Legislature(2015 - 2016)BARNES 124

03/23/2016 03:15 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 194 AK SECURITIES ACT; PENALTIES; CRT. RULES TELECONFERENCED
Moved CSHB 194(L&C) Out of Committee
+= HB 289 BOARD OF BARBERS AND HAIRDRESSERS TELECONFERENCED
Moved HB 289 Out of Committee
+= HB 337 MARIJUANA TAXES;EXCESS POSSESSION;BONDS TELECONFERENCED
Moved CSHB 337(L&C) Out of Committee
**Streamed live on AKL.tv**
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                         March 23, 2016                                                                                         
                           3:23 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Kurt Olson, Chair                                                                                                
Representative Shelley Hughes, Vice Chair                                                                                       
Representative Jim Colver                                                                                                       
Representative Gabrielle LeDoux                                                                                                 
Representative Cathy Tilton                                                                                                     
Representative Andy Josephson                                                                                                   
Representative Sam Kito                                                                                                         
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Mike Chenault (alternate)                                                                                        
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 194                                                                                                              
"An  Act  repealing and  reenacting  the  Alaska Securities  Act,                                                               
including   provisions   relating   to  exempt   securities   and                                                               
transactions; relating to registration  of securities, firms, and                                                               
agents  that  offer or  sell  securities  and investment  advice;                                                               
relating  to  administrative,  civil,  and  criminal  enforcement                                                               
provisions,  including   restitution  and  civil   penalties  for                                                               
violations; allowing  certain civil penalties  to be used  for an                                                               
investor  training fund;  establishing increased  civil penalties                                                               
for  harming  older  Alaskans;  retaining  provisions  concerning                                                               
corporations organized under the  Alaska Native Claims Settlement                                                               
Act; amending Rules  4, 5, 54, 65, and 90,  Alaska Rules of Civil                                                               
Procedure; and providing for an effective date."                                                                                
                                                                                                                                
     - MOVED CSHB 194(L&C) OUT OF COMMITTEE                                                                                     
                                                                                                                                
HOUSE BILL NO. 289                                                                                                              
"An Act  relating to the membership  of the Board of  Barbers and                                                               
Hairdressers."                                                                                                                  
                                                                                                                                
     - MOVED HB 289 OUT OF COMMITTEE                                                                                            
                                                                                                                                
HOUSE BILL NO. 337                                                                                                              
"An Act relating to taxes on marijuana."                                                                                        
                                                                                                                                
     - MOVED CSHB 337(L&C) OUT OF COMMITTEE                                                                                     
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 194                                                                                                                  
SHORT TITLE: AK SECURITIES ACT; PENALTIES; CRT. RULES                                                                           
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
04/13/15       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/13/15       (H)       L&C, JUD, FIN                                                                                          
02/01/16       (H)       L&C AT 3:15 PM BARNES 124                                                                              
02/01/16       (H)       Heard & Held                                                                                           
02/01/16       (H)       MINUTE(L&C)                                                                                            
02/08/16       (H)       L&C AT 3:15 PM BARNES 124                                                                              
02/08/16       (H)       -- MEETING CANCELED --                                                                                 
02/10/16       (H)       L&C AT 3:15 PM BARNES 124                                                                              
02/10/16       (H)       <Bill Hearing Canceled>                                                                                
02/12/16       (H)       L&C AT 3:15 PM BARNES 124                                                                              
02/12/16       (H)       <Bill Hearing Canceled>                                                                                
02/13/16       (H)       L&C AT 10:00 AM BARNES 124                                                                             
02/13/16       (H)       <Bill Hearing Canceled>                                                                                
03/14/16       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/14/16       (H)       Heard & Held                                                                                           
03/14/16       (H)       MINUTE(L&C)                                                                                            
03/23/16       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB 289                                                                                                                  
SHORT TITLE: BOARD OF BARBERS AND HAIRDRESSERS                                                                                  
SPONSOR(s): LEDOUX                                                                                                              
                                                                                                                                
02/01/16       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/01/16       (H)       L&C                                                                                                    
03/21/16       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/21/16       (H)       Heard & Held                                                                                           
03/21/16       (H)       MINUTE(L&C)                                                                                            
03/23/16       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB 337                                                                                                                  
SHORT TITLE: MARIJUANA TAXES;EXCESS POSSESSION;BONDS                                                                            
SPONSOR(s): LEDOUX                                                                                                              
                                                                                                                                
02/24/16       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/24/16       (H)       L&C, FIN                                                                                               
03/09/16       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/09/16       (H)       Heard & Held                                                                                           
03/09/16       (H)       MINUTE(L&C)                                                                                            
03/11/16       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/11/16       (H)       -- MEETING CANCELED --                                                                                 
03/16/16       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/16/16       (H)       Heard & Held                                                                                           
03/16/16       (H)       MINUTE(L&C)                                                                                            
03/21/16       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/21/16       (H)       Scheduled but Not Heard                                                                                
03/23/16       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
KEVIN ANSELM, Director                                                                                                          
Division of Banking and Securities                                                                                              
Department of Commerce, Community & Economic Development                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Reviewed the committee substitute (CS) for                                                               
HB 194, and answered questions.                                                                                                 
                                                                                                                                
KAYLSSA MAILE, Staff                                                                                                            
Representative Gabrielle LeDoux                                                                                                 
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  On behalf of Representative LeDoux, sponsor                                                              
of HB 337, reviewed the committee substitute for HB 337 and                                                                     
answered questions.                                                                                                             
                                                                                                                                
KEN ALPER, Director                                                                                                             
Tax Division                                                                                                                    
Department of Revenue                                                                                                           
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered a question during the hearing on                                                                
HB 337.                                                                                                                         
                                                                                                                                
CYNTHIA FRANKLIN, Director                                                                                                      
Alcohol & Marijuana Control Office                                                                                              
Anchorage Office                                                                                                                
Department of Commerce, Community & Economic Development                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions during the hearing on HB                                                              
337.                                                                                                                            
                                                                                                                                
KONRAD JACKSON, Staff                                                                                                           
Representative Kurt Olson                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered a question during the hearing on                                                                
HB 337.                                                                                                                         
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:23:08 PM                                                                                                                    
                                                                                                                                
CHAIR KURT  OLSON called  the House  Labor and  Commerce Standing                                                             
Committee meeting to  order at 3:23 p.m.   Representatives Olson,                                                               
Josephson, Hughes, LeDoux, Colver,  Tilton, and Kito were present                                                               
at the call to order.                                                                                                           
                                                                                                                                
        HB 194-AK SECURITIES ACT; PENALTIES; CRT. RULES                                                                     
                                                                                                                                
3:23:29 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced  that the first order of  business would be                                                               
HOUSE BILL NO.  194, "An Act repealing and  reenacting the Alaska                                                               
Securities   Act,  including   provisions   relating  to   exempt                                                               
securities   and  transactions;   relating  to   registration  of                                                               
securities, firms, and  agents that offer or  sell securities and                                                               
investment  advice;   relating  to  administrative,   civil,  and                                                               
criminal enforcement provisions,  including restitution and civil                                                               
penalties for violations; allowing  certain civil penalties to be                                                               
used for an investor training  fund; establishing increased civil                                                               
penalties  for  harming   older  Alaskans;  retaining  provisions                                                               
concerning corporations organized under  the Alaska Native Claims                                                               
Settlement  Act; amending  Rules 4,  5,  54, 65,  and 90,  Alaska                                                               
Rules of Civil Procedure; and providing for an effective date."                                                                 
                                                                                                                                
[The committee substitute  for HB 194, Version E,  was before the                                                               
committee.]                                                                                                                     
                                                                                                                                
3:23:57 PM                                                                                                                    
                                                                                                                                
KEVIN  ANSELM,  Director,  Division of  Banking  and  Securities,                                                               
Department  of   Commerce,  Community  &   Economic  Development,                                                               
briefly reviewed  HB 194,  noting that  the bill  would recognize                                                               
and incorporate current securities  industry terms and standards,                                                               
update the law, and delete  outdated references.  Furthermore, HB                                                               
194  would  synthesize  the  Alaska  Securities  Act  with  other                                                               
states'   laws,  open   equity   crowdfunding  opportunities   to                                                               
Alaskans,   deter  investment   scams,  enhance   penalties,  and                                                               
separate the  securities statutes  from the Alaska  Native Claims                                                               
Settlement Act statutes.                                                                                                        
                                                                                                                                
3:26:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX moved to adopt Amendment 1, which read:                                                                   
                                                                                                                                
     Page 34, lines 8 - 9:                                                                                                      
          Delete "by governmental authorities"                                                                                  
                                                                                                                                
CHAIR OLSON objected for discussion purposes.                                                                                   
                                                                                                                                
REPRESENTATIVE LEDOUX  explained that  Amendment 1  requires that                                                               
any  action known  to be  contemplated has  to be  disclosed, not                                                               
only those contemplated by governmental authorities.                                                                            
                                                                                                                                
MS. ANSELM opined  Amendment 1 would change the  model language a                                                               
little; however,  the original language  was not very  clear that                                                               
all  potential  or  pending litigation  that  hasn't  been  filed                                                               
should  be noticed.   She  acknowledged that  the model  language                                                               
includes an  official comment that said,  "Pending litigation can                                                               
include  litigation that  has not  yet been  filed."   Ms. Anselm                                                               
said she  understood the  intent of  the amendment,  and accepted                                                               
the amendment.                                                                                                                  
                                                                                                                                
REPRESENTATIVE  KITO  surmised  that deleting  "by  [governmental                                                               
authorities]," raises concern about  who or what is contemplating                                                               
the action.                                                                                                                     
                                                                                                                                
MS. ANSELM answered that the  language in the bill addresses what                                                               
needs  to be  disclosed to  potential investors,  particularly in                                                               
the  prospectus  of  the  offering  document.    An  issuer  must                                                               
disclose any  pending litigation, action, or  proceeding to which                                                               
the issuer is  a party, and that materially  affects the issuer's                                                               
business or  assets, and is  known to be contemplated  by anyone.                                                               
Thus,  the  intent  is  to   have  any  awareness  of  a  lawsuit                                                               
disclosed, whether by the government or anyone else.                                                                            
                                                                                                                                
3:30:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KITO questioned  how  an  individual would  know;                                                               
actions by  a governmental authority  require public  notice, but                                                               
for a private party, it may not be known.                                                                                       
                                                                                                                                
MS. ANSELM  agreed; however, sometimes  parties do know,  but the                                                               
paperwork hasn't been  filed, and in those cases  there should be                                                               
disclosure.   In  further response  to  Representative Kito,  she                                                               
said the language can be made clear in regulation.                                                                              
                                                                                                                                
3:32:12 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  removed his objection  to Amendment 1.   There being                                                               
no further objection, Amendment 1 was adopted.                                                                                  
                                                                                                                                
3:32:20 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON  opened  public  testimony   on  HB  194.      After                                                               
ascertaining  no  one wished  to  testify,  public testimony  was                                                               
closed.                                                                                                                         
                                                                                                                                
3:32:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HUGHES  moved to  report the  committee substitute                                                               
for HB 194, Version 29-GH1060\E,  Bannister, 3/11/16, as amended,                                                               
out  of   committee  with  individual  recommendations   and  the                                                               
accompanying  fiscal  notes.   There  being  no  objection,  CSHB                                                               
194(L&C) was reported from the  House Labor and Commerce Standing                                                               
Committee.                                                                                                                      
                                                                                                                                
3:33:16 PM                                                                                                                    
                                                                                                                                
The committee took an at ease from 3:33 p.m. to 3:36 p.m.                                                                       
                                                                                                                                
            HB 289-BOARD OF BARBERS AND HAIRDRESSERS                                                                        
                                                                                                                                
3:36:28 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  announced that the  next order of business  would be                                                               
HOUSE BILL  NO. 289, "An  Act relating  to the membership  of the                                                               
Board of Barbers and Hairdressers."                                                                                             
                                                                                                                                
CHAIR  OLSON   opened  public  testimony   on  HB  289.     After                                                               
ascertaining no one wished to testify, closed public testimony.                                                                 
                                                                                                                                
3:37:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HUGHES  moved to  report HB  289 out  of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.   There being no objection,  HB 289 was reported  from the                                                               
House Labor and Commerce Standing Committee.                                                                                    
                                                                                                                                
3:37:46 PM                                                                                                                    
                                                                                                                                
The committee took an at ease from 3:37 p.m. to 3:38 p.m.                                                                       
                                                                                                                                
         HB 337-MARIJUANA TAXES;EXCESS POSSESSION;BONDS                                                                     
                                                                                                                                
3:38:04 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced  that the final order of  business would be                                                               
HOUSE BILL NO. 337, "An Act relating to taxes on marijuana."                                                                    
                                                                                                                                
[The committee substitute  for HB 337, Version H,  was before the                                                               
committee.]                                                                                                                     
                                                                                                                                
3:41:26 PM                                                                                                                    
                                                                                                                                
KAYLSSA MAILE, Staff to  Representative Gabrielle LeDoux, sponsor                                                               
of HB 337, reviewed the bill.   She noted that HB 337 establishes                                                               
the  bonding   requirement  for  marijuana   cultivators  seeking                                                               
licensure, and  the committee substitute changed  the requirement                                                               
from a  $5,000 cash bond  to the option  of either a  $5,000 cash                                                               
bond, or  a surety  bond.   In addition,  the bill  makes product                                                               
manufacturers  and retailers  secondarily liable  for taxes,  and                                                               
allows the Department of Revenue (DOR)  to assess a tax on plants                                                               
above  the  legal  limit  for  those  who  are  not  licensed  as                                                               
cultivators.  The  other change made in  the committee substitute                                                               
was to  add an immediate effective  date, so that the  bill would                                                               
to be in effect before licenses are awarded.                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON   asked  for   the  cost  to   begin  a                                                               
commercial operation -  including lamps and all  of the necessary                                                               
equipment - and a license.                                                                                                      
                                                                                                                                
MS. MAILE was unsure.                                                                                                           
                                                                                                                                
3:43:56 PM                                                                                                                    
                                                                                                                                
KEN ALPER, Director, Tax Division,  DOR, advised that the cost of                                                               
start-up  is part  of the  licensing process  with the  Marijuana                                                               
Control  Board  (MCB),  Alcohol  and  Marijuana  Control  Office,                                                               
Department  of Commerce,  Community &  Economic Development,  and                                                               
DOR  does not  have  a  financial relationship  with  any of  the                                                               
potential marijuana taxpayers.                                                                                                  
                                                                                                                                
REPRESENTATIVE  JOSEPHSON inquired  as  to whether  the only  fee                                                               
imposed by the state  thus far is the $5,000 bond in  HB 337.  He                                                               
remarked:                                                                                                                       
                                                                                                                                
     ... I just want to know  what our 60 hands have imposed                                                                    
     on people, and  if it's only $5,000, I'm,  I'm going to                                                                    
     vote for this  bill I think anyway, but I  just want to                                                                    
     get  a   sense  of  whether  we   are  really  creating                                                                    
     impediments that, that  were not part of  the spirit of                                                                    
      the [Alaska Marijuana Legalization Ballot Measure 2                                                                       
     (2014)].                                                                                                                   
                                                                                                                                
MR.  ALPER stated  that fees  and  costs are  established by  MCB                                                               
through the regulatory process; in  fact, the legislature has not                                                               
put any direct costs on the industry.                                                                                           
                                                                                                                                
3:46:02 PM                                                                                                                    
                                                                                                                                
CYNTHIA  FRANKLIN,   Director,  Alcohol  and   Marijuana  Control                                                               
Office,   Department   of   Commerce,  Community   and   Economic                                                               
Development, offered to answer questions.                                                                                       
                                                                                                                                
REPRESENTATIVE JOSEPHSON repeated his question.                                                                                 
                                                                                                                                
MS.  FRANKLIN  advised that  the  cost  of starting  a  marijuana                                                               
business  depends on  the type  of  license and  on the  business                                                               
model.  Monies  paid to the state are an  annual licensing fee of                                                               
either $1,000  to $5,000, and a  nonrefundable $1,000 application                                                               
fee, which is split between the state and local government.                                                                     
                                                                                                                                
REPRESENTATIVE  JOSEPHSON estimated  that  the  maximum range  of                                                               
government  fees  begins  at   approximately  $11,000,  plus  the                                                               
capital costs of the business.                                                                                                  
                                                                                                                                
MS. FRANKLIN pointed out that the  $5,000 bond is only imposed on                                                               
the cultivator.  Other types  of marijuana licensing, such as for                                                               
a testing facility, would not requiring bonding.                                                                                
                                                                                                                                
REPRESENTATIVE TILTON asked for  an explanation of the difference                                                               
between a tax and a penalty against an illegal operation.                                                                       
                                                                                                                                
3:49:41 PM                                                                                                                    
                                                                                                                                
KONRAD JACKSON, Staff to Representative  Kurt Olson, Alaska State                                                               
Legislature,   relayed    that   Legislative    Legal   Services,                                                               
Legislative  Affairs Agency,  advised  that a  tax is  accessible                                                               
immediately  without  conviction, and  a  fine  or penalty  would                                                               
require charges and conviction.                                                                                                 
                                                                                                                                
CHAIR OLSON redirected the question to Ms. Franklin.                                                                            
                                                                                                                                
MS. FRANKLIN confirmed that criminal  penalties would still apply                                                               
because   legally  growing,   selling,  or   producing  marijuana                                                               
specified by  the Alaska Marijuana Legalization  Ballot Measure 2                                                               
(2014) only  applies to  individuals, corporations,  and entities                                                               
that  have  a license.    Therefore,  someone growing  without  a                                                               
license  would  have  criminal  charges  assessed  regardless  of                                                               
whether DOR has collected taxes.                                                                                                
                                                                                                                                
3:52:16 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HUGHES  moved to  report the  committee substitute                                                               
for  HB  337,  Version  29-LS1490\H,   Nauman,  3/10/16,  out  of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal  notes.  There  being  no  objection,  CSHB  337(L&C)  was                                                               
reported from the House Labor and Commerce Standing Committee.                                                                  
                                                                                                                                
3:53:06 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Labor and  Commerce Standing Committee  meeting was  adjourned at                                                               
3:53 p.m.                                                                                                                       

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