Naomi Klouda

Crisis management earns honor for local PR firms

An Anchorage company that provides student tutoring services got a visit in December 2015 from police officers delivering bad news: one of the employees was suspected of possessing and distributing child pornography. The tutor also had allegedly engaged in a sexual relationship with a teen minor. The urge to avoid publicity when a bad situation strikes a company may be a perfectly natural response. But that’s not the advice a good public relations company covering its reputation would recommend, said Kristin Helvey. Piloting a tutoring company through that public relations nightmare won Helvey Communications and Kathy Day Public Relations the coveted 2017 Public Relations Society of America Silver Anvil Award in July. Out of 400 entrants, they won in the same category as the PR firm that handled “Changing a City’s Narrative: How Cleveland Leveraged the 2016 RNC to Shift Perceptions from Rust Belt to Revitalization” and “Pulse Tragedy: Orlando Health’s Response to Deadliest Mass murder in U.S. history.” The Alaskans’ presentation, “When Nightmares Come True: A Crisis Plan,” gained the national spotlight for a couple of reasons. For one, the small, Alaska-grown company didn’t lose its school district clients. For another, their tutoring business increased a documented 53 percent, which gave rise to 44 percent more revenue in spring 2016 over the previous year. How did that happen? The employee, Evan Vince Fischer, 35, was later convicted on the charges. Among the charges for child pornography, he was charged with six counts of sexual assault against a 15-year-old girl whom he had tutored in English literature at another charter school. But before Fischer was arrested, the company, Frontier Tutoring, had little time to prepare for what was to come. Police didn’t want CEO Brian Franklin to alert parents or students. That would disrupt their investigation and tip off the suspect. With days to act, Helvey called on Day, a veteran Alaskan public relations professional with crisis management experience who was on the Rasmuson Foundation team that came up with Pick.Click.Give. With a budget of only $5,000, the two delved into crisis management practices used by public relations professionals – and invented a few of their own. “The first step was to better understand the company’s role in the situation, whether the company had a history of issues and to determine if the company should have taken action that they didn’t,” Helvey said. Background checks, for example. Nothing had surfaced. Using primary and secondary research practices, the public relations pair delved into all the details they could, not unlike an investigator might do of a company’s past and present dealings. “We were fortunate to work with a CEO who believed in good communications and right actions,” Helvey said. “Putting your head in the sand doesn’t work. It only degrades trust.” They found no red flags or prior incidences of inappropriate behavior by the employee. They reviewed hiring and screening practices, and appropriate workplace behavior policies. Helvey and Day found this was the first major incident for the company. The background check on the employee had turned up no red flags. The company provided tutoring services for the Anchorage School District and used best practices for youth-serving organizations that went above minimum requirements. “Our goal was to maintain the confidence of clients and partners, to minimize the negative impacts on the company,” Helvey said. They identified two specific, measurable objectives. One, they wanted to retain 100 percent of the clients in the upcoming quarter. Two, they wanted to keep the tutoring contract with the Anchorage School District, which automatically came up for review due to the investigation. Helvey and Day also identified four stakeholder groups they would need to communicate to: employees, the parents and students tutored by the employee, the parents of other students who had not been in contact with Fischer, and organizational partners such as the school district and counseling departments. “Our overall strategy was to deliver fast, transparent communication that would reinforce the trust and loyalty, while disassociating the company from the employee in question,” Helvey said. The police asked the CEO to hold all communications until the employee arrest was made so as not to interfere with the investigation. The arrest was expected to take place within several days. “Outreach needed to be trigger ready the moment communication clearance was ready,” Helvey said. The CEO built a good rapport with the case detective, and the crisis team received regular and timely updates on the case. They also divided their plan to “before arrest” communication and “after arrest” communication to ensure readiness. By the time of the arrest, on Dec. 15, the company was fully prepared to respond to media questions. Helvey and Day came up with a Frequently Asked Questions sheet. They submitted all statements in writing, and the CEO communicated face-to-face and took calls from parents and others. Far from sticking his head in the sand, the CEO used the incident to further strengthen controls to include annual employee reorientation and additional steps in new-hire background checks. They also improved interview questions related to flagging inappropriate behaviors and interest based on U.S. Department of Health and Human Services guidance, Helvey said. Helvey and Day presented the case multiple times to public relations professionals across the state as a study on the impact of sincere, transparent and timely communications, even when it’s difficult. Parents emailed comments such as “I am thankful that you are acting swiftly to let us parents be informed of where you stand on this issue.” And “Thank you for your proactive approach…we have recommended you to others with confidence.” There are a couple takeaways from this particular crisis, Helvey and Day say. “In general the rules are to respond as quickly as you can even if you only know a little bit,” Day said. “Be sympathetic, genuine and honest. No matter what the situation is, at some point, emphasize what steps you’ve taken to make sure it doesn’t happen again.” By dealing with a potentially lethal public relations nightmare “off the front,” the damage on the backend is minimized, they say. Another piece of advice for business owners is to understand what good public relations teams do: “They have experience handling these types of situations,” Day said. “Hire experience.” Day said she’s heard company execs say, “I hired this person because he or she used to be a television reporter. That doesn’t necessarily mean they have experience.” Day, who began her career as a news reporter for public radio in Homer and at Channel 13 in Anchorage, said it takes a lot more than knowing how to put out press releases. “What public relations firms really want or need is a strategic thinker. There’s a big difference between someone who’s been in the business for less than five years and someone who’s been there more than five,” Day said. “It takes that long to develop analytical skills.” Helvey said the PR image of “spin doctoring” the news is a common perception, but one that doesn’t credit the professional steps that can be involved in helping a company come to terms with a crisis and react with honesty. “It’s temping for an organization to want to bury their head in the sand,” Helvey said. “At times they want to point fingers and deny it. I think public relations people are under a lot of pressure from organization leaders and others who just don’t have the clarity at the time to think through the repercussions of doing certain actions.” Changes in the industry are raising the bar in standards of practice to council organizations to stand up to do the right thing. “Cases like this I hope will further the discussion about right actions and good that comes from combining high ethical transparency with being straightforward and timely — all those things together can make really good things happen,” Helvey said. ^ Naomi Klouda can be reached at [email protected]

After years of hikes, Premera files rates for 2018 down 21.6%

Premera Blue Cross Blue Shield of Alaska filed insurance rates for 2018 with a 21.6 percent decrease for customers on individual Affordable Care Act compliant plans. As predicted by the Centers for Medicare and Medicaid services when Alaska received a Section 1332 “innovation waiver” on July 11, Alaskans on the individual market exchange would see a 20 percent to 22 percent decrease in 2018. The waiver will provide for $48.9 million in federal funds to the Alaska Reinsurance Program, or ARP, which when combined with $11 million in state funds allowed Premera to lower its rates next year. The five-year waiver will send about $332 million to the ARP. The ARP was created by the Legislature in 2016 and with $55 million in funds collected from every insurance policy sold in the state, Premera was able to reduce the 2017 rate increase from 42 percent to 7 percent. Premera raised rates by nearly 40 percent in the previous two years. The company lost $7 million from 2014-16 in the first three years of the ACA. Premera is also the lone company offering individual insurance plans on the federal exchange after three companies exited in 2016. With lower rates, the 1332 waiver uses the savings from smaller premium subsidies paid by the federal government to cover the costs of 33 expensive medical conditions. However, even with the lower rate increase in 2017, Alaska still has the highest premiums in the country at $947 per month for the second-lowest cost “silver” plan on the insurance exchanges. To illustrate the cost savings, the monthly premium for a 40 year-old non-smoker in Anchorage on the least expensive “bronze” plan in 2017 pays an annual deductible of $5,250 with a monthly premium of $703 per month. In 2018, that person’s monthly premium will be $561 per month, said Premera senior spokeswoman Melanie Coon. In addition to the waiver, Premera said the rate decrease is also attributed to a significant reduction in the use of medical services by customers. “While the rate decrease is an encouraging sign that the Alaska market is becoming more stable, we caution against drawing conclusions based on one or even two years of results,” Coon said in an email. “The Alaska market, due to its small size, remains volatile where the medical claims of a relatively small number of customers have the potential of greatly influencing financial results.” Coon noted the rates Premera filed assume “we would not be getting the Cost Sharing Reduction (CSR) reimbursement from the federal government.” That’s just as well. Currently, payment of the CSR is still entangled in a two-year-old legal battle in the case of U.S. House of Representatives v. Burwell, a case challenging CSR payments to health insurers under the ACA. Judge Rosemary Collyer of the U.S. District Court for Washington, D.C., determined the House had standing to sue the executive branch under President Barack Obama and then ruled in May 2016 that the Obama administration’s CSR payments to insurers were illegal without an appropriation from Congress. Collyer held off on ordering an end to the payments pending the appeal to the D.C. Appeals Court, which allowed the Obama administration to keep making the payments. If the Trump administration drops the appeal, Collyer’s ruling stands. It cuts off CSR payments to health insurance issuers unless Congress appropriates the funds, according to the Crowell and Moring Health Law’s website, which analyzes the latest developments on health care law and policy. Trump has been approving CSR payments on a month-to-month basis since he took office and has held off the appeal hoping for congressional action, but he warned in a tweet July 31 that if the ACA isn’t repealed and replaced, CSR payments or “BAILOUTS for Insurance Companies… will end very soon.” But Alaska, one of only two states in the nation to receive the innovation waiver — which amounts to $332 million over five years — there remains the question of whether Alaska should expect the CSR payment. Other states are dependent on the CSR as one of the only ways to help insurance exchange companies cope with the risks of uncertain coverage for the most expensive to insure. Sen. Joe Connelly, R-Ind., made an appeal to the Centers for Medicare and Medicaid Services Administrator, Seema Verma, on July 31. He expressed hope the CSR payments would continue. Two insurance companies left the Indiana exchange market, citing a lack of certainty after the Trump administration’s refusal to commit to making CSR payments. Indiana, like Alaska, has pockets of small insurance pools. Premera’s Coon explains there’s a big difference between CSR payments and the 1332 waiver funds. CSR helps lower out-of-pocket expenses, lowers the deductible you pay and payment for visits at the time of service. For example, with CSR, a person’s $30 visit would be matched so that the patient pays $20. A $5,000 deductible is lowered to $3,500. It kicks in at the 250 percent of poverty level for those eligible on the Premera Silver Plan. Bronze Plan holders — like the example of the 40-year-old non-smoker above — do not receive CSR subsidies. The waiver, on the other hand, helps the pool of insured. It came out of the state’s reinsurance program that committed state insurance tax dollars ahead of time to prevent costs from increasing for Premera customers. “For Alaska’s 20,000 people — that’s not a big pool,” Coon said. “There were not enough healthy people, and by that, I mean people who are healthy and pay insurance but don’t use it to offset the high medical costs of those who were sick.” The funds aren’t “new money” but rather the amount that would have been paid anyway through individual subsidies that 90 percent of Alaskans on the exchange receive. Premera doesn’t have dollar amounts on the CSR payments for Alaskans, but is working on separating out those, Coon said. The Division of Insurance has required Premera to do a second calculation for what the rates would be if CSR payments are continued. “They are working on that now,” Coon said. “It can only get better. I can’t estimate how much yet.” ^ Naomi Klouda can be reached at [email protected]

Ocean Tuesday starts conversation on innovation

Picture crustacean DNA that allows crabs the ability to grow a new leg. That chemical makeup, in an innovator’s hands, becomes a product to seal up a human puncture wound. Imagine a band-aid made of it. Alaska has lots of crab, but getting from raw seafood byproducts to a marketable commodity will take a new infrastructure. A blue economy movement now in its Alaska infancy is involved in engaging all the human resources necessary to help such innovations evolve. Joel Cladouhos, program director for the Alaska Ocean Cluster Initiative, conducted a workshop July 25 at the Alaska Communications Business Technology Center in Anchorage as part of Startup Week to get the conversation started on how to turn ocean products into wealth. “That’s our mission: to transition from an extractive economy to a diversified economy based on sustainable resources from the ocean,” Cladouhos said. The Ocean Tuesday event allowed almost 100 people to connect via a video conferencing tool called Zoom, bringing together a variety of public members, academics, business leaders and policy makers from Anchorage, Bethel, Kodiak, Valdez, Homer, Fairbanks, Petersburg and Juneau to talk about barriers and opportunities in the sustainable development of Alaska’s vast ocean resources by launching an Alaska Ocean Cluster. Like an Icelandic Ocean Cluster and the New England Ocean Cluster, an Alaska one would bring together innovators, investors and others for capitalization projects. Ocean Tuesday — an event Cladouhos would like to see occur each week — was a chance to start the community conversation. One of Cladouhos’ featured speakers, also appearing via Zoom, was Patrick Arnold, an entrepreneur in Portland, Maine, who founded the New England Ocean Cluster or NEOC. The for-profit business model is based off a similar operation in Reykjavik, Iceland, where they have figured out how to generate value from more than 80 percent of a fish. “After two years, we’re still in the nascent stage,” Arnold told the Alaskans July 25. But already, one of the development teams at the NEOC came up with an innovative way to use lobster shells in the human healing process similar to the band-aid example above. “Much of the crustacean shell waste in the United States contains valuable proteins, and yet the majority of waste goes to landfills or composting operations,” Arnold said, describing a status-quo situation those on the Zoom conference knew well. “In Alaska you have crab. Keep it in Alaska,” Arnold advised. Arnold gave encouragement to form working groups, approach new partners who currently process the waste or toss it out, and introduce the concept of changing how things are done. “It helps to have a cultural shift. You have to show the benefits in a variety of outcomes,” Arnold said. “The strongest way to get cultural change is to show incremental examples of success.” Iceland’s “infrastructure” started with a 40-foot shipping container, Arnold said. “And now they are producing 22 million metric tons and selling it for millions of dollars.” Another presenter at the workshop was Dianne Tilton, the executive director of the Downeast Institute for Applied Marine Research and Education in Beals, Maine. DEI conducts mariculture research that aids commercial shellfish farming and other marine-based entrepreneurship. Tilton’s overview showed a critical partnership piece provided through public university research. “Maine has recognized and put significant investments into building up their R&D (research and development) into the ocean economy,” Cladouhos said. “They are partnering with the private sector to help solve problems.” Finding those opportunities is the stage Alaska is at now, he added. The July 25 event had breakout groups in each of the Alaska towns to discuss challenges and opportunities for capturing more value from Alaska’s ocean resources by starting an ocean initiative. The Anchorage conversation was led by Rachael Miller, Hickel Professor of Strategic Leadership and Entrepreneurship at Alaska Pacific University. The group included Britteny Cioni-Haywood, division director of the Alaska Department of Commerce, Community and Economic Development, Nigel Sharp, the Global Entrepreneur in Resident at the University Alaska Anchorage and UAA Business Enterprise Institute leaders as well as members of the general public. The Anchorage group noted barriers presented in an economy dominated by the oil industry. A solution would be to seek what common interests the oil industry shares with an ocean-focused effort. Alaska also lacks a K-12 curriculum that would lay a foundation for next-generation understanding of ocean resources. There’s also a lack of a common space to let the conversation convene, Miller said. A solution would be to invite Launch Alaska to become the convener or incubator for economic ideas. It would also require leadership from the new UAA Global Entrepreneur-in-Residence, Sharp, who may be able to help find capital and markets. Around the state, other groups identified isolation from business centers and high energy costs as barriers. But opportunities were presented in the expertise of each community, such as Kodiak’s Seafood and Marine Science Center and Valdez’ ocean monitoring program, put in place after the Exxon Valdez oil spill. As an organization, the AOCI comes under the umbrella of the Bering Sea Fishermen’s Association, which has a long history of identifying and supporting economic development, noted Executive Director Karen Gillis. The workshop laid some foundation for a step to forming the ocean cluster. But in addition to ideas, it requires economic sector voices, Cladouhos said. He’s looking at emerging sectors such as ocean technology, marine biotechnology and renewable energy. And he’s looking at the existing sectors like coastal tourism and marine transportation. “Oceans are the unifying theme to this amalgamation of sectors doing business in Alaska,” Cladouhos said. A cooperative cluster of those sectors, like Maine’s and Iceland’s, would help speed along economic successes. Cladouhos calculates Alaska is woefully behind other coastal countries and states in utilizing the wasted tonnage from seafood. One company moved from Juneau to Seattle to develop a value-added shell product. One clear step ahead is to continue “Ocean Tuesday.” It would take place weekly at a place as yet to be decided, and would involve a hybrid of virtual and physical platforms. “This would start a collaborative statewide conversation,” Cladouhos said. “We have many differences from Iceland and Maine. We have to find a way to collaborate across this large state. This morning was a perfect example of a platform that would allow us to do that. That’s really what excites me.” Ocean Tuesday is open to all entrepreneurs and innovators who want to engage. To sign up or learn more, go to or write to Joel Cladouhos at [email protected] Naomi Klouda can be reached at [email protected]

Longtime Anchorage business wins Made in Alaska Award

Alaska Garden and Pet Supply, a company patronized by backyard farmers, large scale agriculture and most of Alaska’s big box stores, won the Alaska Manufacturer of the Year Award on July 24. Also known as Alaska Mill &Feed, Chief Operating Officer Ken Sherwood and company President Joel Klessens accepted the Made in Alaska Award at the Anchorage Chamber of Commerce’s Make it Monday Forum. Gov. Bill Walker presented the award. He spoke of the company’s 11 trademarks, 65 employees and the many “stories within stories of stories,” that marks 67 years in business. Most of it took place in the distinctive red buildings alongside the railroad tracks in Downtown Anchorage that has become an iconic Alaska business, he said. Britteny Cioni-Haywood, division director of the Department of Commerce, Community and Economic Development, said this year’s lineup of nominees gave one another stiff competition. Yet even so, Mill &Feed stood out for its ability to “innovate and deliver quality products to Alaskans, while also providing jobs for Alaskans in the process.” Alaska Garden and Pet Supply was founded in 1950 on the principles and innovations of Don Donatello, an MIT chemical engineer who trademarked his products. Today, the company operates a garden and pet wholesale distribution business and the Alaska Mill &Feed retail store in Anchorage. It was recognized for its nearly seven decades of operation, adding a feed mill in 1965, a fertilizer blending plant in 1978, and a liquid ice melt facility in 2015. Sherwood and Klessens said Alaskans tend to know Alaska Mill &Feed by its iconic storefront. “The store is the face of our business. Then there are all these products we manufacture in buildings behind the store right here on two square city blocks,” Klessens said. “People are surprised when they realize there’s a lot more wholesale to the operation than the retail operation.” It began with Donatello’s ideas for bleach cleaners and waxes sold to the Anchorage School District and local companies. Later he had the idea to make feed for reindeer herds, horses, cattle, chicken and other farm animals in bulk at the distinctive mill he built and tied into the railroad so that he could receive bulk shipments from out of state needed as ingredients. Hopper cars from the Midwest and Canada continue to supply salt, fertilizers ingredients, and corn and soy for feed meal. “Some guys always make the right decisions and Donatello was like that. He was a smart entrepreneur, a brilliant man,” Klessens recalls of the man who hired him 32 years ago. For example, Donatello was honored as the U.S. Small Businessman of the Year in 1965 in award presented by President Lyndon Johnson. Major customers in the Matanuska Valley and farming communities down the Kenai Peninsula and north to Delta Junction came to depend on the animal feed. The mill sold to distributors throughout the state. In the 1970s, Donatello added the fertilizer blending plant, and the retail operation opened. Later, they added the Arctic Melt and Arctic Grip products. Klessens, with his business-public relations degree from Montana State University when Donatello hired him, focused on wider business distribution. Following in Donatello’s footsteps, he also developed a line of Arctic Birdseed for specific migrating bird species that is now trademarked. In the winter, the company manufactures ice melt. The plant turns to making fertilizer in the spring and summer. All of these products are made in the feed mill and plants behind the store on a spread that takes up more than two city blocks. They also make specialty feeds for musk ox, moose and bison, using nutritionists’ guidance for specific state-sanctioned programs. The items are Alaska specific, a sure selling point since lots of products made Outside fail to suit the subarctic environment. “We’ve been manufacturing fertilizers for farmers that is made in Alaska, designed for Alaska conditions,” Klessens said. “When we talk to a buyer for Home Depot or Walmart or one of the big box stores, that’s important. ‘You don’t want to bring up products from an Outside plant,’ we tell them.” Mill &Feed sells directly to these large box stores in Alaska today, including Fred Meyer, Sam’s, Costco, Walmart, Home Depot, Lowe’s, Carrs-Safeway, and True Value. Agriculture changed in the past six decades, shifting from big dairy and meat farms to “backyard farmers,” who keep a few chickens and raise their own produce, said Sherwood, who started with his father-in-law’s company in 1973. At that point he was selling cleaning products to the school districts. “Today it’s different, but agriculture also is doing very well. A lot of green houses are going up, a lot of small and big farms are in operation, and a lot of produce is being grown in Alaska,” Sherwood said. The company trademarked 11 products: Arctic Melt, Arctic Grip, Arctic Grow Fertilizer, Arctic Wild Bird Seed and the various animal feeds, including one Sherwood developed that is safe for moose to eat and is sold only to sanctioned buyers. In 2016, the operation stepped into a new ownership configuration under an employee stock ownership plan, or ESOP. When Don Donatello died in 2002, business ownership went into a family trust. The Donatello Family Trust sold all its shares to the ESOP, Klessens said. It’s fitting the Manufacturer of the Year Award, like company profits, is shared with all the employees, Sherwood and Klessens say. “Our 65 employees invest a lot of themselves in their work. I think of the guy who’s worked for us 25 years and he’s out there in minus-20 below when the wind is blowing. I think of the people selling our products to their neighbors. As a result, they build relationships with a customer, which creates positive relationships,” Klessens said. “So for them to reap the benefits of that success is very fitting and that’s what makes us so proud of today’s announcement.” Naomi Klouda can be reached at [email protected]

McMahon promotes SBA successes in trip to Alaska

Linda McMahon saw her first ulu this past week. The head of the Small Business Administration visited the Ulu Factory in Anchorage on July 20 during her two-day trip to the state to view firsthand an American business that benefited from the SBA loan program. “So that’s how you get the handle on it,” watching May Arruiza assemble wood to blade by hand. “And the stamp, how is that done?” Owner Danni Lynch gave McMahon a nuts-and-bolts tour of machinery that laser burns wooden handles with town names and Alaskan scenes. She introduced her to Kory Roy, whose job is to package each bowl and ulu set. “Kory’s been with us since college,” Lynch said, introducing McMahon to each employee at the building on Ship Creek Avenue made possible through a 2003 SBA loan. Before they had a building, Lynch’s dad and uncle assembled ulus in a one-car garage, going back to 1973. “This is fascinating,” McMahon said, as she perused display shelves of ulus and selected several she intended to send home for her grandchildren. Tourists filtering into the business on the banks of Ship Creek and suited security guards in charge of protecting the cabinet official didn’t seem to faze one another. McMahon’s two-day Alaska portion of her national SBA Ignite Tour focuses on “learning and listening to small businesses” as she stopped at five Anchorage businesses, then hopped a plane the next day for Bethel and Kwethluk. She’s in the 49th state to mentor companies and startups about programs the SBA offers for government contractors, vets, women entrepreneurs and established companies that want to grow. At the 49th State Brewing Co., McMahon had a 45-minute listening session with companies that handle federal contracts and 49th State owners David McCarthy and Jason Motyka. The meeting with contractors was the only portion of her Anchorage visit off limits to the media to allow for businesses to feel open with their private information, said Melanie Norton, the SBA regional communications director based in Seattle. Other shop visits were conducted while customers came and went. Groggy folks showed up for their caffeine fix at Kaladi Brothers Coffee. At the Ulu Factory, tourists arrived in clusters from the trolley. At 49th State, the lunch crowd watched from their plates as a television reporter filmed McMahon talking with McCarthy and Moytka on the sunny rooftop of the restaurant. McMahon ended her business tour at Heather’s Choice Meals for Adventuring and sampling spruce tip and birch syrup Wild Scoop Ice Cream. Knowing the territory McMahon has insights into small business because of her own trials, she sometimes tells small business owners on her Ignite Tour. At 17, in August 1966, she married Vince McMahon and soon after enrolled in East Carolina University where Vince had been studying a year. There she finished in three years with a bachelor’s degree in French and a teaching certificate. She recalls the challenges when at one point filed she and Vince filed for bankruptcy, even briefly receiving food stamps. Though her husband had attended college aiming to become a pediatrician, at one point he took a 90-hour a week job at a quarry. In 1979, the couple co-founded what became World Wrestling Entertainment, which has made them billionaires. Now a publicly traded company, WWE has a market capitalization of $1.5 billion. Of all President Donald Trump’s cabinet officials, McMahon has known him the longest and enjoys reminding people he’s in the WWE Hall of Fame. They purchased the Cape Cod Coliseum in Massachusetts where they began to hold hockey and other sport events. Linda, as co-CEO, cooked meatball sandwiches to feed the crowds and came up with plans for expanding their business. “I tell the story often,” McMahon said on her Alaska visit. “It’s all about cash flow and cash management. There were times early on that I made a decision about $12 a month that I am spending to lease this electric typewriter. Do I continue to lease this or can I now afford to buy it?” It would take more than a decade but the company growth was explosive, enough so that some observers considered Vince and Linda McMahon business geniuses, according to a New York Times story. One of her hooks for success was to establish a line of action figures, “Wrestling Superstars,” which drew children to the sport. Product merchandising and event management grew the bottom line into a multimillion-dollar industry. In giving encouragement to others, McMahon said getting a successful business is always about opportunity and taking advantage of it. “And I think it’s also a little bit about having Lady Luck,” she said in Lynch’s office at the Ulu Factory. By the time Trump appointed her to head the SBA, she had run for the U.S. Senate twice from Connecticut. In 2010 she won the Republican Primary but lost to Democrat Richard Blumenthal. In 2012 she lost again, to Democrat Chris Murphy who filled Sen. Joe Lieberman’s former seat. McMahon also is co-founder and former CEO of Women’s Leadership LIVE, LLC, a company that trains women in businesses. And she’s highlighted the advances of women in education, business and entrepreneurship in a series called “Women in America” that she co-hosted with Burt Wolf, which airs on PBS stations nationwide. Learning about Alaska While the locations change, she hears similar stories around country. The usual small business complaints come from their challenges in tax brackets that put them up to 35 percent, which McMahon said needs to come down to 15 percent, as Trump has advocated. Health insurance is the other one she can reliably hear a lot about. Currently under the American Affordable Care Act, employers complain insurance premiums and deductibles have gotten so costly that that policies are essentially catastrophic coverage compared to what was available before the ACA. “Small businesses are paying more and their employees are receiving less,” she said. But in Alaska, she comes with a different set of expectations as well due to the transportation challenges in a vast geography. “Sens. (Lisa) Murkowski and (Dan) Sullivan educated me about Alaska prior to my confirmation hearing. After listening a while, I sat back and said ‘wow,’” McMahon said. “That is just amazing that it is so incredibly different than anything you would encounter elsewhere. It gives a whole new meaning to rural America.” One company told her that in order to accept a bid, they needed $30,000 to purchase fuel to get from Anchorage to the Aleutians for a cleanup contract. McMahon was able to suggest an SBA loan may be available to provide the money, so the company wouldn’t have to miss out on the contract. On her Ignite Tour, which included Portland, Anchorage, Detroit and Milwaukee this time, the one phrase McMahon will have said perhaps most often: “The SBA is one of America’s best kept secrets.” In the experience of 49th State owners McCarthy and Motyka, McMahon isn’t wrong. Her trip highlighted businesses that benefited from SBA loans or other programs, among them McCarthy’s and Moytka’s, who have twice been named Small Business Administration Business Persons of the Year for Alaska in 2008 and 2017. “Just the fact that she took the time to visit and hear the stories is encouraging,” said Motyka. “Politics aside, there are only benefits to gain from having this visit,” McCarthy said, referring to the often-polarized view of Trump’s presidency. “The SBA is trying to stimulate small business growth in America and she is finding ways and avenues to increase lending to allow them to grow. Marketing the SBA and letting people know how it can help is an incredible challenge. It is America’s best kept secret.” Unlike banks, the SBA guides businesses through loan programs, offering longer-term loans and lower interest rates. “The SBA loan program is self-sufficient. One of the greatest advantages of the loan is that it extends over a longer period of time than a traditional bank would allow,” McCarthy said. “The SBA has a lot of programs to educate them to be more successful. She’s getting the SBA name and resources out to more people. That’s the greatest benefit of what her office is going to do.” The specific issues they discussed with McMahon — their second visit with her after meeting in D.C. for the SBA award in April — is the challenge of Alaska’s continued boom and bust cycles. Tourism is currently in a boom cycle with record amounts of visitors over the past few years, but the business suffered greatly when the Great Recession plagued the Lower 48. Innovation that lasts year-round would be the answer, the partners told McMahon. The 49th State Brewing Co., a property under the larger Denali Visions 3000 Corp., requires hundreds of summer hires with multiple properties at Healy and Denali National Park along with their latest acquisition in Anchorage. For more than an hour, the owners spoke to McMahon about their challenges. They treated her to a lunch of fresh salmon on a bed of greens. “I found her quick and sincere,” Motyka said. “We had a warm welcome from her and it was very personalized. She is a leader of people, right? And it shows.” They respect McMahon for the way she rose in business to become a billionaire in the World Wrestling Entertainment empire she helped build from the ground up. “Her business, (the WWE), we can relate to because we saw that business grow. I saw it while I was growing up,” McCarthy said. “It’s an iconic business from my youth.” He recalled the action figures, and the television entertainment. For new business Heather’s Choice Meals for Adventuring, it was an honor to see the cabinet official in her 1,000 square-foot retail/office location on Vanguard Drive. “There were 10 people crowded into the space,” said Heather Kelly, the founder and member of the just-graduated cohort of the Launch Alaska Program. Kelly is no stranger to SBA programs. She worked with the Alaska Small Business Development Center’s Lance Ahern and others as she worked her way from startup to launch. “It was awesome to see she had done her homework on our business, that she had read about our products,” Kelly said. One take-away from McMahon’s visit is a reminder that SBA programs can help her in the next steps as a small business that has grown exponentially in the past year. Some days she receives a flood of orders through E-commerce “and it catches us off-guard.” To obtain more capital, she has sold shares of her business. “She reminded me that instead of giving up a percentage of my business to get our own kitchen built, I can show the SBA my plan and see if they could fund it,” she said. Jon Bittner, the statewide director of the Small Business Development Center, said he wanted to show Administrator McMahon the “next generation” of Alaska entrepreneurs in Heather Kelly and Wild Scoop owners Elissa Brown and Christopher Pike. “Both of the companies are relatively young and have succeeded in the face of a tough statewide economy, and are growing and thriving,” Bittner said. “I believe businesses like this represent the best aspects of the Alaskan entrepreneurial spirit and are examples of what is possible when people believe in the economic opportunities that Alaska has to offer.” Naomi Klouda can be reached at [email protected]

Marijuana board moves to prohibit common lease arrangement

Should a landlord be allowed a percent of sales in lieu of charging rent to a marijuana business? That’s a current practice of concern to the Alaska Marijuana Control Office. Such arrangements has the potential to allow a landlord — who is not a licensee — “to exert influence on the operation.” Addressing the issue was among the 12 agenda actions sent out for public comment after the Alaska Marijuana Control Board met in Fairbanks July 12-14. By a 3-2 vote, the board settled on a proposal to prohibit future license applicants from lease arrangements that include a percentage of revenue in exchange for rent. Alcohol and Marijuana Control Office Executive Director Erika McConnell estimates at least 25 percent of the nearly 200 marijuana businesses across the state have this sort of lease arrangement. “We see the arrangement on the license applications as they come across,” said Chairman Peter Mlynarik said. Some landlords take 5 percent to 20 percent of revenue in the grow operation, dispensary or other cannabis businesses in exchange for decreased rent. McConnell asked the board to make a decision based on two proposals. One asked to eliminate percentage lease or rent agreements from “direct or indirect financial interest.” The other option would have allowed a financial interest limit of 5 percent or less, and the landlord would then be required to undergo the same licensing review as the business owner. After lengthy debate, the board agreed to adopt the first version prohibiting any percentage of sales agreements and sent the measure out for 30-day public comment. They will take up the measure again Sept. 14-15 at the next board meeting in Nome. At that point, the board could amend it or adopt it as is. Brandon Emmett and Nick Miller, who are the industry representatives on the board, argued that such arrangements can lend financial support as the owner gets his or her business off the ground. Regulations spell out that only Alaska residents can own an interest or work in a cannabis business. “All Alaskans and only Alaskans, I understand that,” said Emmett, who had argued in favor of allowing a percentage-take of revenue. “I also understand the state needs new industry and more revenue. Only the old guard has money and either you have to be a part of that club or beg those people to give you money. Businesses are caught between a rock and a hard place. That’s why you see deals like this.” Miller argued to “let people use the tools that are available. If we shut those tools off, there will be less tools and less investment.” But the board’s attorney Harriet Milks of the state Department of Law said there is no intent to deprive new businesses of adequate investment. The idea is to keep out unwanted influences that could put a criminal element into legal operations. She also brought up the Cole Memo, a 2013 document by former U.S. Deputy Attorney General James Cole that outlines guidance for states’ legal, adult use cannabis industries. Under the Cole Memo, which is under review by the new leaders of the Department of Justice but is still the operating policy, as long as states maintain strict regulation that doesn’t leave open loopholes for criminal activity, the federal government would not look to enforce federal marijuana laws in those states. “We don’t want to attract unwanted federal attention,” Milks said. Those that already have a percentage-of-revenue in exchange for rent would be handled during the license renewal process, Milks said. “Licenses wouldn’t be revoked because of it,” she said. “We would have to discuss that.” Ad watch While on-site consumption proved the most hotly debated agenda item for the five-member board and that too will go out for public comment, a dispensary’s ability to promote its facility came in a close second. Currently, many of the violations cited by enforcement are due to advertising, said Enforcement Supervisor James Hoelscher in his report to the board. One of the intents of all advertising regulation is to avoid advocating or encouraging youth consumption of marijuana products, board member Loren Jones said. But not being able to sponsor public events as a marijuana business “demonizes the industry so that they can’t participate in community-building events,” Emmett said. The new regulations going out for public comment would specify that all promotions must take place inside the licensed business, not in a park or at a public event. New regulations also would separate business advertisement rules from product advertisement rules. Local control Questions about local government jurisdiction also will be going out for public comment. Currently, cities must be notified each time a license is granted to an operation in that jurisdiction. But the land-use authority may be a borough government and in rural Alaska, the local government in authority might be a Tribal entity. A new regulation would require notification to go to all relevant local entities that have separate duties over authorizing land-use and taxes. Board member Jones objected to notifying Tribes, which may own the land, saying it would open a can of worms and the legislature hasn’t yet “detailed ‘local’ government as much as maybe they should be.” Milks said Tribal notification is more complicated. “But I want to assure the public that the Department of Law is on it,” she said. “The question of Tribal government and jurisdiction is complicated, but the public can be assured we are working on it.” Handlers’ permits This measure would have amended regulations to say that an individual would be prohibited from obtaining a handler’s permit if they had committed a felony in the previous five years. This was amended to read two years after board members said smaller communities offer fewer employment opportunities and the businesses need to be able to hire as many employees as they need. The permit is necessary for all employees of a cannabis establishment, including cashier sales and janitors. Other matters taken up by the board related to industry quality control, plant count for new cultivators, removing the time limit on public objections, notification of crime on the premises within 24 hours, kief and testing trim and requirements for testing equipment failure. The matters sent out for public comment will be taken up at the next meeting, Sept. 14-15 in Nome. To comment on drafts of each regulation proposal, go to

Repeal or replace fails, but state to see premiums fall in ‘18

Alaska has the highest insurance premiums in the individual market in the country with an average monthly cost of $927 that’s nearly equal to the average rent of $1,100. Premiums in the individual insurance market are now projected to decrease by as much as 20 percent to 22 percent in 2018 after the state received a Section 1332 “innovation waiver” under the current Affordable Care Act. Consumers won’t be the only one to see a savings. The state budget will see savings of $44 million as the nearly $49 million in federal savings from reduced Advanced Premium Tax Credit, or APTC, payments are passed through to the Alaska Reinsurance Program. Federal savings available to be passed through to the state program are projected to grow to $92 million by 2026. The total amount of federal funding for the reinsurance program under the waiver is $332 million over five years, but it is not “new” money. Instead it is money that otherwise would have gone toward federal premium subsidies. Under the waiver, the state contribution will be $11 million for 2018 instead of the $55 million in 2017. According to Centers for Medicare and Medicaid Services, the waiver program allow states to “implement innovative ways to provide access to quality health care that is at least as comprehensive and affordable as would be provided absent the waiver, provides coverage to a comparable number of residents of the state as would be provided coverage absent a waiver, and does not increase the federal deficit.” With “repeal and replace” or even just “repeal” now dead in the U.S. Senate, leaving the ACA in place for the foreseeable future, the State of Alaska was one of the few states to gain good news on the health insurance front. Murkowski said July 18 she will not vote for a simple repeal; fellow Alaska Sen. Dan Sullivan said he would vote for a straight repeal with the goal to work for a replacement system. Down to only a single insurance provider, Premera Blue Cross Blue Shield, in 2016, the Legislature approved the Alaska Reinsurance Program, or ARP, last year using $55 million from existing fees charged to each insurance policy sold in the state. That funding, which essentially insured Premera’s expenses from 33 high cost conditions, held the 2017 rate increase down to 7 percent compared to a projected 42 percent before the ARP was approved. Premera has said it lost about $7 million over the first three years under the ACA from 2014-16 prior to the ARP adoption. Because about 90 percent of Premera’s individual market customers qualify for at least some income-based subsidy from the federal government, lower premiums reduce the size of those individual subsidies through the APTC. Premera’s adjusted rates for 2018 were filed with the state by the deadline on July 17 in light of receiving the 1332 waiver, spokeswoman Melanie Coon said. The state will analyze the proposal prior to approval. “We will release our rates after the state has reviewed and approved them. With less than 20,000 people in Alaska’s individual market, claims experience can be very volatile,” Coon wrote in an email. “Because of that, Premera and the DOI (Division of Insurance) have agreed to update the rate filing in mid-August with more recent experience, which will result in rates that more closely reflect the latest cost trend. “We will continue to renew customers on grandfathered individual plans (purchased before 2010) and transitional relief individual plans (purchased between 2010 and 2014). Those plans have separate filings and start dates.” The Center for Medicare and Medicaid Services held up Alaska’s approach as a creative solution other states could pursue in a national news conference July 11 announcing a long-awaited decision after the state applied for it in December. “Today’s approval will temporarily stabilize Alaska’s individual insurance market, which only has one carrier and has experienced a 203 percent increase in insurance premiums since the Affordable Care Act began,” said CMS Administrator Seema Verma during the announcement. In its waiver application, the state projected the reinsurance program would save the federal government more than $48 million in 2018 and asked for those savings to be passed to the ARP to replace state money. The state also estimated that 1,460 households that currently don’t have health insurance will buy policies if they are more affordable. The growth is expected to come from households that do not qualify for the income-based subsidies, which is more than 400 percent of the federal poverty line. “Based on these projections, CMS and the U.S. Department of the Treasury are approving the request,” CMS said in its announcement July 11. The waiver was conditional on the state reauthorizing the ARP and appropriating the necessary matching funds. Senate Finance Co-Chair Sen. Anna MacKinnon, R-Eagle River, said the logical place to add in the new provisions became the fiscal year 2018 operating budget, which had already passed prior to the July 11 announcement by CMS. The 2018 budget also appropriates $55 million from the insurance fund, but this time it is spread over the next five fiscal years instead of covering just one. “(The budget) provides the necessary federal receipt authority for FY18 so there is no need for anything in the capital budget,” said Alaska Office of Management and Budget Director Pat Pitney. “It is possible that future year federal receipt authority may be required and that would show up in FY19’s budget.” The money to continue the ARP was included in Gov. Bill Walker’s original proposed budget and the language was amended later to receive federal funds to the program for five years as the state sought in its waiver application. “We were planning on it,” Pitney said. “We were hoping for the strategy to work. Federal money will be coming in for the program January 2018 and there will be revisions once we know the actual dollar amount in real numbers for each year.” Premera had 16,732 customers as of May 31. The numbers have varied as customers join or leave the exchange. Another approximately 2,900 customers have individual coverage that they purchased before ACA plans were available, Coon said. “They are on different plans but we consider them part of our entire individual customer group. If you add those to our individual metallic (ACA) plan customers, it brings our current individual enrollment up to roughly 19,600 customers.” Although CMS officials said Alaska is the first state in the union to receive the 1332 waiver, according to its website Hawaii received a partial 1332 waiver this past December under the previous administration. After the efforts failed to replace, and simply repeal, the ACA, Sen. Lisa Murkowski said the goals should be “to stabilize the individual markets and engage in a bipartisan process to address the failures of the ACA.” In Alaska, the waiver achieves the first goal for at least the next five years.

Board makes call about on-site cannabis consumption

A proposal that would allow on-site consumption of marijuana is now open for public comment after the Alaska Marijuana Control Board endorsed a measure opening the way July 14 during its meeting in Fairbanks. Working from one of three draft proposals, the board looked at a number of restrictions in lengthy debates before approving the on-site consumption measure. The public will be able to weigh in on these and other aspects of the concept: • The facility needs to protect employees from second-hand smoke by offering a screened off viewing area to monitor the floor where consumption takes place. • It also needs to be screened off from public viewing just as current regulations keep shop windows blocked from outsiders looking in. • Local governments would have the right to prohibit such facilities from allowing smoking if they chose. • Applicants would need to submit operation plans for addressing security, separation from the retail area and employee protections from second-hand smoke. • Smoking marijuana concentrates, known as “dabs,” would not be allowed. • Entertainment such as television, music or games would be allowed. The board voted 3-2 to give the public 60 days to comment rather than the minimum of 30 in order to allow local governments time to respond. The votes against came from Chairman Peter Mlynarik, the Soldotna Chief of Police, and Loren Jones of Juneau, who holds a public health seat. Rural Alaska member Mark Springer of Bethel and industry members Brandon Emmett and Nick Miller voted in favor. After the 60-day comment period, the measure will come back to the board for action to amend the proposal, adopt it or reject it. The longer comment period means it will likely be the November meeting in Anchorage before it comes before the board again. If they amend the proposal it will have to go out for comment again. If it is adopted, it goes to the Lt. Gov. Byron Mallott and becomes effective 30 days after he signs it. Should it be approved, Alaska would be the first state with legal recreational cannabis to allow on-site consumption. Miller, Emmett and Springer voted down Jones’ amendment to limit the amount of time a person could spend on-site to 30 minutes. That wouldn’t answer the request from the Anchorage Assembly and others for the board to come up with a legal place to consume marijuana products, they said. “It’s putting our police in the position of deciding low level marijuana crimes essentially against tourists,” Emmett said. Apartment renters also live under no-smoking requirements, and it’s against the law to smoke in a public park, though “green spaces” is where tourists are ending up, according to Anchorage Assemblyman Christopher Constant, who sponsored the assembly resolution. The Assembly passed it July 11, one day before the Fairbanks meeting, asking the board to establish a regulation for consuming in the dispensaries. “Why so overly strict and concerned about the amount of time a person would spend there?” Springer asked about the 30-minute proposal. “Tourists are looking for a place to go and consume,” Emmett said. “Going in and hurrying out is not an experience. Why not smoke in the park? It’s not realistic. (The plan) would place more restriction in a venue that’s generally safer than the currently legal bars where people tend to consume to get intoxicated, and get rowdy and crazy.” The hazards of secondhand smoke also hung the board up in long debate. Alaska’s law against it is meant to protect public health, Jones reminded the board. Even e-cigarette smoking is not allowed. A compromise was struck in the wording “unless otherwise prohibited by local ordinance” to allow governments their own say over smoking in a public facility, after the board’s attorney suggested the language. “We’ll find out if this is a concern through public comment,” Jones conceded. Separation between the retail portion of a dispensary and the on-site consumption portion received a thorough vetting. Bars typically offer open-air decks and yard space for smoking tobacco. Modeling an on-site consumption on that model may make sense, Springer suggested. Even “a plexi-glass shack out back” might answer the need for protecting the public from secondhand smoke, he said. They debated whether a separate structure should be required, but Emmett raised concerns this wouldn’t be necessary as long as a facility could create separate walled-off, well-ventilated space on the premises. Jones also wanted such facilities to keep to a minimal atmosphere of no music, television or games to discourage lingering. That also was voted down, making way for an on-site consumption site to offer entertainment within the social space. But there can be no smoking of tobacco or consuming alcohol on such premises, the board agreed. “Dab” use, the smoking of concentrated marijuana, also was deemed as “not for novices” and won’t be allowed on the premises due to its strong effect. The three-day meeting is the board’s longest since forming in 2015. The first day two days were dominated with taking up 42 license applications. One application was denied and another was postponed to the September board meeting after the board requested more information. A retail store application submitted by Carmen Perzechino called Alaska Native Cannabis Co. that was to be located on the premises of 37650 Ridgeway Street in Sterling was turned down due to a previous violation in that location. A second business, Goldhill Gardens, was told to resubmit paperwork for the September board meeting after the applicant did not present enough detail in the business plan, according to the board. Robert Mikol of Fairbanks was not turned down in his application, but was told to expand it to include more details about his plan of operations. Mikol had supplied brief answers due to objections that revealing sensitive details about plans makes business owners vulnerable. State law requires them to reveal where video equipment will be positioned, where the safe is located and floor layouts. The industry is cash-only because marijuana is illegal by federal law and businesses cannot access the regular banking system. “Mikol made the case, ‘I don’t want to give this out,’” said Emmett, who spoke to the board on Mikol’s behalf because he knows the former federal security contractor. “He feels it’s too much information. In his opinion, the application is too detailed. It gives away more information than it needs and invites criminals to check on you.” Mikol, reached later by the Journal for comment, said revealing information on the application — even Social Security numbers formerly were on forms that could be viewed by the public — creates unnecessary fears for the new businesses. “What if a bank were asked to keep only cash and reveal where it’s kept?” he said. “We’re asked to tell the layout and where the cameras are and where the back up to the video is located. It’s too much.” Some operations are in rural places, far from the closest responding Alaska State Trooper station. But Mikol said he went back to the application and filled out more details of his proposed operation for the board. It won’t be taken up until September at the Nome meeting, which will put him two months behind in opening, he said. At the end of the board meeting on July14, the board agreed they too are concerned about the amount of specific details revealed in the operation plans. They asked Emmett and Miller to give direction on what should be redacted from applications in the future to help protect the cash-only businesses. Two other businesses were not available when their names were called and so will not be issued a license: Raven’s Bud and Nature’s Relief, both of Fairbanks. ^ Naomi Klouda can be reached at [email protected]

Alaska Startup Week launches ‘Year of Innovation’ event series

Taking a business idea from a kernel of thought to grand openings, in the old model, meant testing a market at the end of the process: sales equated success. The new model shows a different way that turns those steps upside down: test and refine ideas in a community of entrepreneurs before putting up the business sign. How to start up a startup is the main idea behind Alaska Startup Week July 22-30 with nine days of events in Alaskan communities to help speed momentum and opportunities around innovation and entrepreneurship. Fairbanks, Juneau and Anchorage are hosting events — most of them free — that the public can sign up for attending via a Techstars program that keeps track of events: https:// Startup Week highlights the three priorities and the “Year of Innovation” pipeline developed in the Innovate Alaska efforts, said Juliet Shepherd, tech led development project manager at the Fairbanks Economic Development Corp. Or, in other words, it begins a year of events meant to let people test drive their business plans. “Alaska Startup Week is the ‘launch’ event in the 2017-2018 Year of Innovation calendar of events,” Shepherd said. “(The events offer) a new pipeline of lean launch tools for innovators and entrepreneurs to test drive business ideas, execute market and customer validation, pivot (as necessary to find the right fit), get in front of real investors, and compete for capital to startup, and launch — right here in Alaska.” In 2016, Year of Innovation events produced results: 309 new business ideas pitched; 31 developed business ideas presented from the two accelerators (Paths to Prosperity or Spruce Root in Southeast Alaska, and Launch Alaska in Anchorage); 14 startup businesses launched with more than $550,000 in capital investment in Alaska. “These numbers do not represent a complete picture of all new business activity across the state, but it is the first attempt to measure business generation, using lean launch principles, through this new ‘pipeline’ of innovation and startup events,” Shepherd said. Innovate Alaska 2.0 reflects the collaborative efforts of a growing number of economic development organizations across the nation. Businesses and investors statewide come together for the shared goal of diversifying Alaska’s economic base beyond its dependence on oil revenue. Startup Week got its own beginning when Jon Bittner, now the statewide executive director of the Small Business Development Center, launched it five years ago as Alaska Entrepreneur Week. At that point, it was sponsored through the Anchorage Economic Development Corp. Ky Holland, assistant professor of business administration management at Alaska Pacific University, and Shepherd took it up in the following years. “We wanted to keep it going and steadily it grew to the 37 events so far this year,” Holland said. “Last year, it involved more than 3,000 people in four cities. This year, we’re hoping for more than that.” Holland said it isn’t too late to schedule hosting a workshop or to invite policy planners, investors, entrepreneurs and business experts. (Email [email protected] or [email protected]) “In the biggest picture, we need a more diversified economy. We’ve lined up a sequence in the Year of Innovation calendar,” Holland said. “It launches with Startup Week, where people can hear about it in a way that is compelling and invites them in.” Gretchen Fauske, associate director of the UAA Center for Economic Development, will be giving a workshop called the Rapid Ideation Lab. The three-hour lab pairs prospective entrepreneurs with guides for an hour to use something called the “Idea Napkin.” This is a first step in testing an idea. The concept works like, well a napkin, where you jot notes about who you are, what are you offering, what are your distinctive competencies? The tool works through key parts of a good early-stage idea using the best practices in entrepreneurship and innovation designed by the Straight Up Business Institute. Two workshops target information for would-be investors. Taught by Holland, one class focuses on corporate strategic investments and syndication of strategic investment in deals. The second one looks at tax issues around investing, and managing losses and gains in new businesses. Meanwhile, in Juneau and Fairbanks workshops are also offered. Among the offerings, Dana Herdon, a communications specialist at the Juneau Economic Development Council, leads a “New and Veteran Entrepreneur Panel” discussion in Juneau on July 27 and a trip to observe innovative operations at Alaska Glacier Seafoods and Taku Smokeries. Fairbanks is offering business tours and a variety of tech and investment workshops. One zooms in on “Making Alaska’s Music Industry Profitable,” on July 29. The Manufacturer of the Year will be announced by the Alaska Department of Commerce, Community and Economic Development’s “Made in Alaska” program at the Make it Monday Chamber Forum noon luncheon July 24 at the Dena’ina Center. Another cornerstone event is the 2017 3-Year Outlook Luncheon hosted by the Anchorage Economic Development Corp. After AEDC President and CEO Bill Popp gives the economic outlook, the event features this year’s guest speaker Abhi Nemani. He is a writer, speaker, organizer and technologist who is currently building EthosLabs, a govtech startup that connects the public sector with entrepreneurs. As Sacramento’s interim chief innovation officer, Nemani developed and launched the city’s landmark $10 million Innovation and Growth Fund to promote entrepreneurship and innovation. Between 2010 and 2014 Nemani helped build, launch and run Code for America, an organization working to advance the priorities of creating healthy, prosperous and safe communities. Nemani’s work has been featured in the New York Times, Government Executive and Forbes. At the end of Startup Week, serious would-be entrepreneurs ideally will be inspired and ready for the next event in the Year of Innovation Calendar, said Shepherd. “We feature 10-13 events each year, with six of the events tried and true,” she said. The seasonal cycle featured the Innovation Summit in Juneau Feb. 15-16, the online Alaska Business Model Competition Feb. 4, the Alaska Business Plan Competition in April, the techy Interior HackaThon in Fairbanks and the fall Arctic Innovation Competition. “You can enter at any point, but it starts with seeding the idea — there’s a total of six that we make a point of highlighting that illustrates a cycle,” Shepherd said. Startup week or Startup Weekend offers immersion into ideation. “Within one year you could go from idea to launch with $60,000 in investments,” Shepherd said. “To launch right here in Alaska means you no longer have to go anywhere else from idea to launch.” The traditional business model called for leasing a brick and mortar storefront and selling products or services out the door. “They tended to do that before considering the size of the market. All the capital was up front,” Shepherd said. “Now, connected through the pipeline of ideas, mentors, incubators and investors, you can work through all these issues before you sink a dollar of investment.” The result is a better chance at business successes, which helps an ecosystem of entrepreneurs succeed. Organizer Fauske notes that people may chaff at the often-used “ecosystem” analogy, but there’s a meaning behind it that’s increasingly catching hold as a community of experts help raise next-generation businesses. The traditional business model also saw businesses in hard-edged competition with one another, hardly an environment to see much cooperation. A new phrase is born in today’s ecosystem philosophy: co-operition. “That’s a good way to think of today’s business model,” Fauske said. “They compete and cooperate or give it forward.” Naomi Klouda can be reached at [email protected]

Fairbanks sets visitor records through winter tourism

The Inland Empire 483 miles from the ocean wouldn’t qualify it as a “shore-side excursion” in the traditional sense but that’s exactly how Fairbanks is designated as thousands of cruise ship visitors make their way directly from the dock to the train or bus that takes them to Interior Alaska. Fairbanks saw new records set in tourism numbers the past two years as a rising number head toward it just as most visitors begin to leave the land of the midnight sun. Bed tax collections for 2016 set a record high for the Fairbanks North Star Borough and tell part of the story of Fairbanks year-round record-setting. Last year the borough, North Pole and Fairbanks combined, exceeded $5.2 million in collections for the first time. That surpassed 2015 as the previous record-breaker when the borough hit $5 million in bed tax collections. A 9 percent increase between the two years represented a huge leap in the industry, said Deb Hickok, president and chief executive officer of Explore Fairbanks, the nonprofit tourism bureau. The second part of the story is that while summer hosts more visitors than winter, growth in Fairbanks’ tourism numbers is coming from August to April. “Developing the aurora and winter tourism seasons has strengthened the local Fairbanks region travel industry and provided more year-round jobs,” Hickok said. That’s been true for more than a decade, but not to the recent extent. Over the past 10 years of summer and winter bed tax collections, Hickok analyzed numbers showing the average growth in the five-month May-September summer period was flat. “But the seven-month October through April winter period grew an average of 6 percent,” she wrote in an email. In 2008, winter collections accounted for 26 percent of the total collections, whereas in 2016, winter accounted for 35 percent of the total collections. For Alaskans accustomed to the last tour bus door closing as darkness descends, that statistical switch turns the tourism seasons upside down. “All our growth has been in winter. The bulk of the bed tax is summer but our growth is in winter,” Hickok said. “Summer has been pretty much flat since the recession.” Another indicator measuring the growth came in hotel occupancy. The 103-room Candlewood Suites opened in December 2016, adding to the 21 other hotels in Fairbanks and one in North Pole. Fairbanks saw 67.5 percent occupancy rates in 2015 and 67.9 percent in 2016. According to PKF Hospitality Research, the 65.6 percent occupancy level for 2015 “is an all-time record for the 27 years STR, Inc. has been reporting U.S. lodging industry performance.” This means Fairbanks is over the national average in occupancy rates. A third indicator comes in arrival and destination numbers, or A&O. In 2015, Fairbanks broke 1 million and in 2016, 1.1 million people. Since the number includes locals traveling back and forth, that too has to be factored in, Hickok said. “Aurora is the main driver,” Hickok said. “We call from Aug. 21-April 21 the Aurora season. The northern lights start showing up that early, by late August.” Fairbanks’ ideal location directly beneath the aurora oval and its clear, cold nights are beating out coastal Norway and other places north of the Arctic Circle prone to cloudiness, explains Matt Atkinson or the Northern Alaska Tour Co. “We get less precipitation,” he said. “Our main competitors are coastal countries where they get fewer viewing days.” Physically closer to the phenomenon and shielded from city lights by its valley placement, Fairbanks has increasingly sold itself as a winter destination. It’s also close enough to Wiseman and Deadhorse to take excursions there for additional viewing, said Adkinson, whose operation books rooms at the 104-room Coldfoot Camp throughout the winter. “There’s not a lot of places globally where you can go to put yourself at that latitude,” he said. Farther north, the Brooks Range protects views from Arctic Ocean weather systems. “People are coming to see Alaska for the first time in winter. Even when its 30 or 50 below zero, winter sells itself,” he said. Adkinson’s operation saw a switch from predominantly Japanese winter visitors to Chinese during Japan’s current recession. Perhaps most remarkable is the heavy spring break traffic in March when entourages of Chinese students attending American universities travel to Alaska, he said. Florida spring break scenes of jubilant young people aren’t their attraction; winter cozy cabins and staying up until 4 a.m. to watch for the northern lights are the draw. Winter employment saw a leap as well. Tour operators need bus drivers, pilots, camp supervisors in the remote places outside Fairbanks, cooks, guides, wood-cutters to fuel winter stoves. For Northern Alaska Tours, six year-round guides are now employed. A Yukon River camp is now open year-round, another first for Adkinson’s operation. “We decided to take a chance on it for the first time this past winter,” he said. The foods they serve also changed from Alaska comfort foods to specialty noodle dishes preferred by Asian visitors. Americans still make up 50 percent of the visitors at the A Taste of Alaska Lodge, where the Eberhardt family is celebrating 25 years of business. The homestead proved up by World War II vet Walter Eberhardt in 1947 has stayed in the family and expanded over the past 70 years. “We’ve seen a lot of changes,” said the third-generation’s Kory Eberhardt. His own parents, Deb and Dave Eberhardt, started a B&B in the early ‘90s when travelers came to Fairbanks via the Alaska Highway and were predominantly Americans and Canadians. As cruise ship travel focused sights inland for “shore-side excursions,” Fairbanks grew in popularity for its Alaska Railroad terminus and the international traveler. The homestead next to the Chena Hot Springs Road where Walter had raised hay, oats and barley, became the perfect setting for a lodge built in 1994 by Kory’s parents. He took over the operation in 2010. “We used to get a lot of our bookings from retreats. Now, it’s mostly visitors coming for winter and they tend to stay longer, for four-five days at a time,” Eberhardt said. They too are seeing a shift to Chinese visitors, and lots of students arriving in winter just as they celebrate A Taste of Alaska’s 25th anniversary. Hickok says indications show changes in the Fairbank’s visitor industry are likely to stay constant for at least a few years to come, now that the Inland Empire and Land of the Midnight Sun monikers caught hold nationally and internationally. Naomi Klouda can be reached at [email protected]

SBA chief McMahon latest cabinet official to visit Alaska

The head of the U.S. Small Business Development Administration will be the latest cabinet official from President Donald Trump’s administration to visit Alaska with stops in Anchorage and Bethel. As part of her nationwide SBA Ignite Tour, Administrator Linda McMahon will focus on listening to business owners and leaders as well as educating about SBA services for accessing capital during her July 20-21 trip, said SBA Regional Communications Director Melanie Norton. Confirmed into office by the U.S. Senate in February in an 81-19 vote, McMahon was noted as a successful small businesswoman who co-founded World Wrestling Entertainment and formerly was its chief operating officer. In Anchorage, her tour includes this year’s SBA Business of the Year Award winner, 49th State Brewing Co., and companies that grew after receiving SBA loans: the Ulu Factory, Heather’s Choice Meals for Adventuring and Kaladi Brothers Coffee. Nancy Porzio, the Alaska Director of the SBA based in Anchorage, said her priorities for hosting McMahon are to show her the contrasting operations at work in Alaska’s biggest city, the hub town of Bethel and a small village, Kwethluk on the Kuskokwim River. “We want her to see the cultural and rural areas to show how unique Alaska is, its vast countryside and the issues we face due to the lack of connectivity,” Porzoi said. McMahon has a hands-on style for getting to know staff and small business needs, said Porzio, who has met her twice before. “During a meeting in Leesburg, Virginia, she did something unusual for administrators: she spent a full day with us and held four different round tables so all the staff could have personal time with her,” Porzio said. On her own Alaska agenda for discussion with McMahon, Porzio’s priorities are to work toward re-establishing a women’s business center to provide technical assistance to women-owned businesses. She also would like to see more micro-lenders in the state involved with SBA programs and wants to increase awareness of government contracting opportunities for Alaska qualifying businesses. In Bethel, Porzio organized portions of McMahon’s visit with the help of Anna Hoffman, president of the Bethel Native Contractors. They will go to a construction camp made from renovating an old Bureau of Indian Affairs school in Kwethluk, to hear first-hand the construction challenges on tundra in a changing climate. Jon Bittner, the Small Business Development Center director, said he’s also excited for the opportunities presented by Linda McMahon coming to town. “I’m hoping she can see the uniqueness of our entrepreneurial activity, some of our more interesting industries: seafood, our banner year in tourism, the newer industries in our economy, breweries and value added products,” Bittner said. “A lot is going on here right now as we move from the one-commodity focus to a more diversified economy.” Also remarkable is the number of high-level cabinet officials visiting Alaska this early in a new president’s term, Bittner said. “Usually, we see them on the last part of an administration’s time in office. Alaska seems to be receiving a lot more of these visits than we ever did before, and I suspect that it has to do with the fact our federal delegation is important to the president’s agenda,” Bittner said. Sens. Lisa Murkowksi and Dan Sullivan are currently key votes on issues such as health care legislation. Alaska has also been a focus of Trump’s administration for its energy potential long touted by the pair and Rep. Don Young. Add McMahon to the previous visitors: Interior Secretary Ryan Zinke arrived for an energy tour at the end of May; Secretary of State Rex Tillerson was in Alaska to preside over the Arctic Council in April. Bittner also said representatives of the Treasury Department are coming for a conference with the Municipality of Anchorage and SBDC. “That’s good for us in the long term. It feels like Alaska has a lot more focus on it,” Bittner said. “There’s nothing but benefits to showing the reality of what’s going on in Alaska. It gives more time to get stuff done if it’s on the earlier end of a president’s term.” Correction: The original version of this story stated Treasury Secretary Steve Mnchunin was visiting in July. It has been corrected to state that representatives of the Treasury Department will be part of the event.

State granted waiver to continue reinsurance program

The 23,000 Alaskans in the individual insurance market are projected to see premiums decrease by as much as 20 percent in 2018 after the state received an innovation waiver under the current Affordable Care Act. While the U.S. Senate debates changes to the ACA, also known as Obamacare, the State of Alaska was approved for a five-year waiver that will allow it to continue the reinsurance program passed by the Legislature in 2016 using $55 million in premium fees to help the lone individual insurance company left in the state hold rates down. From 2018 to 2022, Alaska’s insurance market will be stabilized with $332 million in federal appropriations, it was announced July 11 by the Centers for Medicare and Medicaid Services and the U.S. Treasury Department. “Today’s approval will temporarily stabilize Alaska’s individual insurance market, which only has one carrier and has experienced a 203 percent increase in insurance premiums since the Affordable Care Act began,” said CMS Administrator Seema Verma. Premera Blue Cross-Blue Shield of Alaska is currently the only insurance company offering plans through the Alaska healthcare exchange and had 16,732 customers as of May 31. Its 2017 rate increase was 7 percent compared to a projected 42 percent thanks to the $55 million reinsurance program. The company has said it lost about $7 million over the first three years under the ACA from 2014-16. The Alaska Reinsurance Program, or ARP, is a state-operated program that covers claims in the individual market for people with one or more of 33 identified high-cost conditions in order to help stabilize premiums for healthier participants. The state projects that the ARP will reduce premiums by 20 percent in 2018, and an additional 1,460 households currently uninsured may purchase coverage when it is more affordable. Section 1332 waivers present an opportunity for states to develop solutions that help bring down costs and increase coverage choices for Americans faced with unaffordable premiums, high deductibles, and reduced competition in the insurance market brought on by the ACA. Verma acknowledged the national struggle to obtain coverage on the exchanges where providers are seeking significant premium increases and 40 percent of counties are left with one or no insurance provider. CMS held up Alaska’s approach as a creative solution other states could pursue in a national news conference announcing a long-awaited decision after the state applied for it in December. Division Director Lori Wing-Heier was out of town and was unavailable to comment on the announcement. Because some 90 percent of Premera’s individual market customers qualify for at least some income-based subsidy from the federal government, lower premiums reduce the size of those individual subsidies. CMS stated that the second-lowest cost silver plan premium will be reduced, resulting in the federal government spending less in premium tax credits. In its waiver application, the state projected the reinsurance program would save the federal government more than $48 million in 2018 alone. “Based on these projections, CMS and the U.S. Department of the Treasury are approving the request,” CMS said in its announcement. Randy Pate, deputy administrator of CMS and director of the Center for Consumer Information and Insurance Oversight said the total 2018 outlay will be $59 million, with $11 million of that required to come from the state. According to the approval letter, the state Legislature must reauthorize the ARP by September and appropriate sufficient funds for the 2018 calendar year. The ARP and the premium fees that funded it were only approved for 2017 when passed last year. Gov. Bill Walker’s office issued a statement lauding the announcement. The waiver stabilizes Alaska’s individual health insurance market, bringing in approximately $332 million to the Alaska Reinsurance Program over the next five years, according to the governor’s office. “I thank the Trump Administration, members of the Legislature, and the congressional delegation for their efforts,” the governor said. “I especially thank Division of Insurance Director Lori Wing-Heier for proposing this innovation for Alaska, which has also served as a model for other states.” The news comes just as Premera is finalizing 2018 individual rate filings. Rates will be filed with the state before the deadline on July 17, said Melanie Coon, the senior communications manager for public affairs. The state will analyze the proposal prior to approval after rates are submitted. ^

Marijuana board set for marathon meeting in Fairbanks

Advertising attempts keep tripping up owners of the newly established cannabis shops and resulting in violations, and when the Alaska Marijuana Control Board meets in Fairbanks July 12-14, it will be taking a look at how to streamline ad messages that can be sent to the public. Owners cannot advertise health benefits of the bud or edibles; they can’t put prices next to products; and they can’t announce freebies. There has still been confusion, though, about what is legal. “That’s part of the reason we’re looking at advertising and we’re trying to clarify some of the regulations and addendums,” said board chair Peter Mlynarik. “We’re hoping the extra time will give us time to work on regulation projects we haven’t been able to before.” The three-day meeting will be the board’s longest since forming in 2015. It was a less expensive way to get an extra day’s work done than splitting into two meetings, Mlynarik said. Meeting time has been dominated with approving new licenses. At May’s meeting, for example, no regulations could be taken up due to the high volume of license applications. This time, 41 license applications are on the agenda. Among the 16 agenda items relating to regulations is an advertising matter on labeling and packaging that could “morph” into a broader discussion, Mlynarik said. “It is hard to say succinctly” what is legal and illegal in advertising, he said. “That’s part of the reason we’re interested in looking at an advertisement project.” So far, no one’s taken out a television ad and few try radio. Enlighten Alaska owner Jane Stinson will be airing a brief spot on KNIK Radio, preapproved by attorney Jana Weltzin, who specializes in the new Alaska marijuana laws. The 30-second spot was reviewed to make sure it carries the disclaimer required on all packaging and other regulations, Stinson said. “Advertising is tricky for us. We mostly have social media, and word-of-mouth is our best advertisement,” she said. No posters around town can announce sales or even talks about health and wellness associated with cannabis. Even pamphlets placed in offices are off limits as a way to get the word out. In May, an operation was cited for alleged advertising violations. High Bush Buds of Soldotna reportedly put on its website the CBD strain Skunk Haze “is appreciated for its medicinal value.” Another strain carried this description: “enjoy Pineapple Fields throughout the day to elevate mood, curb depression and stimulate motivation.” Those were illegal because they made “claims” about health, according to the citation. Facebook took down several business sites’ pages in early July with no warning and no explanation. Anchorage’s Enlighten Alaska, Arctic Herbery, Alaska Fireweed and Dankorage and two Fairbanks businesses — Frozen Budz and Pakalolo Supply Co. —all lost their pages, presumably to “not meeting standards” expressed in Facebook policies. “I did read about Facebook, and that didn’t have anything to do with our board,” Mlynarik said. The Facebook takedowns were likely due to federal laws, under which marijuana is still illegal. At the board meeting, two measures will look at advertising including labeling and packaging, and promotional activities. Another agenda item considering whether to allow on-site consumption facilities, similar to how bars function, also is back on the agenda. In Fairbanks, board member and marijuana license holder Brandon Emmett believes supply is an issue the board will be hearing about as it conducts the meeting there. “The industry is off to a crawl because we are still seeing shortages, reduced hours, high prices,” Emmett said. “One of the goals stated at conception of (the board) was to start to diminish black market influence. We’ve done that to a small extent, but there’s too much room for black market competition.” Shortages mean higher shop prices, Emmett said. Currently, it costs $65 for an eighth of an ounce and $75 for half grams of concentrates. On the black market, it costs $35 to $50 for an eighth of an ounce and $40 per gram of concentrate, he said. “As a board member and an industry representative, we need to get more businesses on line and capture the revenue, steal market share from the black market,” he said. One sign of the shortage is measured in tax revenue, he said. Predictions of $14 million in taxes were made for the first six months of operations. Instead, less than $2 million has been raised statewide, Emmett noted. “That’s a seventh of where we should be right now,” he said. Among other agenda items: • Handlers’ Permits: the proposals are two-fold. One would specify what criminal background convictions would prohibit an individual from obtaining a handler’s permit. The permit is necessary for all employees of a cannabis establishment, including cashier sales. The second part of this project, as the board calls its resolutions, is to allow a more convenient transportation between license classifications. If adopted, the new regulation would read: Marijuana or marijuana product may only be transported to a licensed marijuana establishment by a licensee or an agent or employee of a licensee. • Onsite Consumption Endorsement: Three proposals are up for consideration. The board can chose one of the proposals and amend it or put it out for public comment. Mlynarik’s proposal would permit establishments where eating cannabis products is okay but smoking is not. Board member Loren Jones’ proposal would limit the amount of time a person could spend in the establishment; smoking would be allowed, but there would be no entertainment sources such as television or pool tables. Emmett’s proposal would allow on-site consumption including smoking, and model regulations similar to bars. • Definition of “direct or indirect financial interest” The board will consider proposals to exclude a person’s ability to receive rental charges based on a percentage of the marijuana facility’s earnings when the landlord is not a licensee. The current exemption has the potential to allow a landlord, who is not a licensee, to be in a position to exert influence on the facility’s operations in a manner that is expected to be limited to licensees. • Local government regulation: The director of AMCO is required to give written notice of complete applications to “the local government with jurisdiction over the applicant’s proposed license.” This has been interpreted to be the most local form of government: the city. However, Title 29 of Alaska Statute grants planning and platting powers to the borough government, and with a few exceptions, that power is not delegated to city governments. The intention of the proposed draft is to allow the local government, whether it be city or borough, that has jurisdiction over a particular issue to be able to protest regarding that issue. For instance, a borough government may protest based on a land use issue but the city inside the borough may protest based on a tax issue. For a look at the complete agenda, go here. Naomi Klouda can be reached at [email protected]

Yup’ik fashion artist follows family tradition through tech

Women’s leggings are a hot versatile commodity in today’s fashion world. Worn under dresses or long blouses, they’ve come close to nudging out the t-shirt as a visual statement. When Yup’ik artist Mary Charles felt the creative urge more recently, she yearned to do something traditional like her fur-sewing grandmother’s parkas or dance fans but knew that wasn’t going to be realistic. Nick and Elena Charles, her grandparents, were famed throughout the Yukon Kuskokwim Delta as artists preserving the Yup’ik heritage. They were named Masters of Traditional Arts and awarded the Heritage Award in 1993 by the National Endowment for the Arts. Artist aunts, author uncles and mask-making brother Ben Charles all carved their own names in Alaska and beyond. Now it was her turn. But Charles was raised between Anchorage and Bethel, and her ideas bridge an encompassing Alaska culture. Her mother’s family came from Hooper Bay and her father’s came from Kasigluk and Nelson Island. “I wanted to make real fur skin leggings like they wore in the old days, but I don’t know how to skin sew and I don’t have time to learn. Plus they are hot to wear,” said Charles, mother to an 11-month old baby and a two-year old son. She works full-time at Northern Lights Spa in Ted Stevens Anchorage International Airport as a massage therapist helping travel-stressed tourists relax. “I also like technology and computers, learning how to do difficult things,” she said. When friend Yaari Walker brought her the idea to make seal-skin leggings out of polyester and spandex, Charles thought it was just the kind of challenge she felt like taking on. “She didn’t know how to do it and I didn’t either,” Charles recalled. Charles found photos of seal skin leggings worn by hunters in the Smithsonian and other collections. She looked through magazines and even at harbor seals themselves, whose silver-gray dotted fur is often seen on clothing across the Arctic. Using apps on her iPhone, she slowly set about teaching herself how to make a pattern and apply it to leggings manufactured by companies in China and Canada. Eventually she settled on Art of Where, a Canadian company, which manufactures a high quality legging based on original designs. The factory sent Charles samples, and she had her friends and relatives model them. At $35 per pair, the leggings were a hit, the first creation of Posted at her newly-created website, she racked up more than 40,000 hits within a short period on the seal-skin leggings alone. “I guess a lot of people liked the idea,” she said. “Maybe more than only Yup’ik people.” Encouraged, Charles went back to her iPhone design apps, which are professional programs she downloaded and would rather not name in order to keep her copyright proprietary. “I do all of the work on my iPhone, sometimes during downtime between giving massages,” Charles said. “When my boys go to sleep, I take it out.” “It took a while, and I really wanted to make sure my creations were my own design.” Beautiful patterns abound on the internet, and print artists are often copied intentionally or unintentionally as if everything online is fair game. “I didn’t want anyone to think I had taken something off line,” she said. “I started seeing patterns in my son’s drawings (2-year-old Tristan). I saw my niece’s drawings and thought ‘wow, that would make a good pair of leggings.’” Charles said she can take any drawing, and by manipulating it to bring out certain colors or add a background, using her iPhone as a canvas and her finger as a paintbrush, she makes a design that when replicated the length of a legging will provide a unique pattern she can then copyright. Charles collaborated with her 13-year-old niece, Emily, her sister Elena’s daughter, for some of the patterns. Emily drew wolf paw prints — another popular image — and gave her aunt already-penciled or painted scenes from her trove of drawings. Alaska designs such as Forget-me-nots, the northern lights, seal oil lamps, the Big Dipper and a map of Alaska also formed designs for leggings. “Some of my reason for doing it this way is that I wanted to represent my family and Alaskans, not just my Yup’ik culture but Alaskans in general,” she said. “I try to think of ideas that represent the culture of Alaska like the salmonberries and Forget-me-nots and northern lights.” Because she’s designing with customers in mind, she said she “wanted those who wear them to feel like they are representing either their culture or support of others people’s cultures.” What messages get depicted on leggings — like the statement-making t-shirts — boils down to a point of pride at being Alaskan or even a citizen of the north, she said. Now, with a glimmer of success noticed, Charles would like to expand her inventory but will need more capital. She is seeking partners to invest. Stocking inventory at home and working from her iPhone on everything from design to orders has proven a good business idea that has a chance to grow. “Now that I know people like these, I would like to see how it works on a broader market,” she said. Naomi Klouda can be reached at [email protected]

Pollock skins to dog treats coming soon

Americans love their pets and are willing to shell out $23 billion per year on their food, which would be good news for Alaska seafood marketing if more products were developed to serve all those well-cared-for dogs and cats. Now a treat for dogs made of pollock skins has been developed to the marketing stage, perhaps even allowing for a secondary market in millions of tossed-out pollock skin tonnage to come into its own market at 30 to 50 cents per pound. The now market-ready product made from vacuum-dried skins developed by Chris Sannito might be just the treat pets have been waiting for. Sannito, an Alaska Sea Grant seafood technology specialist based at the Kodiak Seafood and Marine Science Center, inherited a research product when he came onboard in 2015. The science center is an arm of the University of Alaska Fairbanks College of Fisheries and Ocean sciences. Pollock skins from billions of pounds of fish go to seagulls and other destinations each year, a food source researchers tinkered with turning into dog treats before Sannito arrived. The Pollock Conservation Cooperative Research Center or PCCRC, a group that focuses on the commercial fisheries of the Bering Sea and Aleutian Islands, is particularly concerned about waste, he said. “The project was funded, but there were no researchers or staff to work on it,” Sannito said. The Fulbright scholar looked at the fish skins and the net screens meant to dry them. “I wondered how would you be able to commercialize something like this, individual pollock skins that weigh fractions of an ounce. It would be so time consuming,” he recalled. “Laying them out on screens and drying them, I thought there’s no way this would work in Alaska where labor is so expensive. There’s got to be a better way.” Unlike salmon skins whose high oil content makes it a more volatile prospect, pollock skins are low in oil and easier to dry. In thinking through the first phase, Sannito recalled an extrusion machine he’d seen in action during his graduate days. The researcher had used a Clextral extruder — a machine that pushes material through a barrel — to create a snack of rice flour and fish powder. Cheerios, Lucky Charms, Goldfish snacks — these shapes are all possible from the same process, as well as spiral ropes, like licorice. Why not try that? The $500,000 machine is manufactured in France, and ironically, the Kodiak Seafood and Marine Center used to own one in a pilot engineering project. But the University of Alaska Fairbanks, during times of budget cuts, sold it back to Clextral a few years back after it fell into disuse, Sannito said. One in Tampa, Fla., at the Clextral Food Compliant Pilot Plant, rented for $5,000 a day, Sannito discovered. The machine is 10 feet tall by 15 feet long and has a giant high-torque electric motor that grinds a 10-foot barrel with a twin screw. He made the arrangements, scheduled trials for a day in July 2016 and sent 500 pounds of frozen fish waste via FedEx to Tampa. “We ran the skins through an extruder and it transformed them under high pressure and temperature, turning the collagen in the skin into gummy bear texture,” he said. Glycerine with water, wheat flour and fish skins achieved the right consistency. “The beauty of it: it goes in wet and comes out dry. In the extrusion barrels there are nine different chambers that at the end applies a strong vacuum,” Sannito said. “It has an adjustable valve to get material from soft gummy bear to a hard pasta noodle based on the vacuum pressure. It’s neat because you have precise control.” Sannito chose the tooling to get a licorice-like spiral that came out an Army green. During the day of experimenting at the plant, he applied artificial and natural coloring to look at red and blue versions of the treat. “We decided to keep it the natural Army green,” he said. “It seemed healthier and we wanted clean labels, a wholesome product. Pet owners read labels for their dogs like they do for themselves.” The end result was a nicer looking product that retained the pungent fish smell dogs love so much. Back when it was just dried skins, dogs like the pollock treats just as well, Sannito said. But he reasoned a more attractive product would likely sell better off store shelves. Back in Kodiak he taste-tested on lots of Kodiak dogs. “This is a dog town so there’s no shortage,” he said. “I didn’t find anyone who turned it down.” The treats are shelf-stable when they come off the machine. All 500 pounds of skins, now dried licorice-shaped treats, came back to Kodiak with Sannito in stand-up re-sealable pouches. Most all of it is gone now, eaten by the local taste-testers, he said. In January, Sannito presented his research results to the PCCRC. Several faculty from the UAF sit on the board, one of them Dean Bradley Moran, head of the College of Fisheries and Ocean Sciences and Sannito’s supervisor. The dean was impressed. On May 5, Sannito and Quentin Fong, Alaska Sea Grant’s seafood marketing specialist, received the 2017 Invent Alaska Award for “innovation in research leading to commercialization.” It was presented by the UAF Office of Intellectual Property and Commercialization. The next step is to find industry partners to develop a commercial product, with a name and graphics for the package labels, Sannito said. The PCCRC board is more interested in research than commercialization of the resulting products, but UAF’s interest was piqued after the January presentation. Sannito is in the process of licensing the product with the Intellectual Property Office. The university offers a generous 50-50 split with its researchers on the patents created by the UAF faculty. At one point, Sannito did reach out to Purina with his product, but wasn’t able to connect with the right person. “Hopefully, as soon as it’s licensed, we can introduce it to a value-added partner,” he said. “It will be neat to see it commercialized. I’ve seen a similar product ‘Greenies’; it’s a very successful dog treat at Costco. Theirs is similar but made with chicken meal. Fish protein would probably be better, more easily digestible.” Partnerships also would create a new market for the tons of fish skin going to waste out at sea where some processors grind and discharge it, or at landed canneries where a separate machine de-skins the fish before tossing out the waste. “Any coastal community is awash in fish skins wherever they process a large amount of skinless boneless filets,” Sannito said. White fish varieties would work equally well. He envisions a full-scale operation would pay costs to processors for handling and freezing the fish skins and selling them to the dog treat manufacturing operation. “I think they would be tickled pink to be able to sell it 30 or 50 cents a pound,” Sannito said. He also would like to see a Clextral machine back in Alaska; it wouldn’t be practical to haul thousands of fish skin pounds elsewhere to process. The machine could be used for crossover products, perhaps like collagen bars used by the beauty industry in products, and other value-added Alaska food products. For Sannito, his interest in seafood comes full circle. He grew up in Indiana and earned his undergraduate degree in science and math at Hawaii Loa College. He completed graduate work at UAF School of Fisheries and Ocean Sciences, then won a Fulbright Scholarship in1992. “He’s uniquely able to see both the research side of a project and the practical aspects,” Moran said. “We’re excited to see where the pollock skin dog treat project goes.” In Fiji as a Fulbright scholar, he worked with small-scale tuna fisheries to export tuna sashimi to Japan. In Alaska, he worked 15 years as a quality assurance manager for seafood processors on Kodiak. Since 2015, he has served in his current UAF faculty position at the Kodiak Seafood and Marine science Center where, besides inventing a new dog treat, he teaches a variety of seafood courses. If Sannito’s dog treats are successful, UAF stands to make money back into its programs, Moran said. Sannito said he’d love to give back during this time of severe state budget cuts to the tune of $8 million next year for the UA system. For now, he has the immediate gratification of his four-legged fan club. Sammy, his own finicky-eating golden retriever, enjoys the fish-skin snacks. But he’s running out soon. “It’s time to make more,” Sannito said.

Downtown cannabis shop gets green light; moratorium debated

Cannabis shops located in Downtown Anchorage were the subject of more than three hours of debate June 27 at the Anchorage Assembly meeting, this time the pros and cons of permitting what is considered the largest operation in Alaska. At the end of testimony from about 30 people, the assembly unanimously approved a marijuana license and special land use permit for Great Northern Cannabis Inc., in a vote of 9-0, with Assembly members Suzanne LaFrance and Fred Dyson excused due to illness. Great Northern Cannabis, or GNC, will open in mid-July at 541 W. 4th Ave., a 3,200-square foot historic building between Once in a Blue Moose and Kumagoro Restaurant. Bob Neuman, former owner of Rumrunners Old Towne Bar on E Street, brought the assembly a letter requesting to put a moratorium on downtown cannabis establishments. Members of the Downtown Partnership had signed it, including former Gov. Tony Knowles. “There are no regulations saying how many or where they can be located,” Neuman told the assembly. “Why can’t we put this on pause and plan?” Another downtown business owner, Wally Brooks, said he owns a building by the courthouse on West 4th Avenue, near the cannabis store Alaska Fireweed. For the past three years, he’s had a problem renting out office space largely because attorney tenants moved out due to “exorbitant parking fees.” He also blamed prospective tenant loss on the “pot shop” Alaska Fireweed nearby, which opened a few months ago in February. “When I show the space, they say ‘well I like your space but I don’t like your neighbors,’” Brooks said. “The last thing I need is another one.” Though testimony made it sound as if there are a lot of cannabis operations in Downtown, Jordan Huss, one of the 23 GNC investors and the company vice president, noted there’s only one cannabis business operating and it will be the second cannabis store granted a license in the area. Those opposing approval of the municipal permit to GNC were outnumbered by testimony favorable to the industry. Hillary Fischer, the granddaughter of May Jefford, who established a Downtown gift shop during World War II that is still in operation, said she helps out at Once in a Blue Moose during summer’s busy tourist season. “A lot of our tourists are happy to see (cannabis businesses) are open. Our elderly customers are curious, and they are more hip,” Fischer told assembly members. “They have their aches and pains, and ask ‘where can I get (cannabis) edibles?’ It might be illegal back home and they want to see a shop.” Steve Brashear, the CEO of GNC, detailed plans for the new store. “We don’t fit a stereotype. Our investors come from all professions, all walks of life,” he said. “We’ve already invested $3 million — $1.3 million to rebuild our facility.” The other $1.7 million is invested in a cultivation operation that will supply all of the retail shop’s cannabis products. They plan to employ more than 25 people in addition to the 10 employees working on cultivation. The 23 investors include two physicians, former Anchorage Assemblyman Patrick Flynn and former legislator and gubernatorial candidate Andrew Halcro. Well-established community members get involved in the industry for a variety of reasons. They bring different expertise, Brashear said. He is retired from the oil and gas industry where he was a longtime regulation compliance officer. He declined to say what company he previously worked for. “I’m not a cannabis consumer. I became interested in the business side. I’m comfortable with the regulations and compliance in this new industry because I’ve had a lot of experience following complicated regulations,” he said. “There’s still a stigma to this industry. A lot of companies may have a conservative view. I wouldn’t want to associate a previous employer with something they don’t advocate for and so I would rather leave them out of it.” Because the federal government has not legalized marijuana, banks cannot loan investment funds to cannabis businesses. The $3 million for GNC was raised through private investors. And those investors had to feel it was a good risk, Brashear said. Because it’s a new industry, all Alaska investors are essentially starting on the ground floor. No large companies have established a dominant hold on the market, Brashear said. “It’s a rare opportunity for people to start out on an equal footing. It’s an exciting time to be involved in a new industry,” he said. GNC is a vertically integrated business and therefore controls its own pricing from the point of cannabis cultivation to manufacturing its products such as oils and edibles, to cashier sales. “It’s a good business model. You have control over quality, quantity and pricing and you can pass good pricing on to the consumer,” he said. Assemblyman Christopher Constant, who represents Downtown, objected to testimony that erroneously stated multiple cannabis operators were open in the area. He asked numerous questions from his assembly seat of people who testified. “If you stretch the boundaries a bit, there are two Downtown, counting another business down by the Lucky Wishbone,” he said. “One person said (in an email to the assembly) there were three on one block. Another one said 17, and that simply is not true.” Some members of Downtown Partnership who signed the letter referenced by Bob Neuman withdrew their names from it after finding out the numbers it was based on were false, Constant said two days after the meeting. He also challenged the request for a “pause” or further vetting cannabis openings in Downtown before the assembly issues more land use permits. The Downtown Community Council has actively taken a part in hearing proposals, making suggestions and keeping communication open with future operations, he said. Each one must be licensed by the Alaska Marijuana Control Board in addition to other steps involved in meeting regulations. Tight state laws are already in place to monitor them, including the ability to shut one down in the annual license renewal requirement, Constant said. The assembly left issues such as limiting numbers of businesses in any given area of town to “market forces to sort themselves out,” he noted. One of the more conservative members of the assembly, Amy Demboski, also questioned those testifying. “If there is a negative impact, there won’t be a license renewal,” she assured those objecting to GNC’s permit. Jordan Huss, one of the investors whose expertise is in cannabis cultivation, worked through issues with the Anchorage Community and Economic Development Committee, of which Demboski is a member, to explain GNC’s plans. He credits the background work of these discussions to help bring even conservative members around. “Twice now we appeared before them. We had good discussions,” Huss said. “We listen, we’re available and we’re actively involved in the community. She (Demboski) saw through the moratorium request because we’ve made two appearances before the committee, and she knows what we intend to do, that we are going to be good operators and contribute to the community.” Assembly Chair Dick Traini, who represents Midtown, noted that most of the Anchorage cannabis businesses are in his area. “There is no reason to treat Downtown differently,” he said. Once renovations are complete on the building, GNC plans to have a “soft opening.” It’s taking longer and more money than expected to fix the former Alaska souvenir shop. “It was built in 1945, and went through the (1964) earthquake. When we took possession of the building, there was more damage then we realized,” Brashear said. When they lifted the building, they found the footings consisted of concrete poured into coffee cans. “How it stood all these years is a mystery,” he said. Architects and construction crews worked together to jack up the building and place a new foundation underneath. The building was gutted and rebuilt. When it’s opened, the design calls for a front retail area for accessories, t-shirts and glassware related to cannabis. The back half will be the cannabis retail area, separated by a glass wall, with security posted at the entrance to each of the two sections. “We’re on an aggressive schedule to capture some of the tourist season,” Brashear said. “We’re not done engaging with the community. That is part of being a good neighbor and we enjoy it.” ^ Naomi Klouda [email protected]

Senators welcome delay on healthcare vote to lobby for Alaska

A delayed vote on overhauling the U.S. health care system buys time for U.S. Sens. Lisa Murkowski and Dan Sullivan to negotiate on key provisions for Alaska over the July 4 recess. Neither of the Alaska senators issued an official statement after Sen. Mitch McConnell, R-Ky., saw that he did not have the necessary 50 votes to pass his legislation repealing and replacing the 2010 Affordable Care Act. Through spokesperson Karina Petersen, Murkowski called the delay a “good thing.” “It’s a good step to take more time. She has said we need to do it right and not rush this. Now she can continue to vet the bill,” Petersen said, adding that her phone hasn’t quit ringing. Murkowski’s moderate standing places her as a swing vote courted by both President Donald Trump and McConnell. The national media is clambering to know how Murkowski will vote, she said. This also buys Murkowski negotiating credits — her vote in exchange for key changes. “She is looking at the Medicaid portion — those with Medicaid and those who came in under Medicaid expansion — (wanting) that they continue to be covered and not have the rug pulled out,” Petersen said. The Congressional Budget Office rated the Senate’s health care bill as potentially causing 22 million to become uninsured. About 15 million of those would be people who choose not to buy insurance because of the repeal of the individual mandate; others could lose coverage through loss of Medicaid eligibility or reduction in premium subsidies. That is an important score, Murkowski says, but it’s not the only one she is considering. According to the latest figures provided by the Alaska Department of Health and Social Services 185,139 Alaskans receive Medicaid services. That’s 25 percent of the state’s population. Previous to the Medicaid expansion funds accepted by Gov. Bill Walker, there were 33,945 fewer people covered that now are added to Medicaid rolls. Keeping Alaska’s adjustment at 138 percent of poverty level is another must-have provision, Murkowski and Sullivan have said. Without that adjustment, fewer people will qualify for federal subsidies. The bill, as currently written, also would phase out additional federal funding 31 states and Washington, D.C., receive, and Alaska is one of them. When then-Gov. Sean Parnell objected in 2010 to expanding Medicaid in Alaska through funds offered during the President Obama administration, he did so on the belief Alaska would be left holding the bag if the law ever changed. That’s exactly what the Senate version does. It ramps down payments to states from 90 percent in 2020 to 50 percent by 2025. “We want to keep what’s worked for some Alaskans under the ACA — keep coverage for preexisting conditions,” Sullivan said in a video statement. But he’s also “relentlessly focused on educating leaders” about “how big of an outlier Alaska is as it relates to healthcare and insurance costs.” The first of Sullivan’s three goals is to stabilize the market. One insurer on the individual market is not sustainable, he said. He wants to protect the “thousands who receive subsidies” but also the thousands who don’t “and they are being wiped out financially.” And thirdly, he wants to see a sustainable, equitable path forward. In a statement issued June 27, Sullivan said he supports waiting until after the July 4 recess to vote. He also “appreciates being invited to the White House with my colleagues for a very productive meeting with President Trump and Vice President Pence” on June 27. “Like most one-size-fits-all approaches from Washington, D.C., the Affordable Care Act is not working for many Alaskans,” he said. “Premiums and deductibles have skyrocketed for the middle class. The director of Alaska’s Division of Insurance (Lori Wing-Heier) said that our market is in ‘chaos.’ The current situation in the healthcare market in Alaska and nationally is not sustainable. Something has to be done, and it has to be done soon.” Sullivan wanted to get rid of the employer or individual mandate, as well. The Senate version does change how the mandate is handled. Insurance carriers have said they favor some kind of carrot to incentivize Americans not to wait to get coverage. McConnell agreed to a penalty for Americans who let their insurance lapse for 63 days or more. Under the new provision, those who go without insurance will be “locked out” of getting coverage for at least six months after they sign up. This “lockout period” would, in theory, create an incentive for people to have insurance all the time, instead of waiting until they’re in the ambulance. Alaska’s only individual market insurer, Premera Blue Cross Blue Shield, favors moves that help with market stability. Premera Alaska President Jim Grazko expressed concern about the earlier draft that lacked any kind of mandate. “We are encouraged that the Senate bill includes funding for reinsurance as well as more funding for subsidies than the House bill to help lower income families,” said Steve Kipp, vice president of corporate communications. That’s important for Alaska because Premera’s rates climbed only 7 percent rather than 42 percent in 2017 because of a reinsurance program approved by the Legislature last year that included $55 million from the state collected through a levy on all plans sold in Alaska. Grazko felt the Senate version offered “slight” improvements over the House. But income will be a big factor in determining subsidies, coupled with age. Premera’s criteria list is to ensure coverage for as many people as possible to increase Alaska’s pool and bring costs for all customers down. They also want people who can’t afford insurance to receive the subsidies for commercial health care coverage. With so many variables still in the air, Premera must calculate its 2018 rates by mid-July and file with the Alaska Division of Insurance. “We are currently working on those,” said Melanie Coon, Premera senior communications manager. As of June 27, Division of Insurance Director Lori Wing-Heier said she was still analyzing the 140-page bill. “At this point, it’s hard to say what impacts there will be to those in the insured market,” she wrote in an email. “We continue to work very closely with Sen. Murkowski and Sen. Sullivan on the intent of the bill and what its impact will be on Alaska.” ^ Naomi Klouda can be reached at [email protected]

Deadline for Real ID at bases pushed back

Now that Alaska was granted a Department of Homeland Security extension for Real ID Act compliance, Alaskans will be good to go for air travel and entry to secured federal facilities by using their state driver’s license or identification. Joint Base Elmendorf Richardson announced that enforcement of Real ID will not begin until Jan. 22, 2018. This replaces a previous announcement that JBER would only accept Real ID-compliant identification and not state drivers’ licenses after July 10. “This date (Jan. 22, 2018) will coincide with TSA (Transportation Security Administration) enforcement,” said Joshua Jasper, a JBER public affairs spokesman. The installation is following the guidelines that are set forth by Department of Homeland Security. The DHS website states: “Alaska has an extension for Real ID enforcement, allowing federal agencies to accept driver’s licenses and identification cards from Alaska until Oct. 10, 2017.” Oct. 10 is the start of a “grace period,” Jasper said, that will last until Jan. 22, 2018. The rest of Alaska will be on the same schedule as JBER, said Leslie Ridle, the deputy commissioner of the state Department of Administration. The department oversees the Alaska Division of Motor Vehicles, which isn’t yet set up to create or issue Real IDs. Estimated costs for the entire project are $1.5 million, Ridle said. “I want to make sure Alaskans know they have up to October 2017 for sure, and then after, when they can continue to use their Alaska driver’s licenses,” Ridle said. In September, the Alaska Department of Administration will again apply for a waiver that should carry residents through another year of Real ID exemption without having to obtain a passport that would comply with the act. The department applied for a waiver from the DHS earlier this spring and it was granted. This allows the state time to install the equipment necessary to begin issuing Real ID by the federal deadline of October 2020. Since Congress enacted the Real ID Act on May 11, 2005, the rollout was divided into four phases, recognizing that “some states must change their laws to comply with the Real ID Act,” DHS explains on its website. “It is also designed to provide an opportunity for members of the public to learn more about the implications of not having a real ID-compliant license so that individuals have an ample opportunity to replace their pre-Real ID licenses with new compliant licenses or to obtain another acceptable form of identification.” Ridle said receiving another extension past January 2018 should be a formality in the fall. “As long as we show we are compliant, that we are making progress, DHS grants the waiver,” she said. A June 21 letter from DHS Secretary John Kelly to Gov. Bill Walker granting the extension outlined the minimum-security requirements necessary for the state’s drivers’ licenses to be converted to Real ID. The state must “incorporate anti-counterfeiting technology into IDs, preventing insider fraud by those involved in the issuance and production processes, and establish that a person is who she/he claims to be through documentary evidence and records checks.” “There’s no switch we can turn to be compliant,” said Ridle. “We are setting up systems, computers need to be programmed and that won’t be ready until January 2019. In the meantime, we keep getting extensions. You can use driver’s licenses to get on planes and bases.” In the current system, a person can walk into the DMV with a passport or birth certificate to obtain a state ID. Under Real ID, that passport or birth certificate will need to be checked against national databases. Ridle explained the process requires programming DMV computers so they can access the passport, birth certificate and other national databases. The new federal ID format requires specific security features intended to prevent tampering, counterfeiting, or duplication of the document for fraudulent purposes. The cards also present data in a common, machine-readable format via bar codes or smart card technology. DHS required the use of RFID chips similar to new bank cards. In 2018, the DMV will be doing the work of programming and purchasing new equipment, Ridle said. Starting in January 2019, Alaskans will be able to go to the DMV and receive their Real ID cards. Under the law signed by Walker on May 17 that brought the state into compliance with the act, residents will also have an option to obtain a non-compliant ID or driver’s license from the state. “That will give everyone ample time — about a year and 10 months — to get their cards,” Ridle said. “We’ll ramp up an information campaign to get the message out to the public prior to January (2019) that they will be able to obtain their REAL ID.” The project’s $1.5 million costs are in the 2018 capital budget, Ridle said, which has not yet been approved by the Legislature. But DMV money is available in its own budget to start toward necessary changes after an operating budget was passed on June 23, she added. ^ Naomi Klouda can be reached at [email protected]

A new cooling in US-Russia relations 150 years after Alaska purchase

Relationships built on friendship exchanges between the Russian Far East and Alaska since 1988 are substantially diminished as the state celebrates the 150th anniversary the U.S. purchase. Trade partnerships stopped when sanctions against Russia were enacted by Congress as punishment for its actions in Ukraine and, more recently, for its alleged meddling in the 2016 presidential election. That meant Alaska lost an estimated $40 million in the salmon roe trade, star ingredient for the famed Russian “red gold” caviar. The work of non-profits such as the Red Cross, the Rotary Club International and Sister-City exchanges have gone dormant, if not to an abrupt halt, under Vladimir Putin. These points were discussed at a sesquicentennial celebration talk, “Commemorating the 150th Anniversary of the Alaska Purchase,” hosted June 22 by the Alaska World Trade Center. It featured David Ramseur, author of newly published “Melting the Ice Curtain: The Extraordinary Story of Citizen Diplomacy on the Russia-Alaska Frontier”; Mike Dunham, author of the books, “The Man Who Sold Alaska” and “The Man Who Bought Alaska,” (short biographies on Tsar Alexander II and William Henry Seward); and Vic Fischer, author of “To Russia With Love,” his life biography. Historian Steven Haycox moderated the discussion. Building blocks for better trade relations and cultural sharing were crushed over the past two years as trade sanctions imposed on Russia curtailed 20- and 30-year-old arrangements with Alaska-Far East Russia partners. Ramseur was arrested last summer in what he calls a new policy of petty harassment against Westerners. “It’s more difficult to operate there, that’s just the climate now,” he said. “The border guards are part of the what used to be the KGB, (now called the Federal Security Bureau), a huge government security agency. They make it difficult for Westerners to deal with Russia’s Far East. Even for someone researching an archive or a library.” In July 2016, a group of nine people including Alaskans and a Mexican film crew were detained at the Bering Sea village of Lavrentiya, “charged with violating federal law and marched before a fast-talking black-robed judge who fined us each 500 rubles” or about $8, Ramseur detailed in the book. The group was allowed to leave after 16 hours, at 4 a.m. Ramseur concludes that much of the earlier excitement of the “Melting Ice Curtain” era “seems dissipated, burdened by paperwork and fading memories of relationships across the Strait.” After Putin came to power, the Duma, or Russian congress, passed a law cracking down on “foreign agents” operating in Russia. It was made a crime and punishable by fines and/or jail time. “(Foreign agents) were religious organizations or non-profits like the Red Cross, which receive American money,” Ramseur said. “The law about agents of a foreign government primarily focuses on non-profits such as democracy-building and religious organizations and I do not believe would target an individual businessman. The press reports I’ve seen show it’s used selectively so if an organization gets on the wrong side of the Russian government, the security services will use it to harass the organization.” A long way from the days when Seward and an agent of Alexander II negotiated the $7.2 million sale of Alaska and signed the treaty in the wee hours of 4 a.m., Dunham noted. Or maybe not so much. Communication wasn’t much better, Dunham said. After the March 29, 1867, purchase treaty was signed, “there was no statement from the Tsar or his foreign office. The Russian newspapers and the Russian public learned about it from the reports that originated across the ocean,” he said. The Russians at work in Alaska had no idea they were going out of business, Dunham noted in his book on Tsar Alexander II. All federal funding for their endeavors was yanked out. And it’s back to a time eerily similar to when Fischer’s family made an escape from Russia. His mother was questioned twice a week for a year by Joseph Stalin’s police, later known as the KGB, a better fate than his friends whose parents either “disappeared” or were murdered by the regime. Barely escaping the Soviet Union ahead of Stalin’s police in 1939, Fischer’s family made it out with the diplomatic string-pulling of First Lady Eleanor Roosevelt. Fisher wasn’t reunited with his mother country until 50 years later, during an easing of the Cold War tensions and melting of the ice curtain experienced in Alaska-Russia exchanges. And now, at the age of 92, he is displaced from Russia again. More than 20 years ago, Fischer helped bring about a jointly sponsored University of Alaska and Russian Academy of Sciences, called Arktika, in Magadan. “When Russia under Putin adopted a new law that specified that any Russian institution that receives state or government money could not have foreign members, we had to dissolve the arrangement. I had to put in resignation as co-director,” he said. Brian Rogers, the University of Alaska Fairbanks chancellor who served with him, also was forced to resign. Other Alaskan academics were likewise fired or resigned as trustees of the Northern International University, sponsored by the Foreign Ministry of Education Magadan regional and UA. “There were a lot of projects and money from both the Russian and American sides, and student exchanges,” Fischer said. “One of the biggest projects was researching human adaptation to Arctic conditions. It was a totally non-political research center.” Fischer calls this a “gray period” in Alaska-Russia relations when some scientific collaboration continues “at arm’s length.” “These are strong relationships though, and they will continue,” he said. Unlike Fischer, Ramseur sees room for political optimism, at least in one regard. When asked what he would like to see emerge from the 150th celebrations, Ramseur said for Trump and Putin to agree to meet on Alaska soil on Oct. 18 — the date of the actual land transfer of ownership. “Relations are pretty bad. My view is that a lot of people in our country believe there is a special relationship between Trump and Putin,” said Ramseur, a former aide to former Anchorage Mayor and Sen. Mark Begich, and Govs. Steve Cowper and Tony Knowles. “Trump should take advantage of that and extract something significant from it — get Russia to pull out of the Ukraine — or Syria. Both of those are naive ideas and I don’t think they would happen, but if I was in the White House, I would advocate for something that big.” The added boon would be a boost in Trump’s image: people wouldn’t see him in “Putin’s pocket” so much as they would see a president exercising diplomacy in ways similar to President Richard Nixon opening relations with China, Ramseur said. Ramseur’s book highlights the “Extraordinary Story of Citizen Diplomacy on the Russian-America Frontier” that many will remember in the previous decades. Alaska grocery store chain owners Carr-Gottstein sold food wholesale in Magadan. Glossy publications announced trade underway and development opportunities. Nome merchants accepted rubles from Russian visitors arriving on Bering Air flights. After the first Friendship Flight between Anchorage and Magadan, a hopeful era sprang up with no small amount of accomplishments, including that 62,000 Russian entrepreneurs received training through the American Russian Center at UAA. The center was shut down in 2008 due to a lack of federal funds to continue, Ramseur said. Americans today, troubled by how to solve a “refreezing” of Russian-U.S. relations, would do well to look at Alaska’s examples of collaboration, the author noted. One thing is certain: Americans are interested in Russia, whether out of trepidation or curiosity. Dunham’s publisher tells him “Tsar Alexander II” is selling better than the Seward book. “Maybe that means they’re more interested in the Russians right now,” he said. “It’s a relief people might learn more about Alaska.” On his Lower 48 book tour, one person asked Dunham if “Russians told Trump secrets while Trump was campaigning in Alaska?” He said he wasn’t sure where to start in answering that. Naomi Klouda can be reached at [email protected]

Alaskan delegation pushes parallel cannabis bills

Where will state and federal law collide when it comes to marijuana laws? That’s the question Sen. Lisa Murkowski put to Deputy Attorney General Rod Rosenstein June 13 during a Senate appropriations subcommittee meeting. Marijuana businesses largely cannot access the banking system, Murkowski noted, and another problem lurking on the horizon for states that have legalized marijuana and now collect taxes on cannabis businesses is that the “U.S. Postal Inspection Service has suggested that marijuana tax payments sent to the Alaska Department of Revenue are subject seizure,” she said. The Department of Justice also wants to eliminate the current fiscal year appropriations language prohibiting federal interference with medical marijuana laws. “So, I am concerned, and I’m speaking for a lot of people in my state who are worried about the inconsistency between the state marijuana laws as well as the federal policy,” she said to Rosenstein. Rep. Don Young also is focused on federal policy right now as a member of the Congressional Cannabis Caucus. Even though he doesn’t personally advocate for the use of marijuana, he views the matter as a states’ rights issue. Two days after Murkowski’s questioning of Rosenstein, she and Young introduced parallel bills in the Senate and House titled the Compassionate Access, Research Expansion and Respect States Act, or CARERS, would amend federal law to allow states to set their own medical marijuana policies. The Senate legislation was also sponsored by Democrats Kirsten Gillibrand of New York, Cory Booker of New Jersey and Al Franken of Minnesota, along with Republicans Rand Paul of Kentucky and Mike Lee of Utah. The CARERS Act would allow states to import cannabinoid oil, or CBD, which is currently prohibited and Alaska marijuana retailers ran afoul of the law in the form of state enforcement raids and seizures of products they believed had legally been brought into the state. So far, the Department of Justice has not taken the position that state marijuana laws are completely preempted by the Controlled Substances Act, or CSA, the laws that establish U.S. drug policy. Under that act, marijuana is listed as a Schedule One controlled substance, the same class as heroin, LSD and ecstasy. Murkowksi cites the Cole Memo, written by former Deputy Attorney General James Cole in 2013 that essentially states that jurisdictions with legalized marijuana are less threatening to federal priorities if they have implemented “strong and effective regulatory and enforcement systems to control marijuana growth and distribution.” She argues Alaska has enacted just such a set of laws. The Cole memo gives wide discretion on whether to prosecute state legal marijuana enterprises but hinted that it’s probably not a prudent use of federal resources to focus enforcement on state legal businesses. “I don’t know if you are headed in that direction — the Cole Memorandum suggests deference to strong state laws but we’re not seeing the federal government doing much to ensure that those strong state laws are enforceable,” Murkowski told Rosenstein. “So, the bigger question is, where are we heading with marijuana?” The first opportunity to vet that question occurred in a Commerce, Science, Justice Appropriations Subcommittee hearing with Rosenstein testifying. “It’s a difficult question because we do have a conflict between federal law and the law in some states,” he said. “…I’ve talked with Chuck Rosenberg, the administrator at DEA (Drug Enforcement Agency), and we follow the law and the science. From a legal and scientific standpoint, marijuana is an illegal drug. “It is properly scheduled under Schedule One. Jim Cole tried to deal with it in the memorandum and at the moment it is still in effect. Maybe there will be changes to it in the future, but we are still operating under that policy.” He concluded, “As (former) Attorney General (Loretta) Lynch said at her confirmation hearing in January 2015, she explained we’re responsible for enforcing the law, it is illegal, and that is the federal policy with regard to marijuana.” Murkowski wasn’t satisfied with the Rosenstein’s response, she said. She will be talking with other senators from states who have more broadly legalized marijuana as to whether legislation to put the federal government on the same page as states is viable. Nine states voted to legalize marijuana for recreational use, including Washington DC. Another 20 states have legal medical-only marijuana laws. The Cole memo states that the DOJ will not enforce federal marijuana laws against those compliant with strong state regulatory regimes, Murkowski aide Karina Petersen wrote in an email. “The (Attorney General Jeff) Sessions’ Justice Department has not withdrawn the Cole Memorandum although changes may be possible. The premise of Sen. Murkowski’s comment to Deputy Attorney General Rosenstein last Tuesday (June 13) was that the federal government is on the one hand supportive of state regulatory regimes and on the other standing as an obstacle to the effective administration of those strong state regulatory regimes.” Murkowksi believes a legislative response may be required to put the federal government on the same page. “But that legislative response would come more easily if the administration were working with states like Alaska rather than working against our state,” Petersen said. Murkowski was hoping that the deputy AG would make a commitment to work with Alaska and others similarly situated to make this all work. “Instead the federal government seems to be moving in the other direction. Not helping states like ours clear impediments like access to the banking system or ensuring tax payments can be sent through the mail,” Petersen said. “It is also trying to turn the clock back on the established congressional policy prohibiting federal interference with state medical marijuana regimes. The CARERS Act, which Sen. Murkowski has co-sponsored, establishes a clear policy of federal non-interference with state medical marijuana laws.” Through a staff level marijuana working group, Murkowski plans to discuss the problem with other offices to determine whether legislation fully eliminating federal obstacles to broader state marijuana laws is viable. At the moment, Murkowski doesn’t believe it is viable or advisable to pursue legislation completely legalizing marijuana on a federal level. A number of states don’t want to go where Alaska has gone and their decisions are also deserving of respect, Murkowski has said. There are numerous bills pertaining to wholesale marijuana reform in the House of Representatives this year and Young is involved in many of them. “I strongly believe in this issue as a matter of states’ rights,” Young said upon launching the Congressional Cannabis Caucus. “Because of the conflicts between Federal and State law, marijuana-related issues are no longer theoretical—they are real, and they are affecting real people in Alaska and across the country.” The issues in the House he is most focused on are banking, the intersection of legal marijuana, second amendment rights, and the effect on tribal issues. Young has sponsored bills to require the federal government to respect state laws legalizing marijuana, to remove it from the Schedule One status, to allow financial institutions to do business with the marijuana industry, allow Veterans Affairs doctors to prescribe marijuana in states where it is legal, and to allow marijuana businesses to use the same tax deductions as other small businesses. Perhaps the most immediate relief for marijuana-legal states is in the 2018 fiscal year spending bill. Language inserted there would bar the DOJ from using federal resources to prosecute individuals who are otherwise in compliance with their state laws, said Matt Shuckerow, Young’s spokesman. “It is extremely likely that the amendment will once again be included in the FY 18 spending bill, given that it has be enacted into law — in a bipartisan manner — since 2014,” Shuckerow said.


Subscribe to RSS - Naomi Klouda