Legislature(2021 - 2022)BELTZ 105 (TSBldg)

05/03/2021 01:30 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HJR 14 RESOLUTION: FED SAFE BANKING ACT/CANNABIS TELECONFERENCED
Moved HJR 14 Out of Committee
-- Invited & Public Testimony --
*+ SB 130 ELECTRONIC PULL-TAB GAMES TELECONFERENCED
Moved SB 130 Out of Committee
-- Invited & Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
        HJR 14-RESOLUTION: FED SAFE BANKING ACT/CANNABIS                                                                    
                                                                                                                                
1:31:00 PM                                                                                                                    
SENATOR  COSTELLO  announced  the consideration  of  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.                                                                            
                                                                                                                                
1:31:37 PM                                                                                                                    
REPRESENTATIVE SARA RASMUSSEN,  Alaska State Legislature, Juneau,                                                               
Alaska,  sponsor of  HJR 14,  related  that the  bill came  about                                                               
after her husband,  who is a mortgage  originator, mentioned that                                                               
somebody had  applied for a  home mortgage and could  not qualify                                                               
because  they worked  in  the legal  cannabis  industry. This  is                                                               
despite  the  2014  initiative  in which  53  percent  of  voters                                                               
approved cannabis  use. She reached  out to industry  leaders and                                                               
learned  that   these  businesses  have  difficulty   renting  or                                                               
purchasing property  and they  have to  pay their  taxes, utility                                                               
expenses,  rent,  and employees  in  cash.  Believing that  there                                                               
should  be  a  better  way, she  worked  with  the  congressional                                                               
delegation  to produce  HJR 14.  It  seeks to  level the  playing                                                               
field for  all Alaskan businesses  and increase  transparency and                                                               
safety measures.                                                                                                                
                                                                                                                                
1:33:56 PM                                                                                                                    
CHAIR COSTELLO summarized  that because cannabis is  not legal at                                                               
the  federal  level,  these  businesses do  not  have  access  to                                                               
banking so all transactions are  in cash. The resolution asks the                                                               
federal  government to  allow these  businesses to  operate under                                                               
the federal Secure And Fair Enforcement (SAFE) Banking Act.                                                                     
                                                                                                                                
REPRESENTATIVE RASMUSSEN agreed with the summary.                                                                               
                                                                                                                                
1:35:00 PM                                                                                                                    
SCOTT  BERGMANN,  Staff,  Representative Sara  Rasmussen,  Alaska                                                               
State Legislature,  Juneau, Alaska, stated  that HJR 14  calls on                                                               
Congress to pass  the Secure And Fair  Enforcement (SAFE) Banking                                                               
Act  or  similar  legislation  to   provide  a  safe  harbor  for                                                               
financial institutions that provide services to legal cannabis-                                                                 
related businesses. Under current federal  law it is a Schedule I                                                               
felony  to accept  deposits and  conduct  other banking  business                                                               
with the legal cannabis industry.                                                                                               
                                                                                                                                
He reported that  since 1996, 33 states comprising  68 percent of                                                               
the nation's  population have legalized  cannabis for  medical or                                                               
adult use. He highlighted that  the U.S. House of Representatives                                                               
passed  a SAFE  Banking  Act and  Senator  Murkowski and  Senator                                                               
Sullivan are co-sponsors of the U.S. Senate version of the bill.                                                                
                                                                                                                                
SENATOR GRAY-JACKSON  asked if legal marijuana  businesses accept                                                               
credit   card  transactions.   She  acknowledged   the  nonverbal                                                               
negative response and expressed  support for changing the federal                                                               
law.                                                                                                                            
                                                                                                                                
SENATOR REVAK commented  that this is a state's  rights issue and                                                               
he appreciates  the legislation.  The people  of Alaska  voted to                                                               
legalize cannabis;  forcing the industry to  transact business in                                                               
cash is dangerous and it impedes commerce.                                                                                      
                                                                                                                                
1:37:50 PM                                                                                                                    
LACY  WILCOX, President,  Alaska  Marijuana Industry  Association                                                               
(AMIA), Juneau,  Alaska, stated that  on behalf of  the industry,                                                               
she was  offering support  for HJR 14.  She said  this resolution                                                               
would  send a  message that  the Alaska  Legislature cares  about                                                               
health and safety.  Access to financial services  is paramount in                                                               
protecting Alaskans from the public  safety risks associated with                                                               
transacting business  entirely in cash. She  described banking as                                                               
a  tool  for law  enforcement,  tax  collectors, regulators,  and                                                               
auditors to  identify less than honorable  industry participants.                                                               
Passing the resolution  in support of the SAFE  Banking Act would                                                               
make Alaska a leader and other states would be likely to follow.                                                                
                                                                                                                                
MS. WILCOX highlighted the effect of  the federal law on the more                                                               
than  400 cannabis  business  entities, shareholders,  investors,                                                               
and  employees.  She  said  the  10,000  or  more  employees  are                                                               
probably  the most  affected by  the  lack of  access to  banking                                                               
services. They  are unable to  qualify to buy  a house or  car or                                                               
take out a  student loan to further their education.  The lack of                                                               
access to  financial services  also prevents  cannabis businesses                                                               
from offering health and retirement  benefits to their employees.                                                               
She mentioned  the ancillary support  businesses that  have found                                                               
it difficult to conduct business  with the industry because large                                                               
payments for supplies and services must  be paid in cash or money                                                               
orders.  General  contractors,  plumbers,  electricians,  utility                                                               
companies,  and supply  vendors  may  jeopardize their  financial                                                               
standing by  doing business with cannabis  businesses. She shared                                                               
the message she  has heard from people in  the financial services                                                               
sector, which is  that they would like to  offer banking services                                                               
to the industry but they  need assurance through the SAFE Banking                                                               
Act or similar legislation that doing so would not be a crime.                                                                  
                                                                                                                                
1:42:37 PM                                                                                                                    
CHAIR COSTELLO opened public testimony on HJR 14.                                                                               
                                                                                                                                
1:42:51 PM                                                                                                                    
RYAN TUNSETH,  representing self, Kenai, Alaska,  advised that he                                                               
is the owner of the retail  cannabis business, East Rip. He urged                                                               
the  committee  to  support  HJR 14  or  similar  legislation  to                                                               
support passage of  the SAFE Banking Act  or similar legislation.                                                               
He  said this  is a  nonpartisan issue  about protecting  working                                                               
Alaskans. It  sends a  clear message  that legislators  from both                                                               
sides of the  aisle will look out for the  safety of Alaskans and                                                               
protect the  rights of workers  and Alaska businesses.  He agreed                                                               
with previous  testimony that moving  and handling  large amounts                                                               
of cash  is problematic.  He pointed  out that  there is  also an                                                               
efficiency  element related  to the  state's finances.  Currently                                                               
there is  nearly $2  million in unpaid  marijuana taxes  and this                                                               
would add  a tool for the  state to audit against  that. It would                                                               
also  make  it easier  for  businesses  to make  those  payments.                                                               
Finally,  there is  an equity  piece that  people have  mentioned                                                               
about not  being able to secure  a loan because the  payments may                                                               
come from the cannabis industry.  Deeper than that, being able to                                                               
secure  any  type of  financing  to  secure  a  loan to  start  a                                                               
business is very  difficult. Because of that, most  of the people                                                               
who entered  the industry  were able  to do  it because  they had                                                               
cash by robbing 401 K plans  or something similar. He said others                                                               
who  may not  have that  ability  are blocked  from entering  the                                                               
industry. There  are no  other mechanisms  for funding.  He urged                                                               
the committee to support HJR 14.                                                                                                
                                                                                                                                
1:45:10 PM                                                                                                                    
MICHAEL MARTIN, President, Alaska  Bankers Association (ABA); CEO                                                               
and General Counsel, Northrim  Bank, Anchorage, Alaska, testified                                                               
in support  of HJR 14.  He stated  that ABA represents  the seven                                                               
banks  that  have operations  in  Alaska,  including four  state-                                                               
chartered  banks and  three  national banks,  all  of which  have                                                               
substantial  operations in  Alaska. He  said ABA  and its  member                                                               
banks support HJR 14, urging  the federal government to adopt the                                                               
SAFE  Banking  Act  to  provide   a  safe  harbor  to  depository                                                               
institutions  that provide  financial  products  and services  to                                                               
legal  cannabis-related  businesses.  He   noted  that  the  SAFE                                                               
Banking  Act is  a  bank-specific solution  that  creates a  safe                                                               
harbor and  enables banks  to serve  cannabis-related businesses.                                                               
The  U.S.  House of  Representatives  most  recently passed  this                                                               
legislation and it is awaiting action in the Senate.                                                                            
                                                                                                                                
MR. MARTIN highlighted  that ABA and the member  banks have never                                                               
taken a position  on the legalization of cannabis,  but the banks                                                               
are committed to  serve the financial needs  of Alaska consumers,                                                               
businesses, and  communities. He said  all bankers in  Alaska are                                                               
subject  to federal  law and  cannabis remains  illegal so  banks                                                               
currently  face substantial  risks by  offering banking  products                                                               
and services  to cannabis-related  businesses. Most  notably, the                                                               
issue is the  potential loss of the bank's  charter and therefore                                                               
the ability  to do business  in general.  He said the  reality is                                                               
that  cannabis-related  businesses   currently  cannot  open  and                                                               
maintain deposit  accounts with Alaska banks.  They cannot engage                                                               
in  electronic transactions,  which includes  tax payments.  They                                                               
have  a difficult  if not  impossible time  obtaining loans  from                                                               
banks. This  causes these legitimate and  substantially regulated                                                               
businesses  to  operate  in  cash   and  money  orders  and  find                                                               
alternative means  of financing  and funds management  outside of                                                               
the  banking system.  He  also noted  that  the American  Banking                                                               
Association  submitted  a  letter   to  Congress  in  March  2021                                                               
supporting  the SAFE  Banking  Act. He  thanked  the sponsor  and                                                               
urged the committee to support HJR 14.                                                                                          
                                                                                                                                
1:48:52 PM                                                                                                                    
CHAIR COSTELLO closed  public testimony on HJR 14.  She asked the                                                               
sponsor if there was another committee of referral.                                                                             
                                                                                                                                
REPRESENTATIVE  RASMUSSEN answered  no;  the resolution  received                                                               
just one referral in each body.                                                                                                 
                                                                                                                                
1:49:20 PM                                                                                                                    
SENATOR REVAK  moved to  report HJR  14, work  order 32-LS0617\A,                                                               
from  committee  with  individual  recommendations  and  attached                                                               
fiscal note(s).                                                                                                                 
                                                                                                                                
CHAIR COSTELLO  found no objection  and HJR 14 was  reported from                                                               
the Senate Labor and Commerce Standing Committee.                                                                               

Document Name Date/Time Subjects
SB 130 Sponsor Statement.pdf SFIN 5/12/2021 9:00:00 AM
SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Sectional Analysis Version A.pdf SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Fiscal Note 2476.pdf SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Supporting Document - AK Electronic Pulltabs Overview.pdf SFIN 5/12/2021 9:00:00 AM
SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Supporting Document - Legal Opinion on Class III Gaming.pdf SFIN 5/12/2021 9:00:00 AM
SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Letter of Support - Scott Henneman, Grover Gaming.pdf SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Letter of Support - Jeremy Conkling.pdf SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Letter of Support - Darwin Biwer.pdf SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Letter of Support - Ray Hout.pdf SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Letter of Support - Joshua Lewis.pdf SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Letter of Support - Ken Koelsch.pdf SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Letter of Opposition - John and Sandy Powers.pdf SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Letter Opposition - Lisa Ally.pdf SL&C 5/3/2021 1:30:00 PM
SB 130