Legislature(2015 - 2016)BUTROVICH 205

03/05/2015 09:00 AM STATE AFFAIRS

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Audio Topic
09:01:30 AM Start
09:02:31 AM Confirmation Hearings: Alaska Police Standards Council
09:24:21 AM SB62
10:49:22 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Governor's Appointments - Confirmation Hearings: TELECONFERENCED
Rebecca Hamon, Alaska Police Standards Council
Gustaf Sandahl, Alaska Police Standards Council
-- Public Testimony --
<Hearing Rescheduled from 02/24/15>
*+ SB 62 REGULATION OF MARIJUANA BUSINESSES; BOARD TELECONFERENCED
Heard & Held
Initial Presentation by Sponsor
Comments by Initiative Sponsors
*+ SB 24 LEGIS. ETHICS ACT: CONTRACTORS,INTERNS TELECONFERENCED
Scheduled but Not Heard
-- Public Testimony --
*+ SB 4 FINL. DISCLOSURE: LEGIS AND PUB OFFICIALS TELECONFERENCED
Scheduled but Not Heard
-- Public Testimony --
+ Bills / Topics Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
            SENATE STATE AFFAIRS STANDING COMMITTEE                                                                           
                         March 5, 2015                                                                                          
                           9:01 a.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Bill Stoltze, Chair                                                                                                     
Senator John Coghill, Vice Chair                                                                                                
Senator Charlie Huggins                                                                                                         
Senator Bill Wielechowski                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Lesil McGuire                                                                                                           
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 62                                                                                                              
"An  Act  relating  to the  regulation  of  marijuana,  marijuana                                                               
testing, marijuana products,  and marijuana accessories; relating                                                               
to the  licensing of marijuana retailers,  producers, processors,                                                               
boutique  producers,  brokers,  and  home  growers;  relating  to                                                               
taxation of marijuana; and providing for an effective date."                                                                    
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
SENATE BILL NO. 24                                                                                                              
"An Act relating  to the applicability of  the Legislative Ethics                                                               
Act to legislative  interns, legislative volunteers, consultants,                                                               
independent  contractors, sole  proprietorships, and  other legal                                                               
entities."                                                                                                                      
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
SENATE BILL NO. 4                                                                                                               
"An  Act  relating to  disclosures  required  by the  Legislative                                                               
Ethics Act."                                                                                                                    
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
CONFIRMATION HEARINGS                                                                                                           
                                                                                                                                
     Alaska Police Standards Council                                                                                          
          Rebecca Hamon                                                                                                         
          Gustaf Sandahl                                                                                                        
                                                                                                                                
     - CONFIRMATIONS ADVANCED                                                                                                 
                                                                                                                              
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 62                                                                                                                   
SHORT TITLE: REGULATION OF MARIJUANA BUSINESSES; BOARD                                                                          
SPONSOR(s): JUDICIARY                                                                                                           
                                                                                                                                
02/25/15       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/25/15       (S)       STA, L&C, FIN                                                                                          
03/05/15       (S)       STA AT 9:00 AM BUTROVICH 205                                                                           
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
GUSTAF SANDAHL, Appointee                                                                                                       
Alaska Police Standards Council                                                                                                 
Kenai, Alaska                                                                                                                   
POSITION STATEMENT: Provided information related to his                                                                       
confirmation hearing.                                                                                                           
                                                                                                                                
REBECCA HAMON, Appointee                                                                                                        
Alaska Police Standards Council                                                                                                 
King Salmon, Alaska                                                                                                             
POSITION STATEMENT: Provided information related to her                                                                       
confirmation hearing.                                                                                                           
                                                                                                                                
CHAD HUTCHISON, Staff                                                                                                           
Senator John Coghill                                                                                                            
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Explained SB 62 on behalf of the sponsor.                                                                 
                                                                                                                                
DR. TIM HINTERBERGER, Member                                                                                                    
Campaign to Regulate Marijuana Like Alcohol                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Recommended changes to SB 62.                                                                             
                                                                                                                                
BRUCE SCHULTE, Board Member                                                                                                     
Coalition for Responsible Campus Legislation                                                                                    
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Suggested changes to SB 62.                                                                               
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
9:01:30 AM                                                                                                                    
CHAIR  BILL  STOLTZE called  the  Senate  State Affairs  Standing                                                             
Committee meeting  to order at 9:01  a.m. Present at the  call to                                                               
order  were Senators  Wielechowski, Coghill,  Huggins, and  Chair                                                               
Stoltze. He announced the agenda.                                                                                               
                                                                                                                                
^Confirmation Hearings: Alaska Police Standards Council                                                                         
                     Confirmation Hearings                                                                                  
                                                                                                                                
Alaska Police Standards Council                                                                                               
     Rebecca Hamon                                                                                                              
     Gustaf Sandahl                                                                                                             
                                                                                                                                
9:02:31 AM                                                                                                                    
CHAIR STOLTZE announced the confirmation  hearings for the Alaska                                                               
Police Standards Council.                                                                                                       
                                                                                                                                
9:03:10 AM                                                                                                                    
GUSTAF  SANDAHL,  Appointee,  Alaska  Police  Standards  Council,                                                               
provided  information related  to  his  confirmation hearing.  He                                                               
said that  he is currently the  Chief of Police in  Kenai and has                                                               
over 19 years of law  enforcement experience in Alaska. He stated                                                               
that he  was honored to  be asked to serve  a second term  on the                                                               
Council.  It is  an  important role  to  help ensure  appropriate                                                               
standards for law enforcement.                                                                                                  
                                                                                                                                
CHAIR STOLTZE asked for an explanation of his duties.                                                                           
                                                                                                                                
9:04:48 AM                                                                                                                    
MR. SANDAHL explained  his experience in law  enforcement and his                                                               
role on  the Council looking  into police officer  misconduct and                                                               
determining  whether certifications  should be  revoked. He  said                                                               
the  Council meets  twice a  year  and also  looks at  regulation                                                               
changes.                                                                                                                        
                                                                                                                                
9:06:45 AM                                                                                                                    
CHAIR STOLTZE asked about the Board.                                                                                            
                                                                                                                                
MR. SANDAHL  replied that  the Board  is made  up of  13 members;                                                               
four municipal  police chiefs, the Commissioner  of Public Safety                                                               
or  designee,  Commissioner  of the  Department  of  Corrections,                                                               
several public  members, and the director,  training coordinator,                                                               
and administrative assistant of the Council.                                                                                    
                                                                                                                                
CHAIR STOLTZE asked for an explanation of the funding.                                                                          
                                                                                                                                
MR. SANDAHL  said funding  comes from  surcharges on  tickets and                                                               
misdemeanor and felony offenses.                                                                                                
                                                                                                                                
9:08:15 AM                                                                                                                    
CHAIR    STOLTZE   inquired    about   cross-licensing    between                                                               
departments.                                                                                                                    
                                                                                                                                
MR. SANDAHL said  that issue is under the director  of the Alaska                                                               
Police Standards Council.                                                                                                       
                                                                                                                                
SENATOR  HUGGINS noted  Mr. Sandahl's  previous board  experience                                                               
and asked what important issues occurred in 2014.                                                                               
                                                                                                                                
MR.  SANDAHL   specified  that  there   were  several   cases  of                                                               
misconduct and proposed changes to regulations.                                                                                 
                                                                                                                                
9:11:21 AM                                                                                                                    
CHAIR STOLTZE thanked Mr. Sandahl.                                                                                              
                                                                                                                                
9:13:36 AM                                                                                                                    
REBECCA  HAMON,  Appointee,   Alaska  Police  Standards  Council,                                                               
provided  information related  to her  confirmation hearing.  She                                                               
said  that she  is the  village advocate  and legal  advocate for                                                               
Safe  and  Fear-Free  Environment  in  Dillingham,  which  offers                                                               
advocacy to victims of domestic  violence and sexual assault. She                                                               
said she  is very  involved in those  issues. She  concluded that                                                               
serving   on  the   Council  has   been   very  interesting   and                                                               
enlightening regarding law enforcement issues.                                                                                  
                                                                                                                                
9:15:43 AM                                                                                                                    
CHAIR STOLTZE asked about victims'  rights as provided for in the                                                               
state constitution.                                                                                                             
                                                                                                                                
MS. HAMON  said there is  a lot  of attention on  victims' rights                                                               
issues, but it varies from  department to department. There is an                                                               
attempt to develop a team approach.                                                                                             
                                                                                                                                
9:17:37 AM                                                                                                                    
CHAIR STOLTZE could tell Ms.  Hamon understood Article 1, Section                                                               
24.                                                                                                                             
                                                                                                                                
SENATOR HUGGINS  noted Ms.  Hamon has been  on the  Council since                                                               
2011.                                                                                                                           
                                                                                                                                
MS. HAMON agreed.                                                                                                               
                                                                                                                                
SENATOR HUGGINS asked about her contributions to the Council.                                                                   
                                                                                                                                
MS. HAMON  stated that  the first year  was spend  learning about                                                               
the Council and  police standards. She said she devoted  a lot of                                                               
attention to cases that involve victims.                                                                                        
                                                                                                                                
9:20:14 AM                                                                                                                    
SENATOR  HUGGINS asked  about the  district  court caseloads  and                                                               
interactions.                                                                                                                   
                                                                                                                                
MS. HAMON  described typical  caseloads and  spoke of  trials and                                                               
spoke  of the  support  she provides  to  the assistant  district                                                               
attorney.                                                                                                                       
                                                                                                                                
SENATOR HUGGINS thanked Ms. Hamon.                                                                                              
                                                                                                                                
CHAIR  STOLTZE  voiced  appreciation   for  those  who  work  for                                                               
victims' rights. He thanked Ms. Hamon.                                                                                          
                                                                                                                                
9:23:35 AM                                                                                                                    
CHAIR STOLTZE  announced that the  names of the nominees  will be                                                               
forwarded to  the joint  session "with  the standard  language on                                                               
the appointment forms."                                                                                                         
                                                                                                                                
9:24:01 AM                                                                                                                    
At ease.                                                                                                                        
                                                                                                                                
        SB 62-REGULATION OF MARIJUANA BUSINESSES; BOARD                                                                     
                                                                                                                                
9:24:21 AM                                                                                                                    
CHAIR STOLTZE announced the consideration of SB 62.                                                                             
                                                                                                                                
9:24:33 AM                                                                                                                    
SENATOR COGHILL explained  that SB 62 is a product  of the Senate                                                               
Judiciary  Committee. The  issues presented  by Ballot  Measure 2                                                               
are how to deal with the  penalties of misuse and how to regulate                                                               
the marijuana industry,  which is what SB 62  addresses. He noted                                                               
that  the federal  government considers  marijuana  a schedule  1                                                               
drug - a controlled substance.                                                                                                  
                                                                                                                                
9:26:38 AM                                                                                                                    
CHAD  HUTCHISON,  Staff,  Senator   John  Coghill,  Alaska  State                                                               
Legislature, explained  SB 62 on  behalf of the sponsor.  He said                                                               
SB 62  deals with the  commercial marijuana industry and  has two                                                               
major  focuses, to  protect  young people  and  to eliminate  the                                                               
black market.                                                                                                                   
                                                                                                                                
9:28:25 AM                                                                                                                    
MR. HUTCHISON began by explaining  that Ballot Measure 2 provides                                                               
that  the  marijuana  industry  is  now  a  legitimate  taxpaying                                                               
business and marijuana must be  labelled to ensure that consumers                                                               
are informed  and protected. He  listed the  provisions available                                                               
to  persons 21  years of  age or  older and  the restrictions  on                                                               
marijuana use in public places.                                                                                                 
                                                                                                                                
9:29:49 AM                                                                                                                    
MR.   HUTCHISON   addressed  marijuana-related   facilities   and                                                               
establishments, which all must have current, valid registration.                                                                
                                                                                                                                
9:31:01 AM                                                                                                                    
MR.  HUTCHISON discussed  rulemaking deadlines  as they  apply to                                                               
marijuana. For  example, the board  has nine months  to implement                                                               
regulations related to chapter 38,  the marijuana provision, such                                                               
as   civil  penalties,   labelling  requirements,   and  security                                                               
requirements. The  board has one  year from February 24,  2015 to                                                               
begin  accepting and  processing  applications for  registration.                                                               
Also,  45 to  90 days  after receiving  an application  the board                                                               
must issue annual registration or notification of denial.                                                                       
                                                                                                                                
MR. HUTCHISON  reviewed local participation and  control options.                                                               
For  example,  local  governments  may  prohibit  establishments,                                                               
enact  ordinances,   and  establish  operating  fees   and  civil                                                               
penalties. They may also create local regulatory authority.                                                                     
                                                                                                                                
9:33:35 AM                                                                                                                    
CHAIR STOLTZE  asked Mr. Hutchison  to explain the  parameters of                                                               
local control.                                                                                                                  
                                                                                                                                
MR.  HUTCHISON explained  that the  bill  provides local  control                                                               
authority much  like the alcohol provisions  that currently exist                                                               
regarding wet and dry communities.  About one-third of Colorado's                                                               
counties have decided not to have marijuana establishments.                                                                     
                                                                                                                                
CHAIR STOLTZE  summarized that it  would be legal to  possess and                                                               
use, but  the local  government could control  whether or  not it                                                               
could be manufactured.                                                                                                          
                                                                                                                                
MR. HUTCHISON answered yes.                                                                                                     
                                                                                                                                
MR. HUTCHISON reviewed  that the Ravin Decision  is unaffected by                                                               
SB 62, as  are the marijuana DUI and medical  use laws. Employers                                                               
may  still restrict  use in  the workplace  and private  property                                                               
owners/occupiers and  public facilities may prohibit  or regulate                                                               
marijuana on their property.                                                                                                    
                                                                                                                                
9:35:38 AM                                                                                                                    
MR.  HUTCHISON  addressed how  taxes  are  assessed on  marijuana                                                               
businesses. The  Department of Revenue  will excise a tax  of $50                                                               
per ounce  when sold or  transferred from a  cultivation facility                                                               
to a retail  store and records must be kept  of the transactions.                                                               
These provisions will help to diminish the black market.                                                                        
                                                                                                                                
9:36:43 AM                                                                                                                    
CHAIR STOLTZE said it would be safer for all people.                                                                            
                                                                                                                                
MR. HUTCHISON agreed.                                                                                                           
                                                                                                                                
CHAIR STOLTZE  asked if local  governments are limited  from also                                                               
charging taxes.                                                                                                                 
                                                                                                                                
MR. HUTCHISON  replied that  they can  charge municipal  taxes at                                                               
the retail level.                                                                                                               
                                                                                                                                
CHAIR STOLTZE asked if there  were any Title 29 restrictions that                                                               
applied.                                                                                                                        
                                                                                                                                
MR. HUTCHISON said he is not aware of any.                                                                                      
                                                                                                                                
CHAIR STOLTZE he  compared it to the alcohol  industry, which has                                                               
some Title 29 restrictions.                                                                                                     
                                                                                                                                
MR. HUTCHISON offered to get back to the committee on that.                                                                     
                                                                                                                                
9:38:13 AM                                                                                                                    
MR.  HUTCHISON  turned  to  the   state's  involvement  with  the                                                               
initiative.  The  legislature  has   broad  power  to  amend  the                                                               
initiative and  various related laws. Departments  can promulgate                                                               
regulations.                                                                                                                    
                                                                                                                                
MR. HUTCHISON  listed the  number of bills  Ballot Measure  2 has                                                               
spawned. He noted there is also a companion bill to SB 62.                                                                      
                                                                                                                                
9:39:28 AM                                                                                                                    
MR.  HUTCHISON began  a sectional  analysis of  SB 62.  Section 1                                                               
deals with the inspection and  certification of marijuana testing                                                               
facilities,   which   is   done   through   the   Department   of                                                               
Environmental  Conservation. The  intent  is to  have samples  of                                                               
marijuana sent to the facility for testing.                                                                                     
                                                                                                                                
He  explained that  Section 2  deals with  marijuana accessories.                                                               
Section 3 deals  with limitations on advertising.  It will ensure                                                               
that there is no advertising to  minors. Section 4 says the board                                                               
is required to adopt regulations for commercial licenses.                                                                       
                                                                                                                                
CHAIR  STOLTZE  asked  Mr.  Hutchison  to  describe  the  board's                                                               
requirements.                                                                                                                   
                                                                                                                                
MR. HUTCHISON  clarified that  he is  referring to  the Marijuana                                                               
Control  Board,  if  it  is approved,  or  the  Alcohol  Beverage                                                               
Control (ABC) Board, which is  the current board with presumptive                                                               
authority.                                                                                                                      
                                                                                                                                
CHAIR STOLTZE  asked if  the ABC  Board is  the default  board as                                                               
named by the initiative sponsors.                                                                                               
                                                                                                                                
MR. HUTCHISON said yes.                                                                                                         
                                                                                                                                
9:41:05 AM                                                                                                                    
MR.  HUTCHISON   continued  with  Section  5   which  deals  with                                                               
regulations for  packaging and labeling of  marijuana for persons                                                               
that  have  a  marijuana  retailer  license.  It  contains  child                                                               
protection   elements.  Section   6  discusses   applications  or                                                               
renewals.  Section 7  is  the fee  payment  provision. Section  8                                                               
provides that the board has 90 days to issue an annual license.                                                                 
                                                                                                                                
CHAIR STOLTZE asked whether the 90  days is to issue a license or                                                               
to make a determination on the issuance of a license.                                                                           
                                                                                                                                
MR. HUTCHISON  answered that  it is  to issue  the license.  If a                                                               
license is not  issued, the applicant has the ability  to go to a                                                               
local regulatory authority.                                                                                                     
                                                                                                                                
9:42:48 AM                                                                                                                    
MR.  HUTCHISON  related  that  Section 9  says  the  board  shall                                                               
consider  local  municipality numerical  limits.  It  is a  local                                                               
control option.                                                                                                                 
                                                                                                                                
CHAIR STOLTZE asked if it is similar to alcohol regulations.                                                                    
                                                                                                                                
MR.  HUTCHISON  said   it  is  equivalent  to   the  process  for                                                               
determining the number of liquor licenses.                                                                                      
                                                                                                                                
CHAIR STOLTZE asked if a municipality  can set up limits based on                                                               
population numbers.                                                                                                             
                                                                                                                                
MR. HUTCHISON suggested asking Ms. Franklin from the ABC Board.                                                                 
                                                                                                                                
CHAIR STOLTZE thought the target  was similar to local control of                                                               
alcohol licensing.                                                                                                              
                                                                                                                                
MR. HUTCHISON answered correct.                                                                                                 
                                                                                                                                
9:44:23 AM                                                                                                                    
MR.  HUTCHISON  said  that Section  10  provides  that  marijuana                                                               
establishments shall  disclose where  they will  operate. Section                                                               
11  says a  municipality may  prohibit a  marijuana establishment                                                               
through enactment  of an ordinance  or voter  initiative. Section                                                               
12  says a  municipality  may enact  ordinances  that govern  the                                                               
time,  place,  manner,  and  number  of  marijuana  establishment                                                               
operations.                                                                                                                     
                                                                                                                                
MR. HUTCHISON continued to explain that in Section 13 a                                                                         
municipality may process applications within the boundaries of                                                                  
the municipality if the board fails to adopt regulations.                                                                       
Section 14 allows a municipality the ability to issue, suspend,                                                                 
or revoke a license. Section 15 allows a municipality to                                                                        
establish a schedule for annual licensing, renewal, and                                                                         
application fees to marijuana establishments. Section 16 says an                                                                
applicant may resubmit their application for license to a local                                                                 
regulatory authority if the board does not issue a license after                                                                
May 24, 2016, and does not provide reason/notice of denial.                                                                     
                                                                                                                                
9:46:39 AM                                                                                                                    
MR. HUTCHISON said Section 17 says if the board does not adopt                                                                  
regulations on time, the local regulatory authority may issue an                                                                
annual license. Section 18 says a local regulatory authority                                                                  
shall issue a license within 90 days after they receive an                                                                      
application. Section 19 says a license issued by a municipality                                                               
shall have the same force and effect as the license issued by                                                                   
the board. Section 20 provides that AS 17.38.110(j) is amended                                                                
to read that a renewed license, issued by a municipality, may be                                                                
issued on an annual basis upon resubmission to the municipality.                                                                
                                                                                                                                
MR. HUTCHISON turned to Section 21 which states that a renewed                                                                  
license may be issued by a local regulatory authority. He said                                                                  
Section 22 is the area people are most interested in because it                                                                 
deals with types of licenses: (1) producer license; (2)                                                                         
processor license; (3) retailer license; (4) boutique producer                                                                  
license; (5) broker license; and (6) home-grower license,                                                                       
testing, notice provisions, license procedures.                                                                                 
                                                                                                                                
9:49:16 AM                                                                                                                    
MR.  HUTCHISON reviewed  basic  licenses  and vertical  licenses,                                                               
such as  producer/processor/retailer licenses. There  is interest                                                               
in  having  a  license  where   one  entity  provides  all  three                                                               
services, hence the vertical license.                                                                                           
                                                                                                                                
MR.  HUTCHISON  showed  a  slide  that  listed  all  the  alcohol                                                               
industry licenses and  predicted there would be  a similar number                                                               
in the marijuana industry.                                                                                                      
                                                                                                                                
MR.  HUTCHISON  went into  detail  about  the marijuana  producer                                                               
license whose  facilities are the  only premises where  more than                                                               
50 plants can  be grown. They can sell to  retailer or processors                                                               
and they have the state tax obligation of $50 per ounce sold.                                                                   
                                                                                                                                
9:51:37 AM                                                                                                                    
MR. HUTCHISON  described the marijuana processor  license for the                                                               
facility that  produces marijuana  infused products. It  does not                                                               
have a tax burden.                                                                                                              
                                                                                                                                
SENATOR COGHILL asked what tinctures are.                                                                                       
                                                                                                                                
MR. HUTCHISON explained that a tincture is an infused solution.                                                                 
                                                                                                                                
9:53:48 AM                                                                                                                    
SENATOR HUGGINS asked  if the state has a  claw-back provision if                                                               
it is losing money on the marketing of marijuana.                                                                               
                                                                                                                                
MR. HUTCHISON explained that the  tax is built into the marijuana                                                               
produced.                                                                                                                       
                                                                                                                                
SENATOR HUGGINS restated  his question and said he  does not want                                                               
the state to subsidize the industry.                                                                                            
                                                                                                                                
9:55:50 AM                                                                                                                    
MR. HUTCHISON replied that they  have had those conversations and                                                               
some  believe  that  will  happen  at first.  The  hope  is  that                                                               
regulations provide positive results.                                                                                           
                                                                                                                                
CHAIR  STOLTZE noted  Commissioner  Hoffbeck  would address  that                                                               
concern.                                                                                                                        
                                                                                                                                
MR. HUTCHISON explained the marijuana  retailer license, which is                                                               
for  a  facility  from  which  any individual  21  or  older  may                                                               
purchase  marijuana. This  licensee  does not  have  a state  tax                                                               
burden, but could be responsible for additional municipal taxes.                                                                
                                                                                                                                
9:58:10 AM                                                                                                                    
MR. HUTCHISON  related information  about the  marijuana boutique                                                               
producer license.  This licensee  is permitted  to grow  not more                                                               
than  50 plants  at one  time  and may  sell only  to a  licensed                                                               
marijuana broker. The  tax burden is absorbed by  the broker. The                                                               
license is to encourage legal grows.                                                                                            
                                                                                                                                
CHAIR  STOLTZE  requested  further  information on  the  cost  of                                                               
licenses for comparable industries.                                                                                             
                                                                                                                                
MR. HUTCHISON  explained that the  board will determine  what the                                                               
licensing fees will be.                                                                                                         
                                                                                                                                
SENATOR HUGGINS said it reminds him of legalizing moonshine.                                                                    
                                                                                                                                
MR. HUTCHISON brought  up the problem of trying  to eliminate the                                                               
black market.                                                                                                                   
                                                                                                                                
CHAIR  STOLTZE said  there has  been  a lot  of discussion  about                                                               
cottage  industries   and  the  possibility  of   large  business                                                               
involvement.                                                                                                                    
                                                                                                                                
10:02:26 AM                                                                                                                   
MR. HUTCHISON explained provisions related  to the home grower in                                                               
an  attempt to  eliminate the  black  market. He  noted a  unique                                                               
provision that provides  that an individual will  obtain a unique                                                               
ID number  that verifies the  grower's age and  Alaska residency.                                                               
It is similar to provisions in Colorado.                                                                                        
                                                                                                                                
CHAIR STOLTZE  asked if the  state has  the technology to  do the                                                               
tracking.                                                                                                                       
                                                                                                                                
MR. HUTCHISON shared Colorado's  procedures using radio frequency                                                               
ID tags and a computer verification system.                                                                                     
                                                                                                                                
He noted that the tax burden  for the home grower license is also                                                               
absorbed by the broker.                                                                                                         
                                                                                                                                
CHAIR  STOLTZE  asked if  it  would  be  a  public process  or  a                                                               
confidential one.                                                                                                               
                                                                                                                                
10:05:16 AM                                                                                                                   
MR.  HUTCHISON  said   the  presumption  is  that   the  data  is                                                               
confidential.                                                                                                                   
                                                                                                                                
CHAIR STOLTZE wished to have an  open discussion about it at some                                                               
point.                                                                                                                          
                                                                                                                                
10:06:00 AM                                                                                                                   
MR.  HUTCHINSON discussed  the  marijuana  broker license,  which                                                               
applies to those  authorized to purchase any  amount of marijuana                                                               
and   marijuana  products   from  licensed   processor,  boutique                                                               
producer  or home  grower  and  to sell  any  amount to  licensed                                                               
processor or  retailer. It is  responsible for the state  tax the                                                               
same as a producer is.                                                                                                          
                                                                                                                                
SENATOR  COGHILL commented  that  this is  where testing  becomes                                                               
important.                                                                                                                      
                                                                                                                                
MR. HUTCHISON agreed.  He described the producer/processor/retail                                                               
license, which allows the retailer  to exclusively sell their own                                                               
product.  They  are  liable  for  the  state  and  municipal  tax                                                               
burdens.                                                                                                                        
                                                                                                                                
CHAIR STOLTZE  said that differs  from the regulation  of alcohol                                                               
which prohibits this type of integration.                                                                                       
                                                                                                                                
MR. HUTCHISON agreed.                                                                                                           
                                                                                                                                
10:08:13 AM                                                                                                                   
MR.  HUTCHISON briefly  mentioned the  producer/processor license                                                               
which is somewhat  the same as the  previously mentioned license.                                                               
He shared the definitions from Sections 23 - 27.                                                                                
                                                                                                                                
He  said Section  28 states  that marijuana  can be  regulated by                                                               
municipalities;  Section  29  discusses  the state  tax  of  $50;                                                               
Section 30 deals with record keeping by producers and brokers.                                                                  
                                                                                                                                
CHAIR STOLTZE  asked if the  metric system  would be used  in the                                                               
industry for weights.                                                                                                           
                                                                                                                                
MR. HUTCHISON said he is open to suggestions.                                                                                   
                                                                                                                                
CHAIR STOLTZE  compared it  to measurements  of alcohol,  such as                                                               
liters.                                                                                                                         
                                                                                                                                
10:10:30 AM                                                                                                                   
MR.  HUTCHINSON said  Section  31 deals  with  penalties for  tax                                                               
deficiencies; Section 32 cleans  up definitions; Section 33 lists                                                               
the statutes  that are repealed;  Section 34 states that  the Act                                                               
takes effect immediately.                                                                                                       
                                                                                                                                
10:12:08 AM                                                                                                                   
DR.  TIM HINTERBERGER,  Member,  Campaign  to Regulate  Marijuana                                                               
Like Alcohol, addressed  recommended changes to SB  62. He voiced                                                               
appreciation for  the work on  the bill and the  incorporation of                                                               
some of the  group's ideas. He spoke in support  of the inclusion                                                               
of  registration  for  home   growers,  boutique  producers,  and                                                               
brokers.                                                                                                                        
                                                                                                                                
He pointed out that he has  detailed several concerns in a letter                                                               
to the committee. The most serious  concern is the deletion of AS                                                               
17.38.070,  which contained  comprehensive legal  protections for                                                               
businesses and  their employees. There  is also concern  with the                                                               
provision  limiting the  amount that  can  be sold  per day,  per                                                               
person. It would require  extensive, intrusive record-keeping and                                                               
would  be   illegal  under  the  initiative   because  individual                                                               
purchase  records cannot  be maintained  by businesses.  There is                                                               
also concern  that the  licensing fees  would increase  the total                                                               
amount of the maximum application  fee to beyond $5,000. There is                                                               
also concern  about revoking  or suspending  registration because                                                               
it is excessively burdensome on businesses.                                                                                     
                                                                                                                                
He pointed out that it is clear  the sponsor is aware of the goal                                                               
of  the initiative  is to  eliminate the  black market  industry.                                                               
Burdensome regulations will  make it more difficult  to meet that                                                               
goal.                                                                                                                           
                                                                                                                                
10:15:30 AM                                                                                                                   
DR. HINTERBERGER proposed several  changes to the current version                                                               
of SB  62. He said  the current version  of the bill  deletes the                                                               
quote  "notwithstanding" in  the paraphernalia  provisions, which                                                               
is  an  important  protection  for  users.  It  also  uses  broad                                                               
language  in   Section  3   regarding  banning   advertising  and                                                               
packaging that  may be  enticing to minors.  He said  he supports                                                               
reasonable  restrictions on  advertising and  efforts to  prevent                                                               
advertising from targeting minors.                                                                                              
                                                                                                                                
He  also noted  that  the  current version  of  the bill  changes                                                               
"registration"  to "license"  throughout.  The word  registration                                                               
was  carefully chosen  in  light of  court  decisions on  federal                                                               
preemption. It  also increases the total  application fees beyond                                                               
the $5,000  cap stated in  the initiative and it  requires rather                                                               
than allows,  a municipality to  establish local  licensing fees.                                                               
That should be optional.                                                                                                        
                                                                                                                                
He continued to say that the  bill limits the amount that retails                                                               
the  amount  retailers can  sell  per  day to  adults,  illegally                                                               
requiring intrusive record-keeping.  To protect personal privacy,                                                               
Measure  2  prohibits  regulations from  requiring  retailers  to                                                               
collect and record personal information about their consumers.                                                                  
                                                                                                                                
10:18:20 AM                                                                                                                   
DR.  HINTERBERGER  continued  to   specify  changes,  noting  the                                                               
requirement of retailers to be  closed from midnight to 8:00 a.m.                                                               
He pointed  out that bars  do not have those  restrictions. Hours                                                               
of  operation   are  best  left   to  the  regulatory   board  or                                                               
localities.  SB  62  forbids  retailers  from  selling  to  other                                                               
licensees.  They should  not be  prohibited  from selling  excess                                                               
inventory  to other  retailers. The  bill says  that a  marijuana                                                               
processor  cannot  sell  to  a  broker,  but  a  broker  may  buy                                                               
marijuana from a processor, which seems like a contradiction.                                                                   
                                                                                                                                
He  addressed community  notices  in the  bill,  which he  deemed                                                               
excessive, especially for home growers.  It says each application                                                               
and transfer  would have to  be posted at the  proposed location,                                                               
which is  unnecessary and would  put small-scale growers  at risk                                                               
for theft. Also, it would allow  a black market grower to protest                                                               
the application  of a regulated  business. Similarly, SB  62 says                                                               
the board may  require three weeks of paid  notices in newspapers                                                               
for applicants and  would be extremely costly. It  says the board                                                               
"shall suspend  or revoke"  a license if  it finds  the continued                                                               
sale  or  manufacture  of  marijuana by  the  licensee  would  be                                                               
contrary to  "the best interests  of the public." He  termed that                                                               
vague  and overly  broad language.  He maintained  that licensees                                                               
need notice  of the rules  and what  is not permitted  and should                                                               
not be subject to personal judgement of the board.                                                                              
                                                                                                                                
10:20:59 AM                                                                                                                   
DR.  HINTERBERGER continued  to specify  changes. He  said SB  62                                                               
says the board  "shall suspend or revoke a licensee"  if it finds                                                               
that  the licensee  has failed  to correct  a defect  that is  in                                                               
violation  of  "other  applicable   law."  Given  that  marijuana                                                               
cultivation  and  sales  violate  federal  law,  this  should  be                                                               
revised to  clearly apply  only to  state law.  He noted  that in                                                               
several places  SB 62 says that  a suspension or revocation  of a                                                               
regulation  "is  required"   by  the  board.  It   should  say  a                                                               
revocation  "should  be  allowed."  He stressed  that  the  board                                                               
should  have discretion  to impose  a  reasonable penalty  rather                                                               
than be forced to suspend or revoke a license.                                                                                  
                                                                                                                                
He maintained that SB 62  grants the board overly broad authority                                                               
to "impose conditions  or restrictions on a license."  SB 62 says                                                               
that  only a  licensee may  have a  direct or  indirect financial                                                               
interest in  a license, which would  create unnecessary obstacles                                                               
to   raising  capital.   SB   62   repeals  comprehensive   legal                                                               
protections  for marijuana  establishments  and  their staff  and                                                               
replacing them  with language that  is problematic. He  said that                                                               
the bill was  crafted to make marijuana  establishments and their                                                               
staff's conduct  lawful and exempt from  criminal penalties under                                                               
state law.  This proposal would  delete such  comprehensive legal                                                               
protections   and  replace   them   with  sections   "authorizing                                                               
conduct."  This  would  make  the   law  more  susceptible  to  a                                                               
preemption challenge.                                                                                                           
                                                                                                                                
He offered to answer questions.                                                                                                 
                                                                                                                                
10:23:11 AM                                                                                                                   
CHAIR STOLTZE  announced that SB 24  and SB 4 would  not be heard                                                               
today.                                                                                                                          
                                                                                                                                
10:25:35 AM                                                                                                                   
BRUCE  SCHULTE, Board  Member, Coalition  for Responsible  Campus                                                               
Legislation, testified on  SB 62. He voiced  appreciation for the                                                               
efforts of committee  members and staff on the bill.  He noted he                                                               
has submitted  written comments.  He first  discussed an  item he                                                               
supports,  such  as  the addition  of  more  license  categories,                                                               
especially the integrated  licenses. He said he  can envision the                                                               
need for  more licenses  in the future  and suggested  defining a                                                               
broader framework for the licenses.                                                                                             
                                                                                                                                
10:28:00 AM                                                                                                                   
MR.  SCHULTE   opined  that   confidentiality  is   an  important                                                               
consideration regarding record-keeping and reporting.                                                                           
                                                                                                                                
CHAIR STOLTZE asked to what degree he was considering privacy.                                                                  
                                                                                                                                
MR. SCHULTE  specified that he  was thinking of  the requirements                                                               
for reporting and record-keeping, not licensing.                                                                                
                                                                                                                                
CHAIR STOLTZE noted community concerns about reporting.                                                                         
                                                                                                                                
MR. SCHULTE suggested there could be a balance.                                                                                 
                                                                                                                                
CHAIR  STOLTZE asked  if the  state or  local communities  should                                                               
determine privacy conditions.                                                                                                   
                                                                                                                                
MR.  SCHULTE   said  he  thought   it  should  be  up   to  local                                                               
communities.                                                                                                                    
                                                                                                                                
10:30:23 AM                                                                                                                   
MR. SCHULTE turned  to the topic of revenue  sharing. He provided                                                               
a suggestion  to retain the  provision in the initiative  that 50                                                               
percent of  the application fee  be given to  the municipalities.                                                               
He thought that removing that  provision would increase the total                                                               
cost of licensing application fees above $5,000.                                                                                
                                                                                                                                
MR. SCHULTE  addressed the stipulation that  a municipality shall                                                               
establish both  a regulatory board and  regulations. He suggested                                                               
that  be  optional  and  hoped the  state  regulations  would  be                                                               
adequate.                                                                                                                       
                                                                                                                                
He  echoed  Dr. Hinterberger's  opposition  to  limiting the  one                                                               
ounce limit at the retail level.                                                                                                
                                                                                                                                
CHAIR STOLTZE  asked if he  had an opinion  about the use  of the                                                               
metric system for measurements.                                                                                                 
                                                                                                                                
10:33:40 AM                                                                                                                   
MR. SCHULTE replied that historically  marijuana has been sold in                                                               
ounces and grams.                                                                                                               
                                                                                                                                
CHAIR  STOLTZE  countered  that  doses of  THC  are  measured  in                                                               
milligrams.                                                                                                                     
                                                                                                                                
MR. SCHULTE  said that is  correct for purposes of  measuring for                                                               
potency and  for labeling; for  marketing and  commerce purposes,                                                               
it is typically ounces and grams.                                                                                               
                                                                                                                                
CHAIR STOLTZE  said his concern  is for regulation,  taxing, etc.                                                               
He said  Colorado has the  ounce-per-day limit for  retailers. He                                                               
wondered if Mr. Schulte disagreed with that.                                                                                    
                                                                                                                                
10:35:06 AM                                                                                                                   
MR. SCHULTE answered that Colorado  has a good model, however, it                                                               
is problematic to actually put  that provision in place. In order                                                               
to  guarantee that  one individual  is not  buying more  than one                                                               
ounce  per  day,  onerous,   intrusive  record-keeping  would  be                                                               
needed.                                                                                                                         
                                                                                                                                
CHAIR  STOLTZE  contrasted  that with  alcohol  requirements.  He                                                               
asked if marijuana has any parallels to those.                                                                                  
                                                                                                                                
MR. SCHULTE said not that he is aware of.                                                                                       
                                                                                                                                
CHAIR  STOLTZE  said  he  was defaulting  to  "regulate  it  like                                                               
alcohol."                                                                                                                       
                                                                                                                                
MR.  SCHULTE  said  he  does  not dispute  that.  He  noted  that                                                               
inebriates  are  recognizable,  whereas  stoned  persons  do  not                                                               
present the same dynamic.                                                                                                       
                                                                                                                                
10:37:06 AM                                                                                                                   
CHAIR STOLTZE summarized his concern.                                                                                           
                                                                                                                                
MR. SCHULTE agreed it was a valid concern.                                                                                      
                                                                                                                                
He continued with  a concern about the board's ability  to deny a                                                               
license   under  many   circumstances.   He   agreed  that   some                                                               
circumstances would  merit denial,  however, the  wording "shall"                                                               
limits  the   board  from  applying  other   sanctions.  He  also                                                               
maintained that  the wording  "not in the  best interests  of the                                                               
public" is too vague.                                                                                                           
                                                                                                                                
CHAIR STOLTZE agreed it is subjective.                                                                                          
                                                                                                                                
MR.  SCHULTE hoped  that  the statutes  would  define an  overall                                                               
regulatory  environment  and leave  some  of  the detail  to  the                                                               
regulatory board.                                                                                                               
                                                                                                                                
10:39:49 AM                                                                                                                   
MR. SCHULTE  addressed a concern regarding  prohibitive financial                                                               
interest. He  said Alaska-based businesses support  the intent of                                                               
keeping the  business in Alaska,  but there are  situations where                                                               
out-of-state investors  will be involved. He  provided an example                                                               
of  the expense  of  a testing  lab and  the  potential need  for                                                               
outside  investors.  He   said  he  does  not   have  a  specific                                                               
recommendation for changing this provision.                                                                                     
                                                                                                                                
MR.  SCHULTE noted  a concern  during the  campaign to  keep "big                                                               
marijuana" out of  the Alaska industry. He said  he supports that                                                               
but also recognizes  the need for adequate  financing. He pointed                                                               
out that interstate commerce regulations  may impact this section                                                               
of the bill.                                                                                                                    
                                                                                                                                
10:42:32 AM                                                                                                                   
SENATOR  COGHILL  opined  that  financing  is  an  issue,  as  is                                                               
interstate   commerce  and   transportation,   when  planning   a                                                               
regulatory scheme.                                                                                                              
                                                                                                                                
CHAIR  STOLTZE  asked  if  there  should  be  an  economic  value                                                               
attached to licenses and whether they should be transferrable.                                                                  
                                                                                                                                
10:43:36 AM                                                                                                                   
MR. SCHULTE answered that marijuana  licensing should not be like                                                               
alcohol licensing, due to potential expense.                                                                                    
                                                                                                                                
CHAIR STOLTZE asked  if the initiative has an intent  to limit or                                                               
prohibit licenses from being owned outside Alaska.                                                                              
                                                                                                                                
MR. SCHULTE  could not recall  seeing that specific  provision in                                                               
the  initiative.  He  said  he   is  speaking  from  an  industry                                                               
perspective.                                                                                                                    
                                                                                                                                
CHAIR  STOLTZE  thought  the  intent  was  to  have  Alaska-based                                                               
businesses.                                                                                                                     
                                                                                                                                
10:45:16 AM                                                                                                                   
SENATOR  WIELECHOWSKI  stated  that   it  should  be  for  Alaska                                                               
businesses and Alaska residents.                                                                                                
                                                                                                                                
SENATOR HUGGINS asked  if pilots and others  should be prohibited                                                               
from buying marijuana.                                                                                                          
                                                                                                                                
MR.  SCHULTE  answered   that  he  is  a   commercial  pilot  and                                                               
recognizes the  limits in  respect to  marijuana use  required by                                                               
his employment.  He maintained  it is up  to the  individual, not                                                               
the retailer. It is a personal choice.                                                                                          
                                                                                                                                
Responding to  a previous question, Mr.  Schulte defined tincture                                                               
as a  diluted form  of hash  oil. He  said it  is often  found in                                                               
medical  applications. He  referred to  a special  on CNN  on the                                                               
topic of tinctures.                                                                                                             
                                                                                                                                
10:48:07 AM                                                                                                                   
CHAIR STOLTZE asked Mr. Schulte  to provide commentary at a later                                                               
date on insurance, as it relates to the marijuana industry.                                                                     
                                                                                                                                
CHAIR STOLTZE held SB 62 in committee.                                                                                          
                                                                                                                                
10:49:22 AM                                                                                                                   
There being  no further  business to  come before  the committee,                                                               
Chair  Stoltze  adjourned  the   Senate  State  Affairs  Standing                                                               
Committee hearing at 10:49 a.m.                                                                                                 
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
Resume - Police Standards Council - Gustaf Sandahl.pdf SSTA 3/5/2015 9:00:00 AM
Confirmation
Resume - Police Standards Council - Rebecca Hamon.pdf SSTA 3/5/2015 9:00:00 AM
Confirmation
SB62 Sponsor Statement.pdf SSTA 3/5/2015 9:00:00 AM
SB 62
SB62 Sponsor Presentation 3-5-15.pdf SSTA 3/5/2015 9:00:00 AM
SB 62
SB62 Sectional Analysis.pdf SSTA 3/5/2015 9:00:00 AM
SB 62
SB62 Fiscal Note DOR-TAX 2-26-15.pdf SSTA 3/5/2015 9:00:00 AM
SB 62
SB62 Fiscal Note DOA-OAH 3-2-15.pdf SSTA 3/5/2015 9:00:00 AM
SB 62
SB62 Fiscal Note DEC-FSS 2-27-15.pdf SSTA 3/5/2015 9:00:00 AM
SB 62
SB62 Fiscal Note DEC-EHL 2-27-15.pdf SSTA 3/5/2015 9:00:00 AM
SB 62
SB62 Fiscal Note DCCED-ABC 2-27-15.pdf SSTA 3/5/2015 9:00:00 AM
SB 62
SB24 Fiscal Note LEG-SESS 3-2-15.pdf SSTA 3/5/2015 9:00:00 AM
SB 24
SB24 Sponsor Statement.pdf SSTA 3/5/2015 9:00:00 AM
SB 24
SB24 LRS Report on Subcontractors.pdf SSTA 3/5/2015 9:00:00 AM
SB 24
SB24 Recommendations by Ethics Office.pdf SSTA 3/5/2015 9:00:00 AM
SB 24
SB24 Previous SCLE Minutes - Committee Action.pdf SSTA 3/5/2015 9:00:00 AM
SB 24
SB24 Previous SCLE Advisory Opinions.pdf SSTA 3/5/2015 9:00:00 AM
SB 24
SB4 Sponsor Statement.pdf SSTA 3/5/2015 9:00:00 AM
SB 4
SB4 Explanation of Changes.pdf SSTA 3/5/2015 9:00:00 AM
SB 4
SB4 Fiscal Note DOA-APOC 2-26-15.pdf SSTA 3/5/2015 9:00:00 AM
SB 4
SB4 Supporting Document - APOC Boards and Commisions POFD Timeline.pdf SSTA 3/5/2015 9:00:00 AM
SB 4
SB4 Supporting Document - APOC Filing Timeline POFD.pdf SSTA 3/5/2015 9:00:00 AM
SB 4
SB4 Supporting Document - APOC Who Must File.pdf SSTA 3/5/2015 9:00:00 AM
SB 4
SB62 CRCL Comments on Version E - 3-4-15.pdf SSTA 3/5/2015 9:00:00 AM
SB 62
SB 62 Comments on Version E by Dr. Hinterberger.pdf SSTA 3/5/2015 9:00:00 AM
SB 62