift net and sportfishing-related management proposals for several areas in Upper Cook Inlet. “It’s no big secret we don’t have the information to really assess the coho population,” said board member Sue Jeffrey, a commercial fisherman from Kodiak. “I think the department has a handle on the coho fishery. It’s just that if the fishery groups all want more, you’re going to err on the side of conservation.” Erik Huebsch, vice president of the United Cook Inlet Drift Association, or UCIDA, readily admitted that the science sometimes serves interests. “We definitely cherry pick. We all do that, get what fits our argument,” said Huebsch. In UCIDA’s case, available coho data shows that salmon stocks are intermingled in the middle of Cook Inlet. Therefore, instead of being confined to the “conservation corridor,” he argues, drift fishermen should be allowed to fish in the middle of the inlet to catch more sockeye and prevent coho overescapement in Mat-Su river systems. With the same data, the Mat-Su Borough Fish and Wildlife Commission argued against drift fishermen in the middle of the inlet. “The folks in the Mat-Su are saying, ‘See? All these coho are out in the middle and we need to keep them from catching them so we get our coho through.’” Huebsch said. “We’re using the same data and have two different approaches to it.” Huebsch and UCIDA still don’t rule out spin, though. He said the department presented improper numbers to the board regarding coho exploitation rates, which were only corrected at UDICA’s insistence. “We’ve seen it too many times for it to be a mistake,” said Martin. And even though commercial groups like UCIDA point to this example as evidence of a bias within ADFG, sportfishing interests use other examples to point to the same issue, in particular to the three days it took the board to craft new language around Kenai River sockeye and king salmon restrictions. “When you look at science, one of the interesting things is when you have advocates within the department for a certain scientific viewpoint, that’s where we get frustrated,” said Gease. Gease pointed to the lack of discussion or action on escapement goals on the Kasilof and Kenai rivers as proof. “It’s a Dr. Jekyll, Mr. Hyde approach,” he said. “You don’t know which department you’re talking to. Dr. Jekyll science based? Maybe it’s just a generational shift. Maybe we’ll grow out of it. Maybe in three years we’ll have an honest discussion about what the right SEG (sustainable escapement goal) is on the Kenai River, or a Kasilof counter for kings.” Along with science, both sides have continued to assert that in the end the board should make a decision based on economics — which like the science, depends on the source. “It does eventually all boil down to the economics, and the jobs, and the stability to the coastal communities that have nothing else but commercial fisheries,” said Martin. Gease said the same. “When you look at the allocation criteria in the Magnuson-Stevens Act, four of the seven deal with economic factors. Nowhere is that discussion is the sport fishery,” he said. “Our footprint economically is very large, comparably. Instead of doing the constitutional mandate of figuring out how this resource can benefit to all Alaskans….we seem to be asking, ‘how can we allocate this resource to benefit me and 300 to 400 of my other individuals user group who may or may not be Alaskans?’” From ADFG’s viewpoint, the squabbling is just part of the process. “You’ll always watch the pendulum swing back and forth,” said ADFG Southcentral Area Management Coordinator Matt Miller. “That’s always going to be the public perception. Certainly we try to be consistent.” “You hear the opposite about the same thing,” said Bowers. “People say the board process is broken. I think it’s a pretty cool process really. A two-week meeting’s not that cool, but the fact that person can submit a proposal and maybe it ends up adopted. That’s pretty cool, you know?”

Senators call for cannabis clarity

Whether or not a fear of federal marijuana crackdown is justified or overblown, Congress isn’t happy with the White House. Only days after remarking that “we don’t need to be legalizing marijuana,” Attorney General Jeff Sessions has evidently assured Congressional Republicans including legalization supporter Sen. Rand Paul that the Department of Justice will support states rights, according to Politico. Still, on March 2, a group of U.S. senators including Alaska’s Lisa Murkowski wrote a letter to Sessions asking for assurance that the federal government will not take any actions against those states that have legalized adult use cannabis. The senators come from both sides of the political aisle, both from states that have legalized adult use marijuana and some that have not, including Sens. Elizabeth Warren (D-Mass.), Lisa Murkowski (R-Alaska), Patty Murray (D-Wash.), Ron Wyden (D-Ore.), Jeff Merkley (D-Ore.), Maria Cantwell (D-Wash.), Ed Markey (D-Mass.), Brian Schatz (D-Hawaii), Catherine Cortez Masto (D-Nev.), Cory Booker (D-N.J.) and Michael Bennet (D-Colo.) "It is essential that states that have implemented any type of practical, effective marijuana policy receive immediate assurance from the DOJ that it will respect the ability of states to enforce thoughtful, sensible drug policies in ways that do not threaten the public's health and safety," the senators wrote. "This ensures that state infrastructure, including tax revenue, small businesses, and jobs, can be protected; DOJ resources can be used most effectively; and most importantly, that marijuana can be properly regulated to improve public health and safety." The senators point to the Cole Memorandum, a guidance letter which among other things told the Department of Justice to not prioritize marijuana enforcement where complies with state law. “We respectfully request that you uphold the DOJ's existing policy regarding states that have implemented strong and effective regulations for recreational marijuana use and ask that the Cole Memorandum remain in place,” the letter reads. “It is critical that states can continue to implement these laws under the framework of the Cole Memorandum. In addition, we request that state and local elected officials, and public health and safety officials, be afforded an opportunity to comment on any shift in policy from that expressed in the Cole Memorandum, to avoid disruption of existing regulation and enforcement efforts.” The letter comes during a bombastic time in the cannabis conversation. Trump’s press secretary Sean Spicer caused a panic attack in states where recreational marijuana is legal when he suggested last week that states would see “greater enforcement” of federal marijuana laws. Spicer said that even though Trump has been on record supporting both medical marijuana and states rights, the eight states that have legalized recreational marijuana may have crossed a line. “There is a big difference between that and medical marijuana,” Spicer said in reference to medical marijuana, which is currently legal in 29 states. Attorneys general and representatives from several states including Alaska were forced to take a “wait and see” approach to Spicer’s comment. A Congressional Cannabis Caucus committee responded to Spicer’s comments as well, hoping that they didn’t indicate a shift in policy. "The federal law is one thing and the state has the right to enact laws in this area and those are perfectly constitutional," Cory Mills, the Department of Law spokesperson, told the Associated Press. "Our law wouldn't be overturned. But there is a different federal law, and how they want to enforce the federal law is up to the federal government. We'll just wait and see what sort of actions they take." Only days later, Sessions denied some of the claims that medical marijuana helps curb opioid abuse and claimed that cannabis trade contributed greatly to violent deaths in the U.S.   DJ Summers can be reached at [email protected]

Cooler tone for Board of Fisheries as Kenai sockeye deliberations begin

Gov. Bill Walker’s Board of Fisheries shakeup either depoliticized the board or compromised it, according to different stakeholders. Either way, it certainly cooled things down. Five days into a two-week meeting, the Board of Fisheries started deliberating a day behind schedule over nearly 200 proposals for the Upper Cook Inlet finfish fisheries, held once every three years. The same arguments exist between sport and commercial users, who grudgingly share the Kenai River, the state’s most heavily used waterway. But the meeting’s tone and tenor have changed with three new board members. Far fewer stakeholders than expected have shown up to the meeting so far and the discussions are tamer than the battleground atmosphere of 2014. In the eyes of the board’s executive director, Glenn Haight, the newcomers seem to be grasping the process and the concepts, despite the clockwork intricacy of the regulations. “It’s complicated as they’ve worked to try to address all these interests,” Haight said. “Robert (Ruffner) has done a good job trying to figure out ways to meet different goals despite the in trepidation of moving it just a little bit one way or another.” The board itself has changed substantially since the last meeting, not only in members but in representation. The long-held idea of dedicated user group or geographic seats was undone when Walker filled three spots in 2016, a year after removing sportfishing advocate Karl Johnstone as chair. Slow moving means the process is working for some of the fishermen who remember more impassioned meetings in the past. “The whole vibe is different,” said Ken Coleman, a Kenai-area setnetter. “That the new board members are asking perceptive questions, and being allowed to do that, has enhanced the process. I think that it allows all users groups, whether they get their way or not, to get their issues vetted. It’s far more open than it was. Johnstone was very heavy handed.” Johnstone received much criticism during his time on the board from commercial groups, who said he kept the board geared in favor of sportfishing interests. Without him, Alaska Department of Fish and Game commissioner Sam Cotten said there might be more room for board members to actually deliberate rather than entering the room with predetermined votes. “Simplicity” became the meeting’s big theme as commercial groups proposed to slice chunks of regulation out of the fishery. First on the agenda, the board took up a painstaking, minutiae-packed reform of the Kenai River Late-Run Sockeye Salmon Management Plan. The complexity of the fishery, of course, adds to the time lag with three new members. The discussion was notably articulate, according to meeting participants, but it was anything but smooth. The board was behind schedule throughout the meeting’s first days, not only due to a wealth of public comments but to frequently consult with department biologists and to take lengthy breaks to write, rewrite and revise blocks of proposals. Even in light of potential risks, board members wanted to eliminate red tape. “The theme is that we need to simplify regulations,” said Israel Payton, one of the board’s three new members. “I’m willing to accept some risk and trust that the department has the tools and the ability to manage.” During a break, Cotten walked out of the room and smiled. “You following this discussion?” he asked. He twirled his hand in a circle like a bicycle wheel. “I think the point is we need to simplify some things.” Late-run sockeye salmon management, the very first proposal discussed, is a lynchpin for the rest of the meeting and perhaps one of the most complex. “It’s the big driver,” explained Haight. “The sockeye late run is a big darn deal, so if they can get that fundamental done, it’s a building block to everything else.” The proposal, submitted by ADFG, asked the board to review the optimum escapement goal, OEG, and in-river goal on the Kenai River for the late run of sockeye salmon. These two goals operate in concert with the river’s sustainable escapement goal, or SEG. An SEG is set by department biologists and cannot be altered by the board, but the board can adopt an OEG or an in-river goal that is larger than the SEG in order to make allocations for socio-economic reasons. After several hours of discussion and back-and-forth amendments, the board passed a proposal eliminating the optimum escapement goal and increasing the range of two of the in-river goal tiers. As adopted, the river will now be managed under a sustainable escapement goal of 700,000 to 1.2 million sockeye salmon and in-river goal with three tiers, based on the total projected run. The bottom tier, when total runs are projected less than 2.3 million fish, will remain the same. The middle tier, when the total run is projected between 2.3 million and 4.6 million, will now be managed for between 1 million and 1.3 million fish. The upper tier, when runs are projected to be greater than 4.6 million fish, will now be managed for 1.1 million to 1.5 million fish. The decision was a compromise — commercial fishermen got the OEG dropped but failed to remove a mandatory time closure on Tuesdays. Sportfishing interests who objected to the OEG removal had a different take on the board’s new dynamic, saying the newer members might not have gotten the best information. “The way that the department looks at it, and the way that it was explained to the board, is not necessarily the way we would look at it as a sportfishery,” said Ricky Gease, executive director the Kenai River Sportfishing Association. Gease said the in-river goal increase, which the department characterized as an automatic increase in allocation for the in-river fishery, artificially constricts the upper end of the escapement goal. Gease said this is counterproductive, as larger escapements mean larger returns. The board’s meeting at Anchorage’s downtown Sheraton Hotel has seats enough for some 400 people, but attendance has topped out at 100 at best. With all the hullaballoo of the meeting’s location in the previous year, the lack of attendance could seem surprising. “I’ve heard some theories,” said Haight, but few of them seem to explain it entirely. “Some people speculate that you’ve gotten to a point where everyone is in an equal amount of pain.” The theory that the meeting would be better attended if it were held on the Kenai Peninsula, he said, isn’t entirely accurate either. The board opened a working group meeting last October to be held in Kenai, but Haight said that was also poorly attended. When the board held a public hearing on Feb. 25 for federal issues, only four people testified. The federal folks that were here were shocked at how relatively calm it was. As a final theory, Haight said he’d heard from at least one commercial fisherman who didn’t feel the kind of urgency as before — the 2017 meeting simply didn’t have any regulations new enough to hold interest. “To me,” Haight agreed, “they’re all the same issues.” DJ Summers can be reached at [email protected]

State appeals to U.S. Supreme Court to overturn salmon decision

In the midst of the Upper Cook Inlet Board of Fisheries meeting, the battle for state management of Cook Inlet salmon fisheries continues. The State of Alaska has filed with the U.S. Supreme Court to review a recent 9th Circuit Court of Appeal decision that would require some of Alaska’s salmon fisheries to conform to federal management. The state says this is the wrong move. “This is an area where the federal government recognizes the State’s expertise and agrees that the State is better equipped to manage the fishery, even in federal waters,” said Attorney General Jahna Lindemuth in a press release Feb. 27. “We hope the U.S. Supreme Court will review this important issue and reverse the Ninth Circuit’s decision.” Last September, the U.S. 9th Circuit Court of Appeals overturned a 2011 decision by the North Pacific Fishery Management Council to remove several Alaska salmon fisheries from the federal management plan. Industry group United Cook Inlet Drift Association, or UCIDA, filed the lawsuit in 2013 to repeal the council’s decision, which was officially Amendment 12 to the Alaska salmon fishery management plan, or FMP. The amendment formally turned over control of salmon fisheries in Cook Inlet, Prince William Sound and the Alaska Peninsula to state management. The U.S. District Court for Alaska sided with the state and feds in dismissing the UCIDA lawsuit in 2014, but the 9th Circuit reversed the decision and found for the plaintiffs. UCIDA’s leadership claimed that the state’s management does not conform to the federal national standards, and has resulted in the loss of harvestable salmon surplus worth millions to commercial fishermen in the region. State officials disagreed with the decision’s wisdom. The Alaska Department of Fish and Game insists that the “state does not need the U.S. government’s help in salmon management.” NMFS officials have largely echoed the sentiment, not relishing the idea of crafting a new FMP for Cook Inlet fisheries. The state’s petition to the Supreme Court case elaborates at length on Alaska’s salmon management, even going so far as to label federal management “inferior.” The 9th Circuit Court did not properly understand the issue, it claims. Mostly, the State of Alaska fears overfishing as a result of the catch limits required in most federal fisheries — hard caps on how many fish the entire fishery can harvest. “Because it can be difficult to forecast how many salmon will return in a given year, NMFS agrees that managing these fisheries with catch limits risks overfishing: sometimes the limits will turn out to be too high, and sometimes too low,” the appeal reads. “The State’s management method under state law is better. The State monitors salmon returns in-season, and by emergency order allows the level of fishing that will ensure that the appropriate number of salmon reach their spawning grounds to sustain the stock. NMFS agrees that the State manages these fisheries consistent with the National Standards of the Magnuson-Stevens Act.” The Magnuson-Stevens Act is primary governing law for federal fisheries, which sets 10 National Standards every FMP must follow. UCIDA President Dave Martin argues the state’s management fails entirely to achieve national standard one to achieve optimum yield while citizens are being crunched under a statewide recession. “We’re not harvesting surplus, we’re getting way below maximum sustained yield returns. That’s not compliance,” said Martin. “With the way economic situation the state’s in now, you’d think on a renewable resource that they’d want to get the most return off of it and turn it into an economic benefit for the state.” Not only does the state claim its management does this, but also that salmon stocks were in fact worse off under federal management. “Before statehood, the Federal Government managed Alaska’s salmon fisheries using a strategy that, like annual catch limits, failed to account for the unpredictability of salmon returns,” the appeal reads. “The result was record low salmon harvests. Since the State took over management of its salmon fisheries, commercial salmon harvests have increased more than tenfold, and Alaska’s salmon fisheries are recognized as sustainable and among the best managed fisheries in the world. The court’s decision will return these three salmon fisheries to inferior federal management over the opposition of the experts at NMFS.” Management, the state argues, should have an FMP only if the fishery itself has a conservation need. “The Magnuson-Stevens Act obviously does not require an FMP for fisheries that will be worse off with an FMP than without one,” the appeal reads. “NMFS has long interpreted (the law) as requiring Councils to prepare FMPs only for fisheries that require the conservation and management measures that an FMP would provide.” Martin responded by pointing to the low king salmon runs that have plagued Alaska over the last decade. “A famed senator from Alaska, Ted Stevens, developed these plans, and they’re world renowned for developing fisheries and rebuilding stocks,” Martin said. “It takes the politics out of it, and manages it according to the science and the biology. We named our airport after Stevens, we should be able to manage our fisheries to the plans he developed.” DJ Summers can be reached at [email protected]

Alaska senators take input, share thoughts on fixing Obamacare

Alaska’s senators know the Affordable Care Act has not lived up to its name in the state, but they aren’t willing to toss the baby out with the bathwater just yet. Over the last week, Sens. Lisa Murkowski and Dan Sullivan addressed lawmakers and business leaders about the controversial healthcare provision, taking a softer tone of “repair” rather than the hardline call of “repeal” some of their Republican fellows take. Sullivan dropped by the Anchorage Petroleum Club on Feb. 22 to talk about his intent to follow Republicans in voting to repeal the Affordable Care Act, or ACA, but not to the extent many of them might want. Alaska’s exorbitant health costs drive the discussion as much as anything. Sullivan highlights Alaska’s size and remoteness, its relatively small number of providers, the lack of transparency of medical procedure prices and overall pharmaceutical prices as issues he wants to find ways to address. “It’s not a one-size-fits all thing,” Sullivan said. “What I’ve been doing since I’ve been home is meeting with as many stakeholders as I can, literally hundreds and hundreds of Alaskan, some people who think the ACA is great, others who think it’s horrible, and some are somewhere in between.” The meeting was packed mostly with the people who think it’s horrible, while outside the Anchorage Petroleum Club protestors picketed Sullivan’s semi-closed meeting. Members of the press were only to report on the condition that they not identify audience members by name to facilitate an “open discussion.” For a state in a recession, officials say ACA is putting a chill into business owners at a time when the state needs growth. Among other problems, the room full of business owners talked of a general feeling of fear — of not being able to provide insurance for employees or of not being able to make insurance requirements pencil out for their bottom lines. “What we’ve heard is more general,” explained Lori Wing-Heier, director of the Alaska Division of Insurance. “Businesses are afraid to hire people. They’ve probably laid more people off. In starting up a business one of their concerns is with cost of healthcare. What are some of the impacts if you’re to start a business?” Though the business crowd had concerns, Sullivan addressed the larger theme of how unaffordable health care is in Alaska under the Affordable Care Act. “Doing nothing on this right now would not be responsible,” Sullivan said. “The Alaska market is in chaos, ground zero for failure, because of the ACA. Premiums have tripled, deductibles are at $12,000, $13,000, for a family of husband and wife with two kids making $75,000 a year. Some people are literally having to fork out $30,000…that’s not affordable care.” Alaska’s new Medicaid enrollees are already costing more than what economists predicted they would. Centers for Medicare and Medicaid Services reported to Congress that Medicaid expansion enrollees cost $6,366 per person for fiscal year 2015 (ended last Sept. 30), about 49 percent higher than estimated. Like many other rural states with sparse populations, Alaska’s results from the ACA have been mixed at best. What has worked better for high population states like New York and California has had poor results in Montana, Wyoming, Alaska and other places where there simply aren’t enough people to evenly spread the expense of high-cost enrollees. The ACA has had other unintended consequences for Alaska. In May 2016, the Legislature bailed out insurance provider Premera Blue Cross Blue Shield of Alaska with a $55 million reinsurance bill. Wing-Heier said the law also known as Obamacare hasn’t been all bad for the state. “You’ve got to look at the ACA in entirety,” she said. Like Sullivan, Wing-Heier points to the expanded coverage class as a benefit. Around 26,000 Alaskans now have access under Medicaid expansion. “The number in the individual market with the high cost claims, probably 600 to 700 people in the entire market that if we were underwriting today wouldn’t be able to get insurance,” she said. “They have a cancer, they have preexisting conditions. For that population, it’s been a success.” That population affects the conversation. Nationally and in Alaska’s delegation, ACA reform comes in two flavors: outright repeal, or a more targeted, piecemeal approach that keeps some of the benefits — a strategy Sullivan favors. “I’m going to press to retain certain things,” he said. “Staying on parents’ insurance until the age of 26, coverage for people with pre-existing conditions. That’s why I’m referring to this as ‘repeal and repair,’ not replace.” Sullivan’s stance reflects that of Murkowski, who told the Legislature on Feb. 22 that she wouldn’t vote on broad or poorly thought out ACA repeal process. Like Sullivan, Murkowski acknowledged that coverage for children under 26 and for people with preexisting conditions was a boon to the state, and wouldn’t support measures that would strip those parts of the ACA. She also told the Legislature she would support Medicaid expansion if it did. To this end, Wing-Heier said the Division of Insurance is holding extensive talks with Sullivan and Lisa Murkowski and Rep. Don Young about the several pieces of ACA-related law being introduced in Congress by reform-minded Republicans. “All three of them realize that there’s impacts to replace and repeal, and have gone more to a repair,” she said. “What’s the impact to Alaska, yea or nay, good or bad.” Wing-Heier said the Division of Insurance thoroughly analyzed the proposals of Sens. Bill Cassidy, R-La., and Susan Collins, R-Maine, and House Speaker Paul Ryan. The Cassidy-Collins bill makes more structured reforms, while Ryan’s bill approaches a repeal, which Wing-Heier said does not suit Alaska’s needs. President Barack Obama’s Affordable Care Act, or ACA, expanded Medicaid eligibility in 2014. More than 4.3 million additional Americans now qualify, for a total of 64 million. By 2024, state and federal governments will spend $920.5 billion on the program, at which time 77.5 million people will get coverage. The expansion covers 41,910 low-income Alaskans from 19 to 64 years of age who were previously not eligible for Medicaid — those not caring for dependent children, not disabled or pregnant, and who earn at or below 138 percent of the Federal Poverty Level, or FPL, for Alaska. DJ Summers can be reached at [email protected]

Cook Inlet meeting to kick off with new faces, old grudges

The Alaska Board of Fisheries has a full plate for its triennial Upper Cook Inlet finfish meeting beginning Feb. 23 and running through March 3 in Anchorage. The board will look quite different with three new members since the last meeting and so does the fishery after three years of restriction, tight markets, lawsuits, and accusations of disregarding the best science that revolve around the board decisions at its last Upper Cook Inlet meeting in 2014. Chinook, or king, salmon stocks on the Kenai River and around the state started to plummet in the late 2000s, and in 2014, the Board of Fisheries approved paired restrictions directing the Alaska Department of Fish and Game had to take certain actions when the Kenai king fishery was restricted, including limiting commercial fishing time. Sport representatives generally thought it fair to share the burden of conservation, while commercial fishermen said it hit them harder than the sportfishermen. This year, nearly 200 proposals from commercial, sport and subsistence fishermen will try to overhaul entire fishery management plans, revise escapement goals, expand or contract fishing areas and openings hours, add or remove new gear types and in general try to open up more fishing opportunity for each respective group. Commercial harvests decline since 2014 The situation in the Kenai River doesn’t seem quite as dire as in 2014, when king salmon runs were at a low point. King salmon show signs of being on the rebound throughout some of the state, but Cook Inlet commercial sockeye harvests will be as low as they’ve been in 15 years in 2017, if ADFG predictions are accurate. Area managers have already said that the season will be much more restrictive for the commercial fleet and all sockeye users should expect tighter rules if the run is as small as forecast. In 2014, 2015, and 2016, commercial sockeye fishermen cried foul over “foregone harvest” — fish they wanted to catch and sell but couldn’t due to the paired restrictions. Over the last three years, the commercial harvest of all five species of salmon in Upper Cook Inlet has been consistent at just more than 3 million fish per year. However that is about 1 million less than the 1966-2012 average of 4.1 million salmon per year. The management on the Kenai and Kasilof rivers needs adjusting, according to more than a dozen proposals seeking to modify or entirely repeal their respective sockeye salmon management plans. Some proposals want to get rid of key management measurements, while others want to add more. Upper Cook Inlet drift fishermen are trying to erase management that ties their openings to the run sizes of Susitna River-bound coho salmon and Kenai River and Kasilof River sockeye salmon. The Central Peninsula Fish and Game Advisory Committee is proposing some of the same ideas put forth by the United Cook Inlet Drift Association. The proposals criticize the current regulations as too restrictive. Several variations submitted say much of the same thing — the drift fishery should be more flexible with windows of allowable fishing time. Chilling board politics Commercial and sport fishermen throughout Upper Cook Inlet have laundry lists of complaints, but this year the tone may be different than in 2014. The board itself has changed substantially in membership since the last meeting, not only in people but in representativeness. The long-held idea dedicated user group or geographic seats was undone when Gov. Bill Walker was able to fill three spots in 2016, a year after removing sportfishing advocate Karl Johnstone as chair. Over the last 20 years, the seven-member Board of Fisheries has typically struck an informal balance among user groups by having three commercial fishermen, three sportfishermen, and one subsistence fishermen. Alaska law does not mandate geographic balance, but that was part of the Legislature’s rationale in 2015 when rejecting Kenai area habitat advocate Robert Ruffner by one vote after sportfishing groups organized against him for alleged sympathies to commercial fishing and the fact he does not live in Anchorage. This year, the board only has two commercial fishermen, vice-chair Sue Jeffrey and chair John Jensen, one sportfishing loge owner, Reed Morisky, and one subsistence fisherman, Orville Huntington. It also welcomes three newcomers — Alan Cain, Israel Payton, and Ruffner, who was confirmed on his second appointment by Walker in 2016. As a whole, the appointments follow Walker’s election promise to take the politics out of the Board of Fisheries process. “It seems like with the list of names…he still has that idea, that that dedicated seat idea is no the right way to do this business,” Ruffner told the Journal in 2016. “Picking a candidate based on how much they’re opposed to another particular gear type isn’t the right idea. I think picking individuals with a balanced view is a better way to look at it.” Cain and Ruffner come from conservation or enforcement backgrounds. Cain served as an Alaska Wildlife Trooper, while Ruffner is the executive director for the Kenai Watershed Forum. Payton grew up in the Bush as a subsistence user and was a member of the Mat-Su Fish and Game Advisory Committee, which has some history of advocating for sport-centered regulations. Fish fights The meeting caps three years of turmoil in fish markets and fish politics. Some in the fishing community object to the “Cook Inlet fish wars” moniker, claiming it mischaracterizes the issue as political, when it is in fact biological and scientific. Looking back over the last three years, Cook Inlet fisheries have their share of squabbles. Walker didn’t come out of the fray unscathed, having failed at three nominations to an empty Board of Fisheries seat in early 2015. Roland Maw, the former executive director of the United Cook Inlet Drift Association, kicked off the fray when he applied for commissioner of the Alaska Department of Fish and Game after Walker’s election, but was unanimously deemed unqualified to interview by the board chaired by Johnstone. That kicked off a series of events that began with commercial fishermen protesting Maw’s treatment and then Johnstone quitting in 2015 with six months left in his term after Walker said he would not be reappointing him and would replace him on the board with Maw. Maw eventually withdrew from consideration from the board after it came to light he had resident hunting and fishing privileges in both Montana and Alaska, which is illegal to do in both states. Maw pled no contest to charges in Montana and is still facing a dozen felony charges for PFD fraud in Alaska. Johnstone is still kicking, too, having written an opinion piece for the Journal in February 2017 on behalf of sportfishing interests that advocated for the gradual elimination of commercial fishing as a priority in Cook Inlet. Tom Kluberton, another sportfishing representative, announced he would not be interested in another term in a letter that read like a soldier’s post-war memoir. Walker also lost his boards and commissions director, Karen Gillis, when he Gillis said the governor planned to nominate Roberta Quintavell to the Board of Fisheries and she quit in protest considering Quintavell unqualified for the position. Bob Mumford, Walker’s last ditch appointment in 2015 to fill Johnstone’s seat after Ruffner was rejected and Quintavell’s name was not forwarded, resigned from the board in early 2016 for personal reasons. UCIDA recorded a legal win in the interim, succeeding in a lawsuit that challenged the North Pacific Fishery Management Council on a 2011 decision to remove Upper Cook Inlet salmon fisheries from the federal fisheries plan. The 9th Circuit Court of Appeals has ruled last September that the council must craft a fisheries management plan for Cook Inlet, Prince William Sound and the Alaska Peninsula, and that it must conform to the 10 federal standards under the Magnuson-Stevens Act. One group tried to ban an entire sector of fishermen from the river. Alaska Fisheries Conservation Alliance, founded by Bob Penney, gathered enough signatures for a ballot initiative that would have banned all setnets from the Kenai River. The group said the measure was to protect king salmon caught in the setnets. The Alaska Supreme Court, however, ruled in December 2015 that the ballot would have been an unconstitutional giveaway and rejected it from appearing on the 2016 primary ballot. Residents of Anchorage and of the Central Kenai Peninsula even battled it out over the meeting location, with Kenai-area mayors offering the board $60,000 in savings if it moved the meeting from Anchorage. The next two weeks will reveal how much old grudges will be in play, but having three new members also offers a chance for a fresh start. DJ Summers can be reached at [email protected]

Bill to legalize hemp gains momentum

Senate Bill 6 which would legalize industrial hemp in Alaska, seems to have support as it passes through subcommittees, but lawmakers still need to iron out some particulars with how the potential industry will pay for itself. During a Senate Judiciary Committee hearing on Feb. 20, Sen. Shelley Hughes, R-Wasilla, explained that her bill takes up an issue brought to the Legislature by former Sen. Johnny Ellis, a Democrat who introduced a bill to legalize hemp last session. “I think the Division of Agriculture, they really want to welcome this industry,” Hughes said. Indeed, Rob Carter, a Division of Agriculture program manager, told the committee that the division sees great potential in industrial hemp, particularly as a forage crop for livestock. Hemp’s non-psychoactive fibers are also a source for textiles, paper, and a slew of other industrial products, as well as a food source. Hughes explained that the Declaration of Independence was written on hemp paper, and that the Pilgrims’s canvas sails and western settler canvas covered wagons were all hemp-based. Carter said Alaska’s long growing season is suited for the plant — pictures from 1916 Palmer-area show farmers with healthy hemp crops. Farmers in the Mat-Su have been looking for a way to grow hemp for some time. Larry DeVilbiss, farmer and former Mat-Su Borough mayor, has come out in strong support of the bill. The committee asked for Hughes to speak with staff and experts to develop a committee substitute to be reviewed later. Much of the hearing was spent differentiating hemp from marijuana. Senators wanted to know whether the crops looked the same, whether they would be taxed the same, and whether there was any potential that hemp could be used as a base for illegal drugs. “If someone is planting a crop of industrial hemp and let’s say there was a market collapse, and they say, ‘OK, I’ll just sell it as recreational hemp,’ could they do that?” asked Sen. Kevin Meyer. “There wouldn’t be much recreation,” said Hughes. “The person would probably be hacking and coughing if they tried to use it that way.” Agronomics experts said hemp wouldn’t be a market for synthetic drugs, either. “Could hemp be dried and laced with something?” asked chair Sen. John Coghill. “We just have to be continually suspicious, that’s all.” Rob Carter from the Division of Agriculture assured Coghill that dried hemp leaves would look no different and contain no more potential for abuse that spices. “There’s plenty of other product at Costco that could be adulterated with another product,” said Carter. The bill mirrors industrial hemp programs in other states. Famers growing industrial hemp would have to get a permit and report their activities. Like other hemp pilot programs, the state’s department of agriculture or a state research university would oversee all hemp cultivation. The bill would define industrial hemp as separate from marijuana in statute. Following federal standards, any cannabis testing less than 0.3 percent THC — cannabis’s psychoactive chemical — is hemp. Studies show that THC’s psychoactive properties don’t take effect in concentrations under 1 percent. Currently, the two are indistinguishable under Alaska law, which has led to some problems for marijuana vendors. The Alcohol and Marijuana Control Office seized thousands of dollars of imported hemp-derived products from cannabis retailers on Feb. 10, declaring them to be unlawful because they did not conform to Alaska regulations for production, packaging and labeling. Those products come from a similar hemp pilot program in Colorado. If the hemp bill passes in the Alaska Legislature, the products would fall back into legal status, according to an AMCO directive given on Feb. 17. “However, in light of Senate Bill 6, a proposal currently before the Alaska State Legislature that would legalize industrial hemp and modify the definition of marijuana in AS 17.38, the board voted to retain possession of the inventory until the end of the current legislative session,” reads a press release from the control office. In the 2017 Legislature, all conversations boil down to cost, and hemp is no exception. Senators wanted to know what kind of taxation and fee schedule would apply to the program. Hughes said farmers were adamant that the current $50 per ounce excise tax levied on commercial marijuana would not work for hemp, which as an industrial product carries a smaller price. The bill does establish that taxes and fees will have to fund the program’s regulation to break even, in such a way that farmers would not have to ask for funding from the Legislature. DJ Summers can be reached at [email protected]

Anchorage official tapped to head marijuana office, board

The Alcohol and Marijuana Control Office and the Marijuana Control Board have a new director with a reputation that is softer than her predecessors but still developing. Gov. Bill Walker appointed Muncipality of Anchorage planning official Erika McConnell as the new AMCO director on Feb. 21. Former director Cynthia Franklin resigned late last year, leaving Sara Chambers to fill the position in the interim. McConnell will start her new job March 20. Industry members and regulators seem to agree that McConnell’s demeanor and 14 years of experience in the Anchorage municipality will be a plus. McConnell both oversaw some aspects of alcohol licensing and wrote the city’s marijuana land use code. Recently, McConnell has gotten high marks for being engaged with industry and personally helpful, but there remains some suspicion due to the relatively slow rollout of Anchorage’s marijuana market. “Ms. McConnell is an exceptional fit to lead the Alcohol and Marijuana Control Office,” said Department of Commerce, Community and Economic Development Commissioner Chris Hladick in a press release. “She has over a decade of experience navigating the regulatory world, both drafting and implementing. In her time with the Municipality of Anchorage she worked closely with the AMCO staff on alcohol and marijuana matters in order to provide assistance to license applicants.” McConnell came into the cannabis world through the Anchorage municipality, where she has works as the marijuana regulatory expert in the Office of Economic and Community Development. In one position or another, McConnell has worked for the municipality since 2003. Board members say they’re hopeful about McConnell’s experience. “I think they made a great choice,” said Nick Miller, who is both a member of the Marijuana Control Board and the president of the Anchorage Cannabis Business Association. With a more bureaucratic history and temperament than Franklin, McConnell’s place on the board could have a calming effect. “Ms. McConnell has significant experience dealing with marijuana issues,” said board member Brandon Emmett, also an industry stakeholder. “I believe she will bring a balanced and thoughtful approach to her new position as director.” When first established, Marijuana Control Board meetings were turbulent. New industry entrants got introduced to the world of regulation, bureaucrats, attorneys and marijuana entrepreneurs without much business experience. Former board chair Bruce Schulte, a leader of the successful ballot initiative to legalize recreational use, and Franklin had plenty of barbed exchanges, and the overall relationship between Franklin and the industry was chilly at best. McConnell’s reputation among cannabis stakeholders has shifted as the industry has grown, but most said she has a better relationship with them than her predecessors. Some said McConnell has actively defended license applicants and taken up sides to move the process along more quickly. “She is one of the few people in the city of Anchorage to come to the (Anchorage Cannabis Business Association) meetings,” said Jack Tobin, owner of Famer Jack’s LLC, an Anchorage cultivation facility still in development. “She does care what our perspective is. I don’t feel that Cynthia nor Sara (Chambers) cared what our perspective was. I definitely feel McConnell is an improvement…but she doesn’t have to beat much.” During the early stages of the municipal regulatory process, many were suspicious of McConnell. Some claimed she had an obstructionist agenda and was actively trying to halt the industry’s progress. “She was kind of anti-cannabis in the beginning,” said Justin Roland, owner of Dream Green Farms. “53 percent of us voted yes (on Ballot Measure 2), and that means 47 voted no. You could definitely tell she didn’t vote yes. I got that from a lot of people at the muni.” Since then, that reputation has shifted and is now largely positive for McConnell. Industry attorney Jana Weltzin described the new AMCO director as “tough, fair, and honest,” and cannabis business owners have said whatever rocky first impressions McConnell gave in 2015 have largely disappeared. “Now,” said Roland, “that is completely gone.” McConnell’s absence from the city could potentially be a boon or a burden. Anchorage has a poor reputation among the Alaska cannabis industry as one of the most restrictive places in the state to do business. Anchorage has a far lower rate of state-approved active cannabis business licenses than Fairbanks, Juneau, or the Central Kenai Peninsula. Without McConnell to oversee much of the marijuana-related business in the Office of Community and Economic Development, some industry members worry that the city process could slow down from a glacial pace to a near stop. The city’s dreaded “change of use” requirement, which plagues marijuana shops trying to get up and running, did begin in McConnell’s office. However, Tobin, who works as a contractor, said the city was moving towards change of use requirements and similar measures independent of marijuana, and so he doesn’t lay that issue at McConnell’s feet. Further, Tobin speculates that McConnell could help the state process by revealing city problems. “One of the reasons I think there’s been some problems in Anchorage is that they don’t know what’s going on at the state level,” he said. “I think the state’s intent is to get us licensed. She does know what’s going on in Anchorage. They definitely don’t know what’s going on.” DJ Summers can be reached at [email protected]

Marijuana Control Board rules on CBD oils

Regulators ruled on Alaska's CBD seizures on Feb. 17, maintaining that the products are indeed marijuana, not hemp, and therefore under control of the Marijuana Control Board. The seized CBD products will not be destroyed, but rather the board will retain them until a hemp legalization bill moves through the Legislature. The owners of the shops from which they were seized will not be disciplined.  The Marijuana Control Board met with Alcohol and Marijuana Control Office enforcement officers and director Sara Chambers on Feb. 17 to invite representatives from each of the raided stores. Board members then called a closed meeting with legal counsel and Chambers to deliberate. "In a unanimous vote, the Marijuana Control Board determined the CBD (cannabidiol) oil seized last week by the Alcohol and Marijuana Control Office (AMCO) to be marijuana product, except that which is labeled as made exclusively from seeds and that does not also include the term 'CBD,'" reads a press release from AMCO. "However, in light of Senate Bill 6, a proposal currently before the Alaska State Legislature that would legalize industrial hemp and modify the definition of marijuana in AS 17.38, the board voted to retain possession of the inventory until the end of the current legislative session. Otherwise, in accordance with 3 AAC 306.830, the board would be forced to destroy the seized items. The board also elected not to pursue further action on Notices of Violation that were issued by AMCO staff."  Each company was issued a violation for activity not allowed in a marijuana store, and having product that is manufactured outside the state of Alaska, not in the state tracking system, not tested in state, and not packaged or labeled as required by Alaska regulation. Company representatives either apologized and pled ignorance or stuck by their claim that industrial hemp products are perfectly legal and not under the control of the Marijuana Control Board, an argument firmly dismissed by AMCO director Sara Chambers. “Just so we’re all clear, we all know that hemp products aren’t marijuana products, right?” said Craig Aglietti, co-owner of Dankorage, during an interlude. “Yes, according to state statute, they are,” answered Chambers. Several had issues with how marijuana enforcement handled the seizures. “These were not seized from a licensed company,” claimed Aaron Ralph, owner of Alaska Cannabis Exchange, through which many of the raided stores received their CBD products. Though cited for violating regulation, Alaska Cannabis Exchange did not have their products seized from their licensed store, though they may have intended eventually to receive and sell them. U.S. Postal Service workers alerted AMCO when boxes of CBD product were leaking. The products were addressed to Geneva Cowen, owner of ACE Holdings, which has a licensing agreement with Alaska Cannabis Exchange for CBD products. Cowen herself is the wife of an affiliate of an Alaska Cannabis Exchange licensee. Enforcement officers acknowledged that the violation letter, which was a boilerplate letter sent to each company, was an “oversight” on the part of AMCO and could have been worded better. Others claimed a similar scenario applied to them, in which officers seized product for a non-marijuana store. Kerby Coman’s seizures happened in a non-marijuana business, Green Degree, that was attached to a licensed marijuana facility. Coman’s non-marijuana business markets itself under the name Green Degree but is owned under a separate LLC name. Many of the testifiers were apologetic to the board, claiming they would not have sold the products if they had known they were under MCB control. “We no longer sell any CBD or hemp containing products, and will not do so,” said Caleb Saunders, co-owner of Green Jar. “It was never our intention to violate any of the regulations. We were fully under the impression that the hemp products did not fall under the jurisdiction of MCB.” Saunders explained that he bought the product from a Colorado industrial hemp pilot program through ACE Holdings by way of Alaska Cannabis Exchange.  “These products have been available at health food stores for many years, so we did not assume there would be a problem,” said Craig Aglietti from Dankorage, an Anchorage retail store. “We will not stock this product again until is it enforced through METRC (the state’s cannabis tracking system).” “This was unintentional,” said Jane Stinson, co-owner of Enlighten Alaska. “We didn’t realize hemp grown CBD products were not allowed in the system we’re in.” Others like Coman, said AMCO’s actions were “morally and legally wrong.” Kerby claimed to prove that CBD is legal, and then asked to get his products back. “Legal opinions have told me I have a lawsuit. But that’s not the route I want to go,” he told the board. Ralph, a member of the Hemp Industries Association, stood by his original claim that nothing illegal happened with his company or the others involved. The seized products, he said, are firmly in line with federal regulations that authorize industrial hemp products and their interstate transport. “There is a legal and defining difference between hemp and marijuana,” said Ralph. “In my opinion, nobody has broken the law here or should be deserving of a notice of violation.” CBS oils and extracts have been hurtled into national morass of confusion after the U.S. Drug Enforcement Administration added them to the Schedule I controlled substances category in January. Though widely available as hemp oils online and in department stores, CBD products are as illegal as marijuana under federal law unless obtained through a licensed pilot program. In Alaska, Chambers says the matter is clear cut becuase Alaska statute does not make hemp legal or distinct from marijuana. “As defined in statute and regulation products derived from the marijuana plant are regulated under AS 17.38,” reads a release from AMCO following the seizures. “There is no separate provision under state law that allows oil with any particular composition of CBD or THC to be regulated outside of AS 17.38 and 3 AAC 306.” The definition in statute does include certain parts of the plant, but also does not make a distinction between hemp and marijuana as it does in federal code. “’Marijuana’ does not include fiber produced from the stalks, oil, or cake made from the seeds of the plant, sterilized seed of the plant which is incapable of germination, or the weight of any other ingredient combined with marijuana to prepare topical or oral administrations, food, drink, or other products,” reads statute. DJ Summers can be reached at [email protected]

Young to co-chair Congressional Cannabis Caucus

Republicans and Democrats now have cannabis as a bipartisan tie that binds. On Feb. 16, a group of U.S. House representatives from several Western states announced the Congressional Cannabis Caucus. The group is spearheaded by two Republicans and two Democrats: Alaska Rep. Don Young, California’s Dana Rohrabacher, Oregon’s Earl Blumenauer, and Jared Polis of Colorado. “People are suffering,” Rohrabacher said. “The law is wrong. We have a bipartisan caucus, and we’re going to change it.” The conflict between federal and state laws inspired the caucus, with one overarching objective: have federal law enforcement respect state laws that have legalized cannabis in some form. At the federal level, cannabis is still listed as a Schedule I controlled substance, the most restricted group. Meanwhile, eight states have legalized recreational use and and 29 states have legalized medical cannabis. Following the November 2016 election, 95 percent of Americans now live in states or territories that permit adult use or medical cannabis or CBD oils. One-fifth live in a state with legal recreational use. “I’ve been deeply concerned about the gap between where the public is, what is rational policy, and what federal policy is,” said Blumenauer. The congressmen said the caucus grew out of an informal cannabis working group formed in 2013. After the November 2016 election cycle saw eight more states pass either recreational or medical cannabis legalization measures, they said the issue became bigger on Congress’ radar. They underscored several main issues to address, namely research, access for veterans and medical users, and business needs. Federal finance laws bar marijuana businesses — a $5 billion industry in 2016 — from routine tools such as banking access. Young, who said he has never used cannabis, said the banking issue needs a solution for commerce to continue. “I’m also interested in the banking part of it,” Young said. “As they do this business, they can run it as a business. I think that’s crucially important to make it work correctly.” The Republican Party has to date had little involvement with cannabis legislation, but the issue now seems to stitch the two parties together. Only days earlier, Young and Polis had a bitter House Rules Committee exchange regarding Young’s bill to overturn a U.S. Fish and Wildlife Service final rule that gives the federal government authority over game management in the state. Polis clarified at the Cannabis Caucus rollout that he indeed called Young’s bill a “puppy killer.” The two Republican caucus members, Young and Rohrabacher, emphasized that cannabis law reform should be in line with Republican beliefs, not counter with them. Traditionally conservative ideals like individual freedom, limited government, constitutionalism should synch up with cannabis’s state-by-state trend. “Our Founding Fathers meant criminal justice to be at the local and state level,” Rohrabacher said. “Our founding fathers did not want the federal government to be involved in that kind of thing at all. We’re going to have battles in which the Republicans will be saying ‘we’re going to leave this up to the states.’ Republicans are being held to live up to their own values and principles.” “I think we can make a lot of progress this session and next session,” said Young. Marijuana legalization advocates have feared newly minted U.S. Attorney General Jeff Sessions will bring a federal hammer down on cannabis businesses, but the caucus appears to think the fears are overblown. “On the campaign trail President Trump indicated he would defer to states,” Polis said. He and the others emphasized that regardless of Session’s past or personal views, he exists only to enforce the administration’s policies. “At the end of the day,” Young said, “Congress is the one that passes laws.” Each of the Congressmen have been marijuana supporters from one angle or another, sponsoring or supporting a slew of cannabis-related bills between them. Young has long been an advocate for state’s ability to “determine the nature of criminal activity within their own jurisdictions.” He does not make an exception for cannabis. In a May 2016 forum, Young said marijuana legalization was “is very frankly dear to my heart, because I do believe in states’ rights and individual rights,” and that, “Either you’re for states’ rights or you’re against it. You can’t have it both ways.” Young introduced the Compassionate Access, Research Expansion and Respect States Act in March with Tennessee Democrat Rep. Steve Cohen in 2015, one of several pieces of legislation with bipartisan support in the House — eight Republican and eight Democrat co-sponsors — that would let banks and credit unions service marijuana businesses in legalized states without fear of the feds. Young and Cohen’s bill and others would also make cannabis a Schedule II drug, lift other federal restrictions and allow Veterans Administration doctors to prescribe medicinal marijuana. Rohrabacher successfully passed an act that prohibited federal funds from being used to prosecute marijuana businesses in states where they are legal. Blumenauer described marijuana policy as “failed” and calls for Washington D.C. to “to face the facts surrounding marijuana” as states continue adjusting laws. He has introduced, cosponsored or supported a slew of bills that would do everything from expunge marijuana-related criminal records to descheduling cannabis from the Controlled Substances list. DJ Summers can be reached at [email protected]

Prices, lawsuit over cod allocation keep Adak plant closed

For the second year running, Adak fishermen aren’t going after the pollock quota they’ve spent more than a decade trying to fish, claiming to need a more stable cod supply that’s now the subject of a lawsuit before they can make processing financially viable. The easing of some fishing restrictions revolving around Stellar sea lion protections in 2015 allowed the Aleut Corp., one of 12 Alaska Native regional corporations, to begin harvesting its pollock allocation of 15,500 metric tons. Prior to the changes, all or a portion of the Aleut Corp. allocation was typically split up each year within the Bering Sea fishery because of the Stellar sea lion rules that would have otherwise prevented its harvest. Ten percent of the 19,000 metric ton allocation for the Aleutians subarea harvest is classified as Community Development Quota, or 1,900 metric tons, and reserved for Adak. The Adak Cod Cooperative owned the pollock quota and leased the processing plant at Adak from Aleut Corp until the state of Alaska revoked its business license. On Feb. 3, with it clear the 1,900 mt issued to Adak would go unharvested, the allocation was shifted into the Bering Sea pollock fishery as it always has been. According to Clem Tillion, a lobbyist for the city of Adak, the pollock aren’t worth going after. “They’re not fishing the quota because no one has wanted it,” said Tillion. “Nobody’s looking for any new resource. Pollock is almost a worthless product at this point.” Pollock isn’t a moneymaker in 2017. Prices are at their lowest point in a decade for the fish and likely to fall even further as the 2017 season continues, according to market sources. Adak’s processing facility is only recently up and operable, having undergone ownership changes after Icicle sold the plant in 2013 and a fire that required expensive renovation. Tillion said the processor is ready to accept pollock deliveries, but likely won’t do so until it can bring in Pacific cod as well, which is faring better in terms of price and could subsidize the less cost-effective pollock. Cod fishermen, however, are now suing to stop a recent requirement they deliver tons of their harvest to Adak. The North Pacific Fishery Management Council, one of eight councils governing federal fisheries, guaranteed a minimum of 5,000 metric tons of Pacific cod each year to be delivered to any shoreside processor west of 170 degrees longitude. Groundfish trawlers objected to the motion when it was passed in September 2015. They said council’s action is an illegal set aside that “unlawfully and arbitrarily restricts at-sea processing and fishing by vessels that target Pacific cod in the ‘directed’ fishery,” according to court filings. In December 2016, Groundfish Forum, an industry group of groundfish trawlers, filed a lawsuit against U.S. Secretary of Commerce Penny Pritzker over the council’s decision, along with several other companies. “Although the Final Rule states that delivery pursuant to the set aside may be to any shoreside processor located on land west of 170 degrees west longitude in the Aleutian Islands, there are only two existing processors in that area, located in Adak and Atka, Alaska, neither of which is currently open for processing Pacific cod,” reads the lawsuit. “The Atka facility has never received and processed cod from the Aleutian Islands directed fishery, and the Adak facility has only been periodically operational over the last decade. “Neither plant processed cod during the 2015 and 2016 fishing years. On information and belief, neither plant intends to process cod during the 2017 fishing year.” Indeed, it appears that the Adak plant is waiting until the case is resolved before it starts taking either pollock or cod. “If we win, and I think we will, then we might start in the summer,” Tillion said. “We won’t know ‘til June, I’m guessing.” Even in the case that Adak hangs onto its shoreside cod delivery requirements, Tillion said there’s no guarantee they’ll fish the pollock quota — the market will still have to make fishing the quota economical. The decision to hold off fishing is somewhat surprising, considering the lengths Adak has gone through to get pollock quota in the first place. The Aleutian town has been on the wrong side of regulations, markets and government movements for the last half century. The U.S. Navy was the town’s income for half a century until it withdrew in 1999, leaving Adak without much revenue stream. Similar coastal towns within 50 miles of the coast are issued Community Development Quota amounting to 10 percent of all Bering Sea harvests, but the program began in 1991 when Adak was still a Naval base, so the town received no CDQ quota until the late former Sen. Ted Stevens managed to do it legislatively in 2004. Steller sea lion protections put in place after 2004 made the quota practically useless and the 1,900 metric tons were reallocated to the Bering Sea each year. The State of Alaska and a coalition of fishing groups sued over an expansion of the fishing closures in 2010, and a federal judge ruled in 2012 that the National Marine Fisheries Service violated the National Environmental Policy Act in the manner it implemented the restrictions designed to protect food sources for the endangered species. The North Pacific Fishery Management Council then recrafted the Stellar sea lion rules that have allowed the Aleutians quota to be fished, but that hasn’t yet helped Adak harvest its allocation. DJ Summers can be reached at [email protected]

Inaction, CBD raids and Sessions fuel suspicions within cannabis industry

Former Alabama Sen. Jeff Sessions’ confirmation as U.S. Attorney General contributes to, or coincides with, reenergized fears that national, state, and local authorities are slowing Alaska’s cannabis industry growth and could even halt it in its tracks. Several regulators and industry members have expressed a sharp concern that the Gov. Bill Walker administration has held up the process through the Alcohol and Marijuana Control Office, an executive branch function under the Alaska Department of Commerce. Walker’s office did not return a request for comment. The state has some obvious reasons for delays. The Alcohol and Marijuana Control Office is woefully understaffed and has asked on several occasions for the Legislature to kick them more money for new staffing. However, the Legislature hasn’t yet responded, as the state is in a recession that economists say will not end for another three to five years and produce a “smaller, poorer Alaska.” Alaska’s industry is developing more slowly than its Lower 48 counterparts, though some of that can be explained by a more limited market size and the challenges of Alaska’s small capital pool, large geography and the lack of an established medical marijuana cultivation and distribution network. In the first three months of legal sales, Colorado businesses sold more than $50 million worth of recreational and medical cannabis. Oregon sold an estimated $27 million in the first two months. Washington sold just less than $12 million — a comparatively slow start with only 18 licensed stores. In Alaska, exact figures are harder to come by in terms of actual amount of product sold. Rather, the $50 per pound excise tax levied against cultivators is the most accurate measure. In the first two months of sales, Alaska collected $226,000 from cultivators, and expects the total tax revenue in 2017 to climb as high as $12 million, according to state estimates. The slowdown is pronounced in Anchorage, which has 30 percent fewer active businesses in relation to completed state licenses than any other major population center. The Marijuana Control Board has made big strides in advancing the industry’s regulations, but some of the hottest items from 2015 are still up in the air. The state has still not tried Rocky Burns, Larry Stamper, and Charlene Egbe, each of whom allegedly ran unlicensed cannabis delivery services and retail shops before regulations were in effect. Social clubs and onsite consumption are still unresolved, and the state rounded up and seized thousands of dollars worth of cannabidiol oils from retailers of Feb. 9. Onsite consumption At its most recent meeting, the Marijuana Control Board cancelled an onsite consumption provision package — which has been a high-profile part of Alaska marijuana regulations since late 2015. Industry leaders took it as the latest sign that they’re being stymied by an element from somewhere within Alaska government. “I think this was incredibly driven by the administration,” said Jana Weltzin, an Alaska cannabis business attorney and board member of the Alaska Marijuana Industry Association. Weltzin highlights the fact that the attorney who reviews regulatory items before they go out for public review takes administrative direction. “That attorney was the one who made the final decision on that,” she said. “They get guidance from above.” Weltzin was referring to errors made in the Alcohol and Marijuana Control Office. During the meeting, interim director Sara Chambers told the board that AMCO had made administrative errors in releasing the draft for public notice. This is the third time the draft was incorrectly noticed. This time, however, rather than kick the package back to a later date, the board opted to drop the subject entirely with a 3-2 vote. Public member Mark Springer of Bethel, who had supported the concept since 2015, said he would rather drop it than risk newly appointed Sessions’ scrutiny. Beginning in mid-2015, public consumption came to the forefront of the state’s developing regulations when several clubs around Alaska popped up that offered a bring your own marijuana venue. After batting back and forth and a whole lot of legal haze that included an opinion by Alaska Attorney General Jahna Lindemuth that the clubs are illegal, the Marijuana Control Board decided it had no authority to outlaw the clubs. Anchorage’s club, Pot Luck Events, is still operating. Though it acknowledged it had no authority to ban the clubs, the Marijuana Control Board did introduce the concept of an onsite consumption provision. This would let retail shops offer an area where buyers can consume what they just bought. Since 2015, Alaska cannabis businesses have eagerly waited for onsite consumption provisions. Without them, they reason, tourists won’t have a place to legally consume what they buy from Alaska’s shops. Alaska: the exception to the recreational rule Nationally, cannabis legalization advocates have noted differences in how states set up their respective programs. “One has to believe that the sole difference between a successful rollout and an unsuccessful rollout is probably more than just a lack of competence,” said Paul Armentano, deputy director of the National Organization for the Reform of Marijuana Laws. “One can certainly speculate, and it certainly looks as if the rollout of these programs are delayed or done in such an ineffective manner that it would be by design.” Lawmakers and officials have long cited the fact that Alaska had no preexisting medical industry to explain Alaska’s slow progress with developing marijuana regulations and developing a full industry. Armentano said he doesn’t believe that rationale. “That rebuttal would be wrong,” he said. “Washington did not have a medical industry to fold into anything. I think there was a desire on the part of Washington lawmakers to get this done. It took about 18 months. Unlike in Colorado they were creating a whole new regulated market. They met that deadline.” Armentano said there are now enough templates for both recreational and medical marijuana that no other reason for slow development exists besides institutional resistance. “Alaska potentially raises this issue as well,” he said. “When we look at the states where voters have approved markets — Colorado, Oregon, Washington — all of those states have been able to roll those programs out operational and functional. “The exception is Alaska. They have been unable to do what lawmakers and regulators in these other states have to the extent that you have to ultimately begin to wonder if the key variable is that in some states the lawmakers and regulators simply don’t share that same desire.” Despite requests from Chambers to the Legislature for more AMCO funding, and from the board for a position on social clubs, the only marijuana-related topic lawmakers have on the 2017 agenda is an industrial hemp bill. Sessions and federal rules With a 52-47 vote, Sessions has set a new record for most opposed attorney general in U.S. history. After a month of broad panic, the nation’s marijuana industry can’t seem to agree on a single way to feel about Sessions, according to the slew of press releases and his careful aversion to a straight answer — which has been routine from the federal government for a half-decade with anything concerning marijuana from banking to gun policy. Sessions, a player in the 1980s drug policies of the Reagan administration, has a history of ominous statements about cannabis. He became infamous for a statement that Ku Klux Klan “was okay until I found out they smoked pot,” a tongue-in-cheek statement made in 1986. As recently as 2016, he has remarked that “good people don’t smoke marijuana,” and that Washington leaders should not support its legalization. However, Sessions also responded in a confirmation hearing that he acknowledged federal resources could be stretched thin by attempting to enforce federal laws against states. Some industry advocates are measured about Sessions, saying he has given no indication that the new attorney general will enforce any more federal cannabis laws than President Barack Obama’s administration did. “We remain cautiously optimistic that the Trump administration will refrain from interfering in state marijuana laws,” wrote Robert Capecchi, federal policies director for the Marijuana Policy Project, which is responsible for many of the campaigns to legalize cannabis, including Alaska’s. “When asked about his plans for marijuana enforcement, Attorney General Sessions said he ‘echo[es]’ the position taken by Loretta Lynch during her confirmation hearings. He repeatedly acknowledged the scarcity of enforcement resources, and he said he would ensure they are used as effectively as possible to stop illicit drugs from being trafficked into the country.” In a mild plea, Aaron Smith, executive director of the National Cannabis Industry Association, wrote that the organization “looks forward” to Sessions keeping up the previous administration’s policy. “That policy, as outlined by the Cole Memo, has allowed carefully designed state regulatory programs approved by voters and lawmakers to move forward, while maintaining the Justice Department’s commitment to pursuing criminals and prosecuting bad actors,” wrote Smith. Others fear he will prosecute marijuana businesses in states where it is legal, in compliance with federal law. “Jeff Sessions’ views are out of step with mainstream America and they are in conflict with the laws regarding marijuana in over half of the states in this country,” wrote Justin Strekal, political director for the National Organization for the Reform of Marijuana Laws, in a press release. “Our elected officials, now more than ever, know that marijuana policy is at the forefront of the minds of American voters and that we are willing and able to mobilize for it.” DJ Summers can be reached at [email protected]


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