State smoking ban could force revision to proposed pot cafes
The Marijuana Control Board anticipates newly-passed legislation that would ban smoking in all public workplaces statewide could throw a monkey wrench into plans for legalizing onsite consumption.
Current law already bans smoking in many workplaces across the state, such as schools, government spaces and health facilities. Senate Bill 63, awaiting the Gov. Bill Walker’s signature, would expand the ban to include private businesses as well.
At the board meeting set for June 13-15 in Downtown Anchorage, the board is asking for guidance from Harriet Milks, the assistant attorney general who advises the Alcohol and Marijuana Control Office.
Board chairman Mark Springer said the board needs to incorporate the smoking ban, which will go into effect Oct. 1 once it’s signed, into its present proposed onsite consumption regulations.
Local governments including those in Anchorage, Palmer, Juneau, Bethel, Barrow, Nome, Petersburg, Dillingham, Haines and Skagway already have a smoking ban in private businesses. The new law would be a uniform ban throughout the state, but it allows local governments to opt out.
Nevertheless, the board’s proposal to allow smoking, if the newly-designated onsite consumption regulations are approved, rested on the assumption that proper air ventilation and measures to protect employees would be in compliance with local laws.
“I know there’s a lot of interest, pro and con, in onsite consumption,” Springer said. “We will need to tie the proposal to the new smoking regulations. In the new smoking law, it specifies a separate building, which implies to me four separate walls disconnected from the retail store. It raises a heck of a lot of questions.”
The newest onsite draft regulation was co-written by Brandon Emmett, an industry representative on the board, and Loren Jones, the public health representative. It won’t be voted on until the Aug. 15-16 meeting, Emmett said, because he plans to pull the project from the June meeting.
He wants a full five-member board present for the vote, and at the August meeting, new public safety member appointee Sitka Police Chief Jeff Ankerfelt will be present.
Onsite consumption has been debated by the board since its inception in July 2015, but each measure failed or was postponed.
The current proposal would allow marijuana products to be sold to patrons in a retail shop, then consumed in a separate area of the shop. Once licensed, the premises would need to confine activities to a designated area. It would be separated from the remainder of the premises by a secure door and a separate ventilation system or located outside.
Now, the question requiring Milks’ guidance is just “how separate” the onsite portion needs to be, Springer said.
“It could become an expensive deal to try to open one of these (onsite consumption bars) if it’s now in a separate building,” Springer said. “How will it impact the cruise ship market? How do you accommodate them if you have a little pot shop in Skagway, and all of a sudden you have to do something additional?”
Along with Springer’s plan to open public testimony to onsite consumption — perhaps in a special meeting — he wants to hear ideas on how the board can incorporate SB 63 into new onsite regs.
“I anticipate we will see some creative attempts at solutions, such as jointly sharing among licensees who go into together,” Springer said, meaning one establishment of multiple shop owners.
He’s not sure how that would fly in terms of gaining the board’s approval, but it’s worth looking at various possible solutions ahead, he said.
The board agreed to flip its regular agenda order in order to handle regulations and other businesses earlier in the meeting, board Chairman Springer said.
The agenda June 13 starts with an executive session to handle an appeal from Frozen Budz, a Fairbanks cannabis manufacturer whose license was suspended in December 2017.
The board found the licensee in violation for failing to properly test products, producing unauthorized edibles, allowing onsite consumption, improper labeling and violating waste notification requirements. The company, the first to have its license revoked in the burgeoning marijuana industry, was also fined $500,000.
After public comments, the agenda calls for a presentation from the Department of Revenue on how the present taxation structure is working. The board has asked for more information about any possible impacts of a tax shift to the retail end.
Currently, the state taxes $50 per ounce of marijuana flower and $15 for stem and leaf trim at the cultivation end, but doesn’t impose a sales tax at the retail level, although municipalities do.
Cultivators and others have advocated for a change, contending that the current tax artificially keeps retail prices high even when supply is also high.
Only the Alaska Legislature can change tax law, but the board is still trying to figure out what to recommend, Springer said.
At the April meeting in Nome, the board was advised that local communities already have sales tax collection at the retail level that could be anywhere from 1 percent to 7.5 percent. State marijuana sales taxes on top of those could become a burden at the local level, necessitating possible staff increases to municipal governments for collecting the tax, according to AMCO Executive Director Erika McConnell.
Since the first legal sales began in October 2016, the state has collected $10.4 million in excise taxes.
“We would like to see if Revenue can come up with a strategy, because taxes aren’t our role,” Springer said.
The board will also hear from representatives of Florida-based Franwell, a tech innovating company that developed the Marijuana Enforcement Tracking Reporting Compliance, or METRC, services to focus on supply chain solutions and regulatory integration.
Executive Director Scott Denholm and Kelly Jenkins, an account manager in the Denver office, will make a presentation to the board on June 13 explaining how the system works.
Alaska awarded METRC a five-year contract to handle the marijuana industry’s supply chain tracking process from 2016 to 2021. Colorado, Oregon, California, Nevada, Michigan, Massachusetts and Alaska all use the METRC system. Alaska’s marijuana regulations require commercial growers, retailers, testing facilities and manufacturers to use the tracking system on all their products.
Violations issued by the Alcohol and Marijuana Control Office at times indicates a discrepancy in the form of missing or untracked inventory. Springer said this is a chance for industry people to ask questions and for the board to get more familiar with how METRC woks.
Springer wants to know more about how it operates because when there are violations, business owners have told the board that METRC messed up.
“For a long time, I’ve asked for a presentation so that we can understand METRC, so we can all understand it better,” Springer said. “This will be the first presentation the board’s had on it. I’m also inviting licensees to ask their questions, and I think there may be a lot of them who want to do that.”
Naomi Klouda can be reached at n[email protected].