Legislature(2021 - 2022)BARNES 124

04/01/2021 08:00 AM COMMUNITY & REGIONAL AFFAIRS

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Audio Topic
08:01:34 AM Start
08:02:26 AM Confirmation Hearing(s): Regulatory Commission of Alaska
09:01:08 AM HJR14
10:00:07 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Consideration of Governor's Appointees: TELECONFERENCED
- Regulatory Commission of Alaska: Robert
Pickett & Keith Kurber
-- Invited & Public Testimony --
*+ HJR 14 RESOLUTION: FED SAFE BANKING ACT/CANNABIS TELECONFERENCED
Heard & Held
-- Invited & Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
**Streamed live on AKL.tv**
        HJR 14-RESOLUTION: FED SAFE BANKING ACT/CANNABIS                                                                    
                                                                                                                                
9:01:08 AM                                                                                                                    
                                                                                                                                
CO-CHAIR HANNAN announced that the  final order of business would                                                               
be HOUSE JOINT  RESOLUTION NO. 14, Supporting the  passage by the                                                               
United  States Congress  of the  SAFE Banking  Act of  2019, sec.                                                               
110606  of the  Heroes Act,  or similar  legislation relating  to                                                               
cannabis-related  legitimate  businesses'   access  to  financial                                                               
services.                                                                                                                       
                                                                                                                                
9:01:43 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RASMUSSEN,  Alaska  State Legislature,  as  prime                                                               
sponsor, presented  HJR 14.  About  a year ago, she  related, her                                                               
husband,  who is  in the  mortgage industry,  had commented  that                                                               
owners of cannabis  companies cannot qualify for  mortgages.  She                                                               
said  that  seemed odd,  since  Alaska,  with passage  of  Ballot                                                               
Measure  2  in  2013,  had  legalized  the  recreational  use  of                                                               
marijuana.   She said she  assumed that meant  cannabis companies                                                               
were legitimate  businesses.   She said HJR  14 was  created with                                                               
the  idea  of  creating  safety  measures  and  more  traditional                                                               
financing options.   She said,  should HJR 14 pass,  Alaska would                                                               
become  the  first  state  in   the  nation  to  put  forward  "a                                                               
resolution for safe banking."                                                                                                   
                                                                                                                                
9:04:07 AM                                                                                                                    
                                                                                                                                
MICHAEL  BRONSTEIN,  President,  American Trade  Association  for                                                               
Cannabis and Hemp, expressed that  the matter addressed by HJR 14                                                               
is  urgent  and  important;  it  is  not  [only]  about  industry                                                               
accommodation but about  public health and safety  and the people                                                               
working  in  the   industry.    Currently,  40   percent  of  the                                                               
population  lives in  a state  that  has legalized  adult use  of                                                               
cannabis, not  including medical  marijuana use.   He  said there                                                               
are approximately  300,000 employees  that work in  the industry.                                                               
He explained that under federal  law, cannabis businesses are not                                                               
allowed to bank.  Keeping money  in banks allows it to be traced,                                                               
which is  why there  is broad and  bi-partisan support  for "safe                                                               
banking," including  a letter from  Alaska's attorney  general to                                                               
U.S. Congress.                                                                                                                  
                                                                                                                                
9:06:39 AM                                                                                                                    
                                                                                                                                
MR. BRONSTEIN  mentioned the  "Safe Banking  Act," which  he said                                                               
would   "prohibit   penalizing   or   prohibiting   a   financial                                                               
institution from providing services  to a legitimately sanctioned                                                               
and regulated  businesses" or "an associated  cannabis business."                                                               
He  said  most  concerning  is that  employees  of  the  cannabis                                                               
industry are  being denied mortgages  and loans,  which threatens                                                               
"the economic  integrity and the  individual ability  of workers"                                                               
in the  industry.   He said there  are ramifications  well beyond                                                               
the industry  in terms of having  to do payroll on  a cash basis.                                                               
He opined  that Alaska's  leadership on  this issue  is important                                                               
nationally.  He said this is  a simple issue and is separate from                                                               
the issue  of whether or not  cannabis should be legal.   This is                                                               
about  providing  safe  banking   services.    He  concluded  his                                                               
testimony by stating full support for HJR 14.                                                                                   
                                                                                                                                
9:11:36 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MCCARTY said this reminds  him of Elliot Ness, who                                                               
was with  the U.S. Treasury  and was focused  on the issue  of Al                                                               
Capone  and unaccounted  for money  during the  prohibition.   He                                                               
suggested the  federal government  was Al  Capone in  the current                                                               
situation and  "we're trying  to rectify  the situation,"  and he                                                               
asked  Mr. Bronstein  if that  was an  accurate summation  of the                                                               
situation.                                                                                                                      
                                                                                                                                
MR. BRONSTEIN  replied that the  [federal] government "has  a lot                                                               
that they can do on this"  and knows that there is "congressional                                                               
relief."   He said  the cannabis industry  pays taxes,  just like                                                               
other  businesses,  and  it  wants   to  be  treated  like  other                                                               
businesses.   Not having access  to banking  is not tenable.   He                                                               
opined  that having  broad-based statewide  support [for  HJR 14]                                                               
will help  point the federal  government in the  right direction.                                                               
In response to  Representative McCarty, he explained  that HJR 14                                                               
would send  a strong  message to  Congress.   He agreed  that "we                                                               
will  be waiting  on Congress,"  but expressed  his hope  that it                                                               
would not be much longer.                                                                                                       
                                                                                                                                
REPRESENTATIVE  MCCARTY  noted  that   he  has  constituents  and                                                               
friends in  the industry who  say they are legally  sending money                                                               
out  of  the   country  to  banks  to  secure  the   money.    He                                                               
acknowledged that those  employees in the industry  are not being                                                               
acknowledged for home loans, for  example, because there is not a                                                               
payroll that is  recognized.  He said, "I  appreciate the efforts                                                               
here."                                                                                                                          
                                                                                                                                
9:16:12 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  PRAX surmised  that "the  nuts of  the issue"  is                                                               
whether legalizing cannabis has been  detrimental to society.  He                                                               
proffered  that  if  so,  "I  guess  we  wouldn't  want  to  make                                                               
operating the business  easier"; if not, then  "we're driving the                                                               
business  back underground  if we're  not recognizing  the income                                                               
...."  He asked Mr. Bronstein  if he had heard of any detrimental                                                               
effects resulting from the legalization of cannabis.                                                                            
                                                                                                                                
9:17:35 AM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 9:17 a.m. to 9:18 a.m.                                                                       
                                                                                                                                
9:18:11 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RASMUSSEN  said 37  states have  legalized medical                                                               
and/or recreational use of cannabis,  and 53 percent of those who                                                               
voted Ballot  Measure 2 supported legalizing  recreational use in                                                               
of  cannabis  in Alaska.    She  concluded,  "So, this  issue  is                                                               
basically just  to address  the safety  for employees  and owners                                                               
and, honestly, any  support businesses for the  industry.  People                                                               
are dealing  with tens of  thousands to hundreds of  thousands of                                                               
dollars in  cash."  She  noted that  there are only  two drop-off                                                               
points  in the  state  where it  is possible  to  "put the  money                                                               
toward taxes."                                                                                                                  
                                                                                                                                
9:19:38 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PRAX, in response  to Co-Chair Hannan, offered his                                                               
understanding  that the  question  of the  federal government  is                                                               
whether cannabis  is detrimental to  society.  He  indicated that                                                               
since 37 states have said it  is not detrimental then there is no                                                               
argument; therefore,  restricting business by not  allowing those                                                               
in the cannabis industry into the banking system makes no sense.                                                                
                                                                                                                                
9:20:36 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  HANNAN   noted  that  Mr.  Bronstein   had  a  previous                                                               
commitment and was no longer available for questions.                                                                           
                                                                                                                                
9:21:16 AM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 9:21 a.m. to 9:23 a.m.                                                                       
                                                                                                                                
9:23:12 AM                                                                                                                    
                                                                                                                                
SCOTT BERGMANN,  Staff, Representative Sara Rasmussen,  on behalf                                                               
of   Representative  Rasmussen,   prime   sponsor   of  HJR   14,                                                               
paraphrased the sponsor statement, which read as follows:                                                                       
                                                                                                                                
     Since  1996, 33  states  comprising 68  percent of  the                                                                    
     nation's   population  have   legalized  cannabis   for                                                                    
     medical or  adult use. Despite this  ever-growing voter                                                                    
     preference,  current federal  law continues  to prevent                                                                    
     banks  from offering  products  and  services to  these                                                                    
     businesses without  fear of federal  sanctions. Leaving                                                                    
     the cannabis industry without  access to banks presents                                                                    
     serious  public  safety,  revenue  administration,  and                                                                    
     legal compliance concerns.                                                                                                 
                                                                                                                                
     Access to licensed and  reputable financial services is                                                                    
     important for the following reasons:                                                                                       
          ? A  high level of  cash handling in  the cannabis                                                                    
     industry   puts  consumers,   businesses,  and   public                                                                    
     authorities  at  increased   risk  of  contracting  the                                                                    
     coronavirus.                                                                                                               
          ?  Criminals  and   unscrupulous  individuals  are                                                                    
     attracted to  cash heavy businesses; access  to banking                                                                    
     services   would  reduce   criminal  activity   in  the                                                                    
     industry   and   deter    opportunistic   lending   and                                                                    
     investment.                                                                                                                
          ?  Reduced hours  and  drive-through only  deposit                                                                    
     options  (due to  COVID-19) at  banks  create an  undue                                                                    
     burden on industry workers who are paid in cash.                                                                           
          ?  Inspections  and   audits  by  regulators,  tax                                                                    
     collectors,  and state  and federal  agencies would  be                                                                    
     streamlined.                                                                                                               
          ?  Service  providers  that work  with  the  legal                                                                    
     cannabis  industry   would  be  protected   from  being                                                                    
     charged with financial crimes.                                                                                             
                                                                                                                                
     House Joint Resolution 14  urges the Federal Government                                                                    
     to pass  SAFE Banking Act  of 2019, sec. 110606  of the                                                                    
     Heroes Act,  or similar legislation that  would provide                                                                    
     a safe harbor for  depository institutions that provide                                                                    
     financial  products  or  services  to  legal  cannabis-                                                                    
     related businesses or service  providers in states that                                                                    
     have  implemented   laws  and   regulations  legalizing                                                                    
     cannabis for medical or adult use.                                                                                         
                                                                                                                                
9:25:04 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DRUMMOND remarked that alcohol  has been more of a                                                               
problem in  her district than cannabis  has.  She said  the taxes                                                               
paid on  alcohol in  Alaska do  not even  begin to  cover related                                                               
social ills and crime.  She  then talked about a cannabis testing                                                               
company in Fairbanks  having to move to another  city because the                                                               
Wells Fargo business in the  same building threatened to call its                                                               
mortgage.                                                                                                                       
                                                                                                                                
9:29:50 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MCCABE commented  that  "the genie's  out of  the                                                               
bottle" as  far as the  legalization of marijuana in  Alaska; now                                                               
the legislature  needs to fix  the banking  issue.  He  noted the                                                               
significant cross  section of those  in support  of HJR 14  - not                                                               
just political  parties, but  in age groups  - and  he encouraged                                                               
taking action to address anything that impedes business.                                                                        
                                                                                                                                
9:31:19 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RASMUSSEN noted that  the co-sponsorship is evenly                                                               
divided among parties.                                                                                                          
                                                                                                                                
9:32:14 AM                                                                                                                    
                                                                                                                                
LACY  WILCOX, President,  Alaska Marijuana  Industry Association,                                                               
testified  in support  of  HJR  14.   She  said  a resolution  in                                                               
support of the  Safe Banking Act sends a message  that the Alaska                                                               
State  Legislature cares  about public  health and  safety.   She                                                               
said regardless of how members  may feel about legalized cannabis                                                               
in  Alaska,  "access  to  financial   services  is  paramount  in                                                               
protecting Alaskans from the risks  associated with large volumes                                                               
of  cash" and  is a  tool  for law  enforcement, tax  collectors,                                                               
regulators,   and  auditors   "to  identify   less-than-honorable                                                               
industry participants."                                                                                                         
                                                                                                                                
MS. WILCOX  reported that currently  there are over  400 business                                                               
entities in Alaska's cannabis  industry; those entities represent                                                               
over   500   cannabis   licenses,  thousands   of   shareholders,                                                               
investors,  and  about 10,000  employees.    Those employees  are                                                               
finding obstacles  when attempting  to buy a  house or  car, take                                                               
out a  loan to  further their  education, or  apply for  most any                                                               
other financial  service.   She pointed  out that  many ancillary                                                               
services,  such as  general contractors,  plumbers, electricians,                                                               
utility companies, and supply vendors  have found it difficult to                                                               
work with the industry because  often large payments for buildout                                                               
services have to  be creatively converted to money  orders to not                                                               
put  in  jeopardy  the financial  situation  of  those  ancillary                                                               
services.  Mr. Wilcox said  some businesses in the industry would                                                               
like to expand  or offer health benefits  and retirement programs                                                               
to  their staff,  but cannot  do so  without access  to financial                                                               
services.                                                                                                                       
                                                                                                                                
MS.  WILCOX imparted  a  message she  has  heard repeatedly  from                                                               
those  who work  in financial  services that  they would  love to                                                               
bank the  cannabis industry's money and  offer merchant services,                                                               
"but the risks associated to  them personally change what reality                                                               
allows."  She said the  Safe Banking Act would provide assurances                                                               
to them  and relief from  criminal liability.   The Act  seeks to                                                               
provide safe harbor to get cash  off the streets and "safely into                                                               
the vault."                                                                                                                     
                                                                                                                                
9:35:31 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DRUMMOND asked  Ms. Wilcox if she is  aware of any                                                               
criminal activity  resulting from  the presence of  large amounts                                                               
of cash.                                                                                                                        
                                                                                                                                
MS.  WILCOX answered  yes, several  people in  the industry  have                                                               
been held  up while  on the  way to  the tax  office or  to their                                                               
cars.   She said luckily  camera surveillance is required,  so it                                                               
makes it  easier to  prosecute; however, she  said it  should not                                                               
happen in the first place.   In response to a follow-up question,                                                               
she said originally Juneau was  planning to offer a cash drop-off                                                               
point but reconsidered  because of safety concerns.   She offered                                                               
her understanding that a cash  depository in an Anchorage parking                                                               
garage is  the only one  of which she is  aware.  In  response to                                                               
another question,  she offered more  details about  getting money                                                               
orders to  send via certified  mail.  A  person may do  that from                                                               
his/her  personal  account,  but  many have  had  their  personal                                                               
accounts closed by the bank.                                                                                                    
                                                                                                                                
9:40:36 AM                                                                                                                    
                                                                                                                                
MICHAEL  MARTIN, President,  Alaska  Bankers Association,  stated                                                               
that he is  also the chief operating officer  and general counsel                                                               
for Northrim Bank.  He  said the Alaska Bankers Association (ABA)                                                               
represents seven  banks with operations  in Alaska.  He  said the                                                               
seven banks  include four  state banks  and three  national banks                                                               
that are  chartered by the  federal Office of the  Comptroller of                                                               
the Currency.   He said ABA and all its  member banks support HJR
14, urging the  federal government to adopt the  Safe Banking Act                                                               
to  provide  a  safe  harbor  for  depository  institutions  that                                                               
provide  financial  products  and  services  to  legal  cannabis-                                                               
related businesses.   He noted  that ABA  does not and  has never                                                               
taken a  position on the  legalization of cannabis;  however, all                                                               
the  banks  are  committed  to   serve  the  financial  needs  of                                                               
consumers, businesses, and communities of Alaska.                                                                               
                                                                                                                                
MR.  MARTIN  said all  banks  are  subject  to federal  law,  and                                                               
cannabis  remains illegal  under  federal law.   Currently  banks                                                               
face  substantial risk  if they  offer services  and products  to                                                               
cannabis-related    businesses,    including   extreme    federal                                                               
regulatory scrutiny under  the current regime, loss  to access of                                                               
critical payment systems,  and the loss of  charters from federal                                                               
regulators,  which  affects  the   banks'  abilities  to  conduct                                                               
business with  the rest  of their  customers.   He said  the Safe                                                               
Banking Act  is "a bank-specific  solution that enables  banks to                                                               
serve  cannabis-related  businesses."   He  stated,  "The  Alaska                                                               
Bankers Association  and I definitely appreciate  your leadership                                                               
in bringing forward a resolution."                                                                                              
                                                                                                                                
9:43:31 AM                                                                                                                    
                                                                                                                                
MR. MARTIN  noted that cannabis-related businesses  cannot:  open                                                               
and maintain deposit accounts;  engage in electronic transactions                                                               
with banks, including  tax payments; and cannot obtain  loans.  A                                                               
cannabis-related business  cannot be  in the  same property  as a                                                               
financial   institution.     He   said   that   is  what   causes                                                               
"substantially  regulated businesses"  to deal  in cash  and find                                                               
money orders  to operate outside the  traditional banking system.                                                               
He further  noted that the American  Banking Association supports                                                               
the Safe Banking Act and submitted  a letter to Congress on March                                                               
17, 2021, signed by the president of the association.                                                                           
                                                                                                                                
9:46:24 AM                                                                                                                    
                                                                                                                                
JANA WELGZIN,  Owner, JDW Counsel,  said her law  firm represents                                                               
over 200  licensed cannabis  businesses.   She said  the industry                                                               
has  generated over  7,000  jobs  in Alaska  and  is 100  percent                                                               
Alaska-owned.  She hears about  her clients keeping large amounts                                                               
of money  in their  homes, which  concerns her.   She  echoed the                                                               
comments about  people in the  industry having to  pay everything                                                               
in cash.   She said these  businesses create a lot  of revenue in                                                               
Alaska.   She said  Alaska needs to  show the  federal government                                                               
that it  supports safe banking  and give  the tools needed  to do                                                               
it.                                                                                                                             
                                                                                                                                
9:50:31 AM                                                                                                                    
                                                                                                                                
RYAN TUNSETH, Owner, East Rip  Dispensary, stated that it is okay                                                               
to admit when  a mistake has been made, and  he related that idea                                                               
to the war  on drugs and ideology surrounding cannabis.   He said                                                               
a detrimental  effect of  the industry has  been that  only those                                                               
with enough money could  get into it.  He said  while he has been                                                               
able to figure  out loopholes, there is a need  for visibility of                                                               
money  rather  than having  it  under  people's mattresses.    He                                                               
talked about safety and the ability  to audit, for people to have                                                               
the ability to get credit and grow their businesses.                                                                            
                                                                                                                                
9:55:33 AM                                                                                                                    
                                                                                                                                
PAUL V.  DISDIER, General Manager,  The Fireweed  Factory, stated                                                               
that one  of the most  worrisome issues is the  accountability of                                                               
the money.  He  said even with a good accountant  it is still not                                                               
possible  to keep  accurate accounting  like is  possible with  a                                                               
bank  account.    He  emphasized the  danger  of  carrying  large                                                               
amounts of  money.  He said  all four members of  his family have                                                               
had their  bank accounts closed;  his employees must  be cautious                                                               
about how  they use their bank  accounts for fear they  will lose                                                               
them.   Mr.  Disdier said  he cannot  get loans  from banks,  and                                                               
employees in the  industry oftentimes do not have  the ability to                                                               
get loans.   He  expressed the difficulty  in getting  a location                                                               
for a business.   Most warehouses require a mortgage.   He stated                                                               
that the  Internal Revenue  Service "electronically  required 941                                                               
employee  withholding,"  and  he  said  that  "everyone  in  this                                                               
business has to figure some workaround about that."                                                                             
                                                                                                                                
9:59:55 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RASMUSSEN expressed appreciation  that most of the                                                               
committee members had signed on to HJR 14 as cosponsors.                                                                        
                                                                                                                                
[HJR 14 was held over.]                                                                                                         

Document Name Date/Time Subjects
RCA - Keith Kurber Board Application_Redacted.pdf HCRA 4/1/2021 8:00:00 AM
RCA Appointees
RCA - Robert Pickett Board Application_Redacted.pdf HCRA 4/1/2021 8:00:00 AM
RCA Appointees
RCA - Robert Pickett Resume.pdf HCRA 4/1/2021 8:00:00 AM
RCA Appointees
RCA - Keith Kurber Resume_Redacted.pdf HCRA 4/1/2021 8:00:00 AM
RCA Appointees
HJR014A.PDF HCRA 4/1/2021 8:00:00 AM
HCRA 4/6/2021 8:00:00 AM
HJR 14
HJR14 - Sponsor Statement 3.9.21.pdf HCRA 4/1/2021 8:00:00 AM
HCRA 4/6/2021 8:00:00 AM
HJR 14
HJR 14 - Letter of Support AKBA 3.16.2021.pdf HCRA 4/1/2021 8:00:00 AM
HCRA 4/6/2021 8:00:00 AM
HJR 14
HJR 14 - Letter of Support - Division of Banking & Securities 3.11.21.pdf HCRA 4/1/2021 8:00:00 AM
HCRA 4/6/2021 8:00:00 AM
HJR 14
HJR 14 - Letter of Support - Alaska Marijuana Industry Association 3.23.21.pdf HCRA 4/1/2021 8:00:00 AM
HJR 14
HJR 14 Support Letter - East Rip.pdf HCRA 4/1/2021 8:00:00 AM
HCRA 4/6/2021 8:00:00 AM
HJR 14
HJR 14 - Supporting Documents - New York governor signs bill legalizing recreational marijuana for adults 21 and older - CNN.pdf HCRA 4/1/2021 8:00:00 AM
HCRA 4/6/2021 8:00:00 AM
HJR 14