Legislature(2021 - 2022)BARNES 124
04/01/2021 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing(s): Regulatory Commission of Alaska | |
| HJR14 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | HJR 14 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
April 1, 2021
8:01 a.m.
MEMBERS PRESENT
Representative Sara Hannan, Co-Chair
Representative Calvin Schrage, Co-Chair
Representative Harriet Drummond
Representative Mike Prax
Representative Ken McCarty
Representative Kevin McCabe
MEMBERS ABSENT
Representative Josiah Patkotak, Vice Chair
COMMITTEE CALENDAR
CONFIRMATION HEARING(S):
Regulatory Commission of Alaska
Bob Pickett - Anchorage, Alaska
Keith Kurber II - Fairbanks, Alaska
- CONFIRMATION(S) ADVANCED
HOUSE JOINT RESOLUTION NO. 14
Supporting the passage by the United States Congress of the SAFE
Banking Act of 2019, sec. 110606 of the Heroes Act, or similar
legislation relating to cannabis-related legitimate businesses'
access to financial services.
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HJR 14
SHORT TITLE: RESOLUTION: FED SAFE BANKING ACT/CANNABIS
SPONSOR(s): REPRESENTATIVE(s) RASMUSSEN
03/05/21 (H) READ THE FIRST TIME - REFERRALS
03/05/21 (H) CRA
04/01/21 (H) CRA AT 8:00 AM BARNES 124
WITNESS REGISTER
BOB PICKETT, Appointee
Regulatory Commission of Alaska
Anchorage, Alaska
POSITION STATEMENT: Testified as appointee to the Regulatory
Commission of Alaska.
KEITH KURBER
Appointee, Regulatory Commission of Alaska
Fairbanks, Alaska
POSITION STATEMENT: Testified as appointee to the Regulatory
Commission of Alaska.
JIMI CASH
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of the appointment of
Keith Kurber to the Regulatory Commission of Alaska.
ALYSSA SAPPENFIELD, Energy Analyst
Alaska Public Interest Research Group (AKPIRG)
Anchorage, Alaska
POSITION STATEMENT: Expressed concerns regarding the
appointment of Keith Kurber to the Regulatory Commission of
Alaska.
REPRESENTATIVE RASMUSSEN
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As prime sponsor, presented HJR 14.
MICHAEL BRONSTEIN, President
American Trade Association for Cannabis and Hemp
Washington, D.C.
POSITION STATEMENT: Testified in support of HJR 14.
SCOTT BERGMANN, Staff
Representative Sara Rasmussen
Juneau, Alaska
POSITION STATEMENT: Presented the sponsor statement to HJR 14
on behalf of Representative Rasmussen, prime sponsor.
LACY WILCOX, President
Alaska Marijuana Industry Association
No address provided
POSITION STATEMENT: Testified in support of HJR 14.
MICHAEL MARTIN, President
Alaska Bankers Association
No address provided
POSITION STATEMENT: Testified in support of HJR 14.
JANA WELGZIN, Owner
JDW Counsel
No address provided
POSITION STATEMENT: Testified in support of HJR 14.
RYAN TUNSETH, Owner
East Rip Dispensary
Kenai, Alaska
POSITION STATEMENT: Testified in support of HJR 14.
PAUL V. DISDIER, General Manager
The Fireweed Factory
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HJR 14.
ACTION NARRATIVE
8:01:34 AM
CO-CHAIR SARA HANNAN called the House Community and Regional
Affairs Standing Committee meeting to order at 8:01 a.m.
Representatives Drummond, McCabe, Schrage, and Hannan were
present at the call to order. Representatives Prax and McCarty
arrived as the meeting was in progress.
^CONFIRMATION HEARING(S): REGULATORY COMMISSION OF ALASKA
CONFIRMATION HEARING(S): REGULATORY COMMISSION OF ALASKA
8:02:26 AM
CO-CHAIR HANNAN announced that the first order of business would
be the confirmation hearings on the governor's appointees to the
Regulatory Commission of Alaska.
8:05:05 AM
BOB PICKETT, Appointee, Regulatory Commission of Alaska,
testified as appointee to the Regulatory Commission of Alaska
(RCA). He noted that he has served as chair of the RCA since
March 2008. He offered his educational and work experience
available on his resume [included in the committee packet].
8:07:25 AM
MR. PICKETT, in response to a question from Representative Prax
regarding the workload of the RCA, confirmed that the RCA has
been busy. He said the legislature has established a strict
statutory regime of deadlines. He related that the past year
has been challenging with acquisition of the Anchorage Municipal
Light and Power Electric Utility assess by Chugach Electric and
Harvest BP pipeline transactions. Additionally, Senate Bill 123
was passed last year [during the Thirty-First Alaska State
Legislature], which tasked the commission to establish a system
of regulations for an electric reliability organization, and
focus has been on the railbelt. In response to a follow-up
question, he said with passage of the telecom deregulation bill
and once regulatory activities related to Senate Bill 123 are
complete, the RCA will be "in fairly good shape." He said there
have been a tremendous amount of capital expenditures in
electric utilities, particularly in the railbelt, but also with
natural gas storage on the Kenai Peninsula. He said he does not
anticipate anything close to that. He said the idea of Senate
Bill 123 was to have an electrical liability organization - yet
to be established - oversee systemwide, integrated resource
planning.
8:10:38 AM
MR. PICKETT, in response to a question from Co-Chair Schrage
regarding what is required in order to carry out the duties of
the RCA commissioner, indicated there are a variety of
backgrounds suited to the job, and statute lists several areas
of expertise required in order to serve as a commissioner. One
area he advised is underemphasized is having experience working
in a group setting and making decisions collegially on
controversial and technical issues. He said this is his third,
six-year term, so he has undergone the confirmation process a
number of times and interacted with various governors, thus
having experience [with collaboration and compromise].
8:12:15 AM
MR. PICKETT, in response to a question from Representative
McCarty regarding the hours spent by a commissioner, said works
between 10.5 and 12.5 hours per day, driven by the work flow.
As state employees, the commissioners are paid for 37.5 hours
per week, but he rarely sees commissioners work only 37.5 hours.
In response to a follow-up question, he confirmed that the RCA
has technical staff in the areas of engineering, finances, and
law. He said commissioners must come to conclusions about the
information they read, but they do have staff to help them.
8:14:40 AM
REPRESENTATIVE DRUMMOND noted that the position of commissioner
on the RCA is a highly paid one quite different from any other
boards and commissions.
MR. PICKETT confirmed that is correct. In response to a
question from Representative Drummond, he agreed that experience
in local government is beneficial to serving on the RCA. He
said he has worked with local governments statewide in terms of
housing, technical, and infrastructure programs. He related
there are local governments that are holders of certificates of
public convenience and necessity.
8:16:33 AM
CO-CHAIR HANNAN opened public testimony on the confirmation of
Mr. Pickett, governor's appointee to the Alaska Regulatory
Commission. After ascertaining that there was no one who wished
to testify, she closed public testimony.
CO-CHAIR HANNAN related some of the requisites to serve as
commissioner, as found within AS 42.04.020(a), which read as
follows:
(a) The commission consists of five commissioners
appointed by the governor and confirmed by the
legislature in joint session. To qualify for
appointment as a commissioner, a person must be a
member in good standing of the Alaska Bar Association
or have a degree from an accredited college or
university with a major in engineering, finance,
economics, accounting, business administration, or
public administration. Actual experience for a period
of five years in the practice of law or in the field
of engineering, finance, economics, accounting,
business administration, or public administration is
equivalent to a degree.
8:18:00 AM
KEITH KURBER II, Appointee, Regulatory Commission of Alaska,
gave his biographical information [included in the committee
packet]. He stated that serving on the RCA would allow him to
use his training and life experiences to serve the state. He
imparted that his experience has prepared him to analyze complex
issues and make critical decisions, often under pressure. He
opined that being from Fairbanks and having spent time in the
Matanuska-Susitna ("Mat-Su") Valley and rural Alaska during his
military career would be beneficial in serving on the RCA.
8:21:14 AM
REPRESENTATIVE MCCABE expressed thanks for Mr. Kurber's service
and support for his appointment.
8:21:48 AM
MR. KURBER, in response to a question from Representative
Drummond as to whether he meets the qualifications for
commissioner as listed in [previously cited] statute, listed the
following as meeting that standard: Bachelor of Science from
West Point, to meet the Engineering expectation; and 30 years of
military service and 6 years of public safety work, to meet the
5 years of actual experience. He said the curriculum at West
Point was very proscribed. At the time he attended, there were
no majors; instead, there were concentrations. His transcripts
show that out of the 145 credits he earned while at West Point,
75 were in science, engineering, or mathematics. He further
noted that during his brigade command experience, he "became
aware of the needs of essentially running a small city," in
terms of maintenance of sewage and electricity, for example.
8:26:47 AM
MR. KURBER, in response to a follow-up question from
Representative Drummond as to whether Mr. Kurber is willing to
move from Fairbanks to Anchorage to serve as commissioner,
stated that as has been done by former commissioners, it is his
understanding that he could serve from Fairbanks; however, he
emphasized that he is willing to do whatever it takes to
complete his mission.
8:29:10 AM
MR. KURBER, in response to a question from Co-Chair Schrage as
to what experience he had in regulatory, legal, or engineering
matters more recent than 30 years ago, said his most recent
experience was as commander at Fort Richardson from 2004-2007,
and his last appointment was in 2009. He said as a citizen of
Alaska, he is "acutely interested in utility issues," because
Alaska's extreme weather conditions can disrupt power sources.
He mentioned calls being dropped for no other reason than being
placed in Alaska. He pointed to his experience at West Point as
teaching him to have the ability to "speak the language" in
terms of being able to interact with subject matter experts with
enough understanding to ask pertinent questions and make
informed decisions.
8:32:48 AM
MR. KURBER, in response to a follow-up question, said his
interest in utilities to date has been in having enough power to
power a base camp in other countries and attending annual
meetings of local electric utilities to have at least a base
knowledge. He said while he has less experience than some on
the RCA, he is no less caring, because he is a resident, who
wants to "keep the lights on."
8:33:59 AM
MR. KURBER, in response to a question from Representative Prax
about similarities between Mr. Kurber's role in the military and
in the RCA, said he brings to the commission the ability to
engage with subject matter experts, ask questions, and make
decisions based on the information gained. He talked about the
need for collaboration and the rule to work one-on-one with
commissioners to avoid creating a quorum. He described a
willingness by veteran RCA commissioners to share information
while respecting the unique abilities brought by each new
commissioner, who may cycle in to serve a six-year term.
8:36:35 AM
MR. KURBER, in response to a request from Representative McCabe
to speak about military commander experience with legal issues
and regulations, said typically a battalion commander has
responsibility for 300-600 people, while brigade-level
commanders oversee up to 5,000. A commander has the
responsibility not only for nonjudicial punishment, but also the
execution of court martial, which requires engagement in areas
of law. He said his primary experience in legal matters has
been in purchasing a house, being a commander, working as a
public safety officer at the Fairbanks International Airport,
and pointing people to the right legal support when he served as
a pastor. In response to a follow-up question, he confirmed
that regulations and statute have been part of his work, both in
military and civilian vocations. He said he attended the Alaska
Police Academy in Sitka, where he took part in an exercise
designed to give him an understanding of the Constitution of the
State of Alaska. In response to another question from
Representative McCabe, he said he started with the RCA on March
1, 2021.
8:43:06 AM
MR. KURBER, in response to a question from Co-Chair Hannan
regarding Mr. Kurber's interest in serving on the RCA, said he
was asked to serve on the RCA, and after considering his
qualifications and the requirements of the appointment, he
thought serving would be make use of his past experience. He
emphasized the collaboration among all ranks in the military and
expressed that that mirrors his experience on the commission
thus far.
8:46:00 AM
MR. KURBER, in response to a question from Representative
McCarty as to concerns that need addressing, echoed the
statements of Mr. Pickett that the issue of the regulatory
demands of Senate Bill 123 is one of the largest facing the RCA.
He also mentioned the utilities for the railbelt area.
8:48:23 AM
MR. KURBER, in response to a question from Representative
Drummond regarding equity of Internet access statewide, said he
just became aware of the U.S. Supreme Court's ruling that
entities such as the RCA can regulate broadband utilities. He
agreed that broadband access is a key issue in Alaska, based on
the feedback he has received thus far. He said he imagined
there would be interaction between the RCA and the legislature
on this issue going forward. He mentioned news about expanding
5G networks along the Parks Highway.
REPRESENTATIVE DRUMMOND said she hopes broadband remains a
priority issue for the RCA.
8:51:52 AM
CO-CHAIR HANNAN opened public testimony on the confirmation of
Keith Kurber, governor's appointee to the Alaska Regulatory
Commission.
8:52:02 AM
JIMI CASH, noted that although he is a member of the Fairbanks
North Star Borough Assembly, he was speaking on behalf himself
in support of Mr. Kurber. He named some of Mr. Kurber's
accomplishments listed in the submitted materials, noting that
the appointee got his doctorate. He highlighted that Mr.
Kurber's time in the military, public safety, and ministry were
all spent in service of others. Mr. Cash said Mr. Kurber has
the heart for service and a drive to learn, grow, achieve, and
meet challenges. He opined that all these attributes make Mr.
Kurber a good candidate for commissioner on the RCA.
8:54:24 AM
ALYSSA SAPPENFIELD, Energy Analyst, Alaska Public Interest
Research Group (AKPIRG), offered her understanding that AkPIRG
is the only nongovernmental entity focused on addressing
Alaska's specific consumer interest issues. She said the
executive director of AkPIRG serves on the Railbelt Reliability
Council Implementation Committee. Ms. Sappenfield expressed
concern with the appointment of Mr. Kurber to the RCA. She said
Mr. Kurber would be one of only five commissioners, each serving
a six-year term. She said, as heard previously, that the
qualifications under statute to serve as a commissioner are
quite specific, and she opined that "the importance of these
appointments cannot be overstated." She said the RCA oversees
matters where millions of dollars are at stake and critical
issues of regulatory policy arise. She mentioned AkPIRG's role
in overseeing the aforementioned utility BP Hilcorp transfer
this December and the entity's current work in establishing
technical and procedural rules for the state's Electric
Reliability Organization, which is tasked with developing and
enforcing systemwide electric utility reliability standards and
crafting an integrative resource plan that is affordable and
accessible for all Alaskans.
MS. SAPPENFIELD indicated that the issues addressed by the RCA
involve law, economics, accounting, finance, and engineering and
can establish critical legal precedence for legal cases. She
continued as follows:
Reaching these decisions often means considering
complex and competing interests of the concerned
parties in pursuit of outcomes which protect and
promote overall public interest. Each decision, which
can be appealed to ... state and federal court has to
be supported by an evidentiary record and applicable
laws and regulations. These technical qualifications
required by statute for RCA commissioners are not just
sensible or superfluous; we absolutely need science-
and evidence-based regulators.
MS. SAPPENFIELD said Mr. Kurber's testimony before the House
Finance Committee on March 30, 2021, exacerbated her original
concerns. She opined that Mr. Kurber's qualifications do not
meet the statutory requirements for commissioners and are
tenuous. She said he has only 31 days of regulatory experience,
those being the 31 days he has spent with the RCA. She said
that given the complexity of the work of the RCA, the statutory
requirements are a minimum.
8:58:27 AM
CO-CHAIR HANNAN closed public testimony.
[The confirmations of Bob Pickett and Keith Kurber, governor's
appointees to the Regulatory Commission of Alaska were
advanced.]
8:58:36 AM
The committee took an at-ease from 8:58 a.m. to 9:01 a.m.
HJR 14-RESOLUTION: FED SAFE BANKING ACT/CANNABIS
9:01:08 AM
CO-CHAIR HANNAN announced that the final order of business would
be HOUSE JOINT RESOLUTION NO. 14, Supporting the passage by the
United States Congress of the SAFE Banking Act of 2019, sec.
110606 of the Heroes Act, or similar legislation relating to
cannabis-related legitimate businesses' access to financial
services.
9:01:43 AM
REPRESENTATIVE RASMUSSEN, Alaska State Legislature, as prime
sponsor, presented HJR 14. About a year ago, she related, her
husband, who is in the mortgage industry, had commented that
owners of cannabis companies cannot qualify for mortgages. She
said that seemed odd, since Alaska, with passage of Ballot
Measure 2 in 2013, had legalized the recreational use of
marijuana. She said she assumed that meant cannabis companies
were legitimate businesses. She said HJR 14 was created with
the idea of creating safety measures and more traditional
financing options. She said, should HJR 14 pass, Alaska would
become the first state in the nation to put forward "a
resolution for safe banking."
9:04:07 AM
MICHAEL BRONSTEIN, President, American Trade Association for
Cannabis and Hemp, expressed that the matter addressed by HJR 14
is urgent and important; it is not [only] about industry
accommodation but about public health and safety and the people
working in the industry. Currently, 40 percent of the
population lives in a state that has legalized adult use of
cannabis, not including medical marijuana use. He said there
are approximately 300,000 employees that work in the industry.
He explained that under federal law, cannabis businesses are not
allowed to bank. Keeping money in banks allows it to be traced,
which is why there is broad and bi-partisan support for "safe
banking," including a letter from Alaska's attorney general to
U.S. Congress.
9:06:39 AM
MR. BRONSTEIN mentioned the "Safe Banking Act," which he said
would "prohibit penalizing or prohibiting a financial
institution from providing services to a legitimately sanctioned
and regulated businesses" or "an associated cannabis business."
He said most concerning is that employees of the cannabis
industry are being denied mortgages and loans, which threatens
"the economic integrity and the individual ability of workers"
in the industry. He said there are ramifications well beyond
the industry in terms of having to do payroll on a cash basis.
He opined that Alaska's leadership on this issue is important
nationally. He said this is a simple issue and is separate from
the issue of whether or not cannabis should be legal. This is
about providing safe banking services. He concluded his
testimony by stating full support for HJR 14.
9:11:36 AM
REPRESENTATIVE MCCARTY said this reminds him of Elliot Ness, who
was with the U.S. Treasury and was focused on the issue of Al
Capone and unaccounted for money during the prohibition. He
suggested the federal government was Al Capone in the current
situation and "we're trying to rectify the situation," and he
asked Mr. Bronstein if that was an accurate summation of the
situation.
MR. BRONSTEIN replied that the [federal] government "has a lot
that they can do on this" and knows that there is "congressional
relief." He said the cannabis industry pays taxes, just like
other businesses, and it wants to be treated like other
businesses. Not having access to banking is not tenable. He
opined that having broad-based statewide support [for HJR 14]
will help point the federal government in the right direction.
In response to Representative McCarty, he explained that HJR 14
would send a strong message to Congress. He agreed that "we
will be waiting on Congress," but expressed his hope that it
would not be much longer.
REPRESENTATIVE MCCARTY noted that he has constituents and
friends in the industry who say they are legally sending money
out of the country to banks to secure the money. He
acknowledged that those employees in the industry are not being
acknowledged for home loans, for example, because there is not a
payroll that is recognized. He said, "I appreciate the efforts
here."
9:16:12 AM
REPRESENTATIVE PRAX surmised that "the nuts of the issue" is
whether legalizing cannabis has been detrimental to society. He
proffered that if so, "I guess we wouldn't want to make
operating the business easier"; if not, then "we're driving the
business back underground if we're not recognizing the income
...." He asked Mr. Bronstein if he had heard of any detrimental
effects resulting from the legalization of cannabis.
9:17:35 AM
The committee took an at-ease from 9:17 a.m. to 9:18 a.m.
9:18:11 AM
REPRESENTATIVE RASMUSSEN said 37 states have legalized medical
and/or recreational use of cannabis, and 53 percent of those who
voted Ballot Measure 2 supported legalizing recreational use in
of cannabis in Alaska. She concluded, "So, this issue is
basically just to address the safety for employees and owners
and, honestly, any support businesses for the industry. People
are dealing with tens of thousands to hundreds of thousands of
dollars in cash." She noted that there are only two drop-off
points in the state where it is possible to "put the money
toward taxes."
9:19:38 AM
REPRESENTATIVE PRAX, in response to Co-Chair Hannan, offered his
understanding that the question of the federal government is
whether cannabis is detrimental to society. He indicated that
since 37 states have said it is not detrimental then there is no
argument; therefore, restricting business by not allowing those
in the cannabis industry into the banking system makes no sense.
9:20:36 AM
CO-CHAIR HANNAN noted that Mr. Bronstein had a previous
commitment and was no longer available for questions.
9:21:16 AM
The committee took an at-ease from 9:21 a.m. to 9:23 a.m.
9:23:12 AM
SCOTT BERGMANN, Staff, Representative Sara Rasmussen, on behalf
of Representative Rasmussen, prime sponsor of HJR 14,
paraphrased the sponsor statement, which read as follows:
Since 1996, 33 states comprising 68 percent of the
nation's population have legalized cannabis for
medical or adult use. Despite this ever-growing voter
preference, current federal law continues to prevent
banks from offering products and services to these
businesses without fear of federal sanctions. Leaving
the cannabis industry without access to banks presents
serious public safety, revenue administration, and
legal compliance concerns.
Access to licensed and reputable financial services is
important for the following reasons:
? A high level of cash handling in the cannabis
industry puts consumers, businesses, and public
authorities at increased risk of contracting the
coronavirus.
? Criminals and unscrupulous individuals are
attracted to cash heavy businesses; access to banking
services would reduce criminal activity in the
industry and deter opportunistic lending and
investment.
? Reduced hours and drive-through only deposit
options (due to COVID-19) at banks create an undue
burden on industry workers who are paid in cash.
? Inspections and audits by regulators, tax
collectors, and state and federal agencies would be
streamlined.
? Service providers that work with the legal
cannabis industry would be protected from being
charged with financial crimes.
House Joint Resolution 14 urges the Federal Government
to pass SAFE Banking Act of 2019, sec. 110606 of the
Heroes Act, or similar legislation that would provide
a safe harbor for depository institutions that provide
financial products or services to legal cannabis-
related businesses or service providers in states that
have implemented laws and regulations legalizing
cannabis for medical or adult use.
9:25:04 AM
REPRESENTATIVE DRUMMOND remarked that alcohol has been more of a
problem in her district than cannabis has. She said the taxes
paid on alcohol in Alaska do not even begin to cover related
social ills and crime. She then talked about a cannabis testing
company in Fairbanks having to move to another city because the
Wells Fargo business in the same building threatened to call its
mortgage.
9:29:50 AM
REPRESENTATIVE MCCABE commented that "the genie's out of the
bottle" as far as the legalization of marijuana in Alaska; now
the legislature needs to fix the banking issue. He noted the
significant cross section of those in support of HJR 14 - not
just political parties, but in age groups - and he encouraged
taking action to address anything that impedes business.
9:31:19 AM
REPRESENTATIVE RASMUSSEN noted that the co-sponsorship is evenly
divided among parties.
9:32:14 AM
LACY WILCOX, President, Alaska Marijuana Industry Association,
testified in support of HJR 14. She said a resolution in
support of the Safe Banking Act sends a message that the Alaska
State Legislature cares about public health and safety. She
said regardless of how members may feel about legalized cannabis
in Alaska, "access to financial services is paramount in
protecting Alaskans from the risks associated with large volumes
of cash" and is a tool for law enforcement, tax collectors,
regulators, and auditors "to identify less-than-honorable
industry participants."
MS. WILCOX reported that currently there are over 400 business
entities in Alaska's cannabis industry; those entities represent
over 500 cannabis licenses, thousands of shareholders,
investors, and about 10,000 employees. Those employees are
finding obstacles when attempting to buy a house or car, take
out a loan to further their education, or apply for most any
other financial service. She pointed out that many ancillary
services, such as general contractors, plumbers, electricians,
utility companies, and supply vendors have found it difficult to
work with the industry because often large payments for buildout
services have to be creatively converted to money orders to not
put in jeopardy the financial situation of those ancillary
services. Mr. Wilcox said some businesses in the industry would
like to expand or offer health benefits and retirement programs
to their staff, but cannot do so without access to financial
services.
MS. WILCOX imparted a message she has heard repeatedly from
those who work in financial services that they would love to
bank the cannabis industry's money and offer merchant services,
"but the risks associated to them personally change what reality
allows." She said the Safe Banking Act would provide assurances
to them and relief from criminal liability. The Act seeks to
provide safe harbor to get cash off the streets and "safely into
the vault."
9:35:31 AM
REPRESENTATIVE DRUMMOND asked Ms. Wilcox if she is aware of any
criminal activity resulting from the presence of large amounts
of cash.
MS. WILCOX answered yes, several people in the industry have
been held up while on the way to the tax office or to their
cars. She said luckily camera surveillance is required, so it
makes it easier to prosecute; however, she said it should not
happen in the first place. In response to a follow-up question,
she said originally Juneau was planning to offer a cash drop-off
point but reconsidered because of safety concerns. She offered
her understanding that a cash depository in an Anchorage parking
garage is the only one of which she is aware. In response to
another question, she offered more details about getting money
orders to send via certified mail. A person may do that from
his/her personal account, but many have had their personal
accounts closed by the bank.
9:40:36 AM
MICHAEL MARTIN, President, Alaska Bankers Association, stated
that he is also the chief operating officer and general counsel
for Northrim Bank. He said the Alaska Bankers Association (ABA)
represents seven banks with operations in Alaska. He said the
seven banks include four state banks and three national banks
that are chartered by the federal Office of the Comptroller of
the Currency. He said ABA and all its member banks support HJR
14, urging the federal government to adopt the Safe Banking Act
to provide a safe harbor for depository institutions that
provide financial products and services to legal cannabis-
related businesses. He noted that ABA does not and has never
taken a position on the legalization of cannabis; however, all
the banks are committed to serve the financial needs of
consumers, businesses, and communities of Alaska.
MR. MARTIN said all banks are subject to federal law, and
cannabis remains illegal under federal law. Currently banks
face substantial risk if they offer services and products to
cannabis-related businesses, including extreme federal
regulatory scrutiny under the current regime, loss to access of
critical payment systems, and the loss of charters from federal
regulators, which affects the banks' abilities to conduct
business with the rest of their customers. He said the Safe
Banking Act is "a bank-specific solution that enables banks to
serve cannabis-related businesses." He stated, "The Alaska
Bankers Association and I definitely appreciate your leadership
in bringing forward a resolution."
9:43:31 AM
MR. MARTIN noted that cannabis-related businesses cannot: open
and maintain deposit accounts; engage in electronic transactions
with banks, including tax payments; and cannot obtain loans. A
cannabis-related business cannot be in the same property as a
financial institution. He said that is what causes
"substantially regulated businesses" to deal in cash and find
money orders to operate outside the traditional banking system.
He further noted that the American Banking Association supports
the Safe Banking Act and submitted a letter to Congress on March
17, 2021, signed by the president of the association.
9:46:24 AM
JANA WELGZIN, Owner, JDW Counsel, said her law firm represents
over 200 licensed cannabis businesses. She said the industry
has generated over 7,000 jobs in Alaska and is 100 percent
Alaska-owned. She hears about her clients keeping large amounts
of money in their homes, which concerns her. She echoed the
comments about people in the industry having to pay everything
in cash. She said these businesses create a lot of revenue in
Alaska. She said Alaska needs to show the federal government
that it supports safe banking and give the tools needed to do
it.
9:50:31 AM
RYAN TUNSETH, Owner, East Rip Dispensary, stated that it is okay
to admit when a mistake has been made, and he related that idea
to the war on drugs and ideology surrounding cannabis. He said
a detrimental effect of the industry has been that only those
with enough money could get into it. He said while he has been
able to figure out loopholes, there is a need for visibility of
money rather than having it under people's mattresses. He
talked about safety and the ability to audit, for people to have
the ability to get credit and grow their businesses.
9:55:33 AM
PAUL V. DISDIER, General Manager, The Fireweed Factory, stated
that one of the most worrisome issues is the accountability of
the money. He said even with a good accountant it is still not
possible to keep accurate accounting like is possible with a
bank account. He emphasized the danger of carrying large
amounts of money. He said all four members of his family have
had their bank accounts closed; his employees must be cautious
about how they use their bank accounts for fear they will lose
them. Mr. Disdier said he cannot get loans from banks, and
employees in the industry oftentimes do not have the ability to
get loans. He expressed the difficulty in getting a location
for a business. Most warehouses require a mortgage. He stated
that the Internal Revenue Service "electronically required 941
employee withholding," and he said that "everyone in this
business has to figure some workaround about that."
9:59:55 AM
REPRESENTATIVE RASMUSSEN expressed appreciation that most of the
committee members had signed on to HJR 14 as cosponsors.
[HJR 14 was held over.]
10:00:07 AM
ADJOURNMENT
There being no further business before the committee, the House
Community and Regional Affairs Standing Committee meeting was
adjourned at 10:00 a.m.