Legislature(2015 - 2016)BUTROVICH 205

01/27/2015 09:00 AM Senate STATE AFFAIRS


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09:02:32 AM Start
09:02:47 AM Presentation by Executive Branch Representatives: Marijuana Ballot Measure - Discussion of Implementation / Administration Perspective
10:53:41 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Presentation by Executive Branch Representatives: TELECONFERENCED
Marijuana Ballot Measure - Discussion of
Implementation / Administration Perspective
- Cynthia Franklin, ABC Executive Director
DCCED
- Kaci Schroeder, Special Assistant / Criminal
Liaison, Department of Law
- Harriet Milks, Attorney IV, Department of Law
- Ken Alper, Director, Tax Division, Department
of Revenue
- Jerry Burnett, Deputy Commissioner, Department
of Revenue
- Major Dennis Casanovas, Alaska State Troopers
Department of Public Safety
- Jay Butler, Chief Medical Officer / Director
Division of Public Health, DHSS
Elaine Busse Floyd, Director of Division of
Environmental Health, DEC
(Phone / Questions Only)
Marijuana Ballot Measure: Alaska Mental Health
Trust Authority Perspective
- Jeff Jessee, Alaska Mental Health Trust
Authority
                    ALASKA STATE LEGISLATURE                                                                                  
            SENATE STATE AFFAIRS STANDING COMMITTEE                                                                           
                        January 27, 2015                                                                                        
                           9:02 a.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Bill Stoltze, Chair                                                                                                     
Senator John Coghill, Vice Chair                                                                                                
Senator Charlie Huggins                                                                                                         
Senator Lesil McGuire                                                                                                           
Senator Bill Wielechowski                                                                                                       
                                                                                                                              
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PRESENTATION BY EXECUTIVE BRANCH REPRESENTATIVES: MARIJUANA                                                                     
BALLOT MEASURE - DISCUSSION OF IMPLEMENTATION / ADMINISTRATION                                                                  
PERSPECTIVE                                                                                                                     
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
See Senate State Affairs minutes from 1/22/15.                                                                                  
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
HARRIET MILKS, Assistant Attorney General                                                                                       
Civil Division                                                                                                                  
Alaska Department of Law                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION   STATEMENT:    Provided   departmental    insight   and                                                             
recommendations on the marijuana ballot measure.                                                                                
                                                                                                                                
KACI SCHROEDER, Assistant Attorney General                                                                                      
Criminal Division                                                                                                               
Alaska Department of Law                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION   STATEMENT:    Provided   departmental    insight   and                                                             
recommendations on the marijuana ballot measure.                                                                                
                                                                                                                                
MIKE LESSMAN, Legislative Liaison                                                                                               
Alaska Department of Public Safety                                                                                              
Anchorage, Alaska                                                                                                               
POSITION   STATEMENT:    Provided   departmental    insight   and                                                             
recommendations on the marijuana ballot measure.                                                                                
                                                                                                                                
MAJOR DENNIS CASANOVAS, Deputy Director                                                                                         
Division of Alaska State Troopers                                                                                               
Alaska Department of Public Safety                                                                                              
Anchorage, Alaska.                                                                                                              
POSITION   STATEMENT:    Provided   departmental    insight   and                                                             
recommendations on the marijuana ballot measure.                                                                                
                                                                                                                                
JERRY BURNETT, Deputy Commissioner                                                                                              
Alaska Department of Revenue                                                                                                    
Juneau, Alaska                                                                                                                  
POSITION   STATEMENT:    Provided   departmental    insight   and                                                             
recommendations on the marijuana ballot measure.                                                                                
                                                                                                                                
KEN ALPER, Director                                                                                                             
Tax Division                                                                                                                    
Alaska Department of Revenue                                                                                                    
Juneau, Alaska                                                                                                                  
POSITION   STATEMENT:    Provided   departmental    insight   and                                                             
recommendations on the marijuana ballot measure.                                                                                
                                                                                                                                
BRANDON SPANOS, Deputy Director                                                                                                 
Tax Division                                                                                                                    
Alaska Department of Revenue                                                                                                    
Anchorage, Alaska,                                                                                                              
POSITION   STATEMENT:    Provided   departmental    insight   and                                                             
recommendations on the marijuana ballot measure.                                                                                
                                                                                                                                
CYNTHIA FRANKLIN, Director                                                                                                      
Alcoholic Beverage Control Board                                                                                                
Alaska Department of Community and Regional Affairs                                                                             
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT: Provided  insight  and recommendations  from                                                             
the  Alcoholic  Beverage  Control   Board's  perspective  on  the                                                               
marijuana ballot measure.                                                                                                       
                                                                                                                                
JEFF JESSEE, Chief Executive Officer                                                                                            
Alaska Mental Health Trust Authority                                                                                            
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT: Provided  insight  and recommendations  from                                                             
the  Alaska Mental  Health Trust  Authority's perspective  on the                                                               
marijuana ballot measure.                                                                                                       
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
9:02:32 AM                                                                                                                    
CHAIR  BILL  STOLTZE called  the  Senate  State Affairs  Standing                                                             
Committee meeting  to order at 9:02  a.m. Present at the  call to                                                               
order were Senators McGuire, Wielechowski, and Chair Stoltze.                                                                   
                                                                                                                                
^Presentation  by  Executive  Branch  Representatives:  Marijuana                                                               
Ballot Measure  - Discussion  of Implementation  / Administration                                                               
Perspective                                                                                                                     
  PRESENTATION BY EXECUTIVE BRANCH REPRESENTATIVES: MARIJUANA                                                               
 BALLOT MEASURE - DISCUSSION OF IMPLEMENTATION / ADMINISTRATION                                                             
                          PERSPECTIVE                                                                                       
                                                                                                                              
9:02:47 AM                                                                                                                    
CHAIR  STOLTZE announced  that the  committee  will continue  its                                                               
review of  the marijuana initiative,  Ballot Measure 2.  He added                                                               
that there is no legislation in  the committee for the omnibus or                                                               
the comprehensive marijuana  bill. He specified that  a bill will                                                               
be  forthcoming from  one of  the  committee members,  Vice-Chair                                                               
Coghill or Senator McGuire.                                                                                                     
                                                                                                                                
He said the theme for the  committee meeting is a presentation by                                                               
the Walker administration from the  various departments that have                                                               
the most direct  impact. He explained that  the committee cherry-                                                               
picked the  most relevant and frontline  agencies and departments                                                               
that will be helping to  formulate any legislation in addition to                                                               
coping with the act's implementation when it goes into law.                                                                     
                                                                                                                                
9:05:38 AM                                                                                                                    
HARRIET  MILKS,  Assistant   Attorney  General,  Civil  Division,                                                               
Alaska Department of Revenue, Juneau.                                                                                           
                                                                                                                                
9:06:13 AM                                                                                                                    
KACI  SCHROEDER, Assistant  Attorney General,  Criminal Division,                                                               
Alaska Department  of Law, Juneau, Alaska,  said her presentation                                                               
will address questions raised by  the initiative for the Criminal                                                               
Division. She  revealed that the  initiative does not  repeal any                                                               
law. She  pointed out  that the  state has  a legal  structure to                                                               
deal  with  conflicting statutes  without  having  to start  from                                                               
scratch.                                                                                                                        
                                                                                                                                
She said  the Department  of Law  would like to  point out  a few                                                               
things that  are in conflict.  She revealed that there  are three                                                               
marijuana definitions  on the books  once the  initiative becomes                                                               
effective.  She said  the medical  marijuana  definition is  very                                                               
short and basic.  She noted that the marijuana  definition in the                                                               
drug  offense statutes  is much  more extensive  and pointed  out                                                               
that the definition specifically  excludes: hashish, hashish oil,                                                               
and resins in  oils made from the marijuana  plant. She disclosed                                                               
that  the marijuana  definition  in the  initiative does  include                                                               
marijuana concentrates  and resins.  She specified that  case law                                                               
says   that  conflicting   statutes  are   not  supposed   to  be                                                               
interpreted  in  such  a  way  that it  nullifies  parts  of  the                                                               
statute, but conflicting statutes  are supposed to be harmonized.                                                               
She  conceded  that  harmonization  is  an  inexact  science  and                                                               
different people will harmonize in different ways.                                                                              
                                                                                                                                
9:08:38 AM                                                                                                                    
SENATOR WIELECHOWSKI  opined that having one  definition would be                                                               
preferable. He  asked if Ms.  Schroeder agreed and what  would be                                                               
her recommended definition.                                                                                                     
                                                                                                                                
MS. SCHROEDER replied  that she agreed that  one definition would                                                               
be preferred. She  stated that the Department of  Law would defer                                                               
to the  Legislature or regulatory  board of what  definition they                                                               
want to pick.  She noted that the Department of  Law has an issue                                                               
with the  term "concentrates." She specified  that the Department                                                               
of Law  would like some  definition of  "concentrates" regardless                                                               
of the definition for marijuana.                                                                                                
                                                                                                                                
CHAIR STOLTZE commented that the  overriding theme of the bill is                                                               
precise definitions.                                                                                                            
                                                                                                                                
SENATOR WIELECHOWSKI asked Chair Stoltze  if maybe it is time for                                                               
the committee to get into the specifics.                                                                                        
                                                                                                                                
CHAIR STOLTZE  replied that  the committee does  not have  a bill                                                               
but noted that questions can be placed on the record.                                                                           
                                                                                                                                
SENATOR  WIELECHOWSKI  asked  what   "PSUM"  stands  for  in  the                                                               
initiative.                                                                                                                     
                                                                                                                                
MS.  MILKS  answered  that  PSUM   is  an  acronym  used  in  the                                                               
initiative, [Production, Sale, and Use of Marijuana].                                                                           
                                                                                                                                
SENATOR  WIELECHOWSKI asked  why  the Department  of  Law has  an                                                               
issue with "concentrates."                                                                                                      
                                                                                                                                
9:10:11 AM                                                                                                                    
MS.  SCHROEDER  explained   that  the  "concentrates"  definition                                                               
currently  in the  drug  offense  statutes specifically  excludes                                                               
hashish,  hashish oil,  resin, and  extracted oil.  She said  the                                                               
statute's  definitions for  hashish and  hashish oil  include the                                                               
word  "resins"  and "concentrate."  She  pointed  out that  there                                                               
could  be   an  argument  that   hashish  and  hashish   oil  are                                                               
concentrates. She  revealed that  under current law,  hashish and                                                               
hashish oil are  schedule IIIA drugs and marijuana  is a schedule                                                               
6A drug. She stated that the  Department of Law needs to know the                                                               
Legislature's intent with the definition for concentrates.                                                                      
                                                                                                                                
SENATOR WIELECHOWSKI  asked if the  Department of  Law recommends                                                               
that  hashish's definition  be  kept different  or  kept out.  He                                                               
inquired what the  issue is with hashish as  opposed to marijuana                                                               
concentrate.                                                                                                                    
                                                                                                                                
MS. SCHROEDER  replied that hashish  is made in a  different way.                                                               
She specified that hashish is  much more concentrated with higher                                                               
tetrahydrocannabinols (THC)  levels than  marijuana. She  said an                                                               
ounce  of hashish  oil will  go a  lot farther  than an  ounce of                                                               
marijuana. She  stated that the  Department of Law is  not saying                                                               
that hashish has to be  excluded or included, but a determination                                                               
needs  to  be   made  and  regulatory  boards   can  regulate  it                                                               
differently even if it is included.                                                                                             
                                                                                                                                
9:12:19 AM                                                                                                                    
She said the  other issue the Department of Law  wants to flag is                                                               
that  currently  it is  a  class  B  misdemeanor for  someone  to                                                               
possess less  than an  ounce of  marijuana. After  the initiative                                                               
becomes effective, anybody over 21  can possess an ounce or less,                                                               
but  a  person   under  21  will  be  charged  with   a  class  B                                                               
misdemeanor,  a   criminal  offense.   She  explained   that  the                                                               
Department of  Law does not know  if a violation for  those under                                                               
21 should be  considered or maybe something similar  to the minor                                                               
consuming alcohol statute.                                                                                                      
                                                                                                                                
CHAIR STOLTZE asked how minor consuming of alcohol is treated.                                                                  
                                                                                                                                
MS.  SCHROEDER replied  that a  person's first  two offenses  are                                                               
violations and then a misdemeanor after the first two.                                                                          
                                                                                                                                
SENATOR  WIELECHOWSKI stated  that everyone  is in  agreement for                                                               
not  wanting  kids  to  be  using  marijuana.  He  asked  if  the                                                               
department had  an opinion  on a kid  getting a  misdemeanor when                                                               
there is a good  chance the offense could be on  his record for a                                                               
long time.                                                                                                                      
                                                                                                                                
MS. SCHROEDER  replied that  Department of Law  does not  have an                                                               
opinion. She  said if  the intent is  to regulate  marijuana like                                                               
alcohol,  the Legislature  may want  to consider  looking at  how                                                               
alcohol  is  treated  for  minors.  She  specified  that  if  the                                                               
Legislature  decides marijuana  is different  than alcohol,  than                                                               
the offense  structure needs  to be  different, that's  fine too.                                                               
She  stated  that  the  Department of  Law  knows  that  underage                                                               
possession is  going to be an  issue and the department  does not                                                               
want there to be complaints where a  person that is 20 and a half                                                               
is charged with a misdemeanor.                                                                                                  
                                                                                                                                
9:14:18 AM                                                                                                                    
MS. SCHROEDER noted that the  initiative allows local governments                                                               
to prohibit marijuana establishments  from operating within their                                                               
municipality.  She said  the department  needs direction  on what                                                               
the  penalty  should  be   for  operating  marijuana  cultivation                                                               
facilities,    product    manufacturing    facilities,    testing                                                               
facilities, or  retail stores  in a community  that has  opted to                                                               
prohibit such activities.  She pointed out that  the penalties in                                                               
the  current  drug   offense  statutes  range  from   a  class  A                                                               
misdemeanor to  an unclassified felony  for the  previously noted                                                               
activities. She asked if the  noted offenses should be treated in                                                               
the same way as bringing  alcohol into an opt-out community where                                                               
the offense is either a class A misdemeanor or class C felony.                                                                  
                                                                                                                                
She reiterated  that the initiative  does not repeal any  law and                                                               
noted  that  marijuana  is  still  a  controlled  substance.  She                                                               
specified that under the  promoting contraband statutes, bringing                                                               
a controlled substance into a  correctional facility is a class C                                                               
felony  and  bringing  a  legal   product  like  tobacco  into  a                                                               
correctional  facility is  a class  A  misdemeanor. She  inquired                                                               
whether the promoting contraband statute should be amended.                                                                     
                                                                                                                                
9:16:23 AM                                                                                                                    
CHAIR  STOLTZE   commented  that  both  the   committee  and  the                                                               
Department of Law  is seeking clarity on the  marijuana issue. He                                                               
pointed  out  that  PSUM  proponents  have  testified  towards  a                                                               
minimum  role for  the Legislature  with broader  authority to  a                                                               
board. He asked  if the Department of Law can  give the committee                                                               
guidance.                                                                                                                       
                                                                                                                                
MS. MILKS  noted that she  is representing the Civil  Division of                                                               
the Department  of Law. She  asserted that the Department  of Law                                                               
is  ready to  get to  work and  do what  they can  to assist  the                                                               
Alaska Beverage Control Board (ABC  Board) or a marijuana control                                                               
board in regulating the new marijuana industry.                                                                                 
                                                                                                                                
CHAIR  STOLTZE queried  if the  Department  of Law  can give  the                                                               
committee more guidance. He asked  if the department would prefer                                                               
administering  with clarified  definitions.  He  inquired if  the                                                               
Department of  Law would prefer  a board-direction where  a board                                                               
makes the rules and regulations.                                                                                                
                                                                                                                                
9:18:35 AM                                                                                                                    
MS.  MILKS  answered that  the  Department  of  Law can  be  more                                                               
specific. She  said with respect  to definitions,  lawyers always                                                               
like  bright-lines.  She  stated  that  the  Legislature  can  be                                                               
helpful by  assisting the regulatory board  in defining important                                                               
terms like "marijuana" and "public."                                                                                            
                                                                                                                                
CHAIR STOLTZE  opined that  the Walker  administration apparently                                                               
wants the  Legislature to defer  to the growers and  producers to                                                               
define and regulate marijuana.                                                                                                  
                                                                                                                                
MS. MILKS replied  that she did not intend to  make the inference                                                               
that Chair Stoltze noted.                                                                                                       
                                                                                                                                
CHAIR  STOLTZE reiterated  that  the Legislature  is looking  for                                                               
guidance.  He asserted  that the  Department of  Law is  making a                                                               
statement by deferring.                                                                                                         
                                                                                                                                
9:20:42 AM                                                                                                                    
SENATOR MCGUIRE asked  that if the Legislature was  to change the                                                               
promoting statute  to change the definitions  such that marijuana                                                               
would not be a controlled substance  in that area and to regulate                                                               
it more like tobacco and  alcohol, would the Legislature need to,                                                               
across  the  board,  change  the definition  of  marijuana  as  a                                                               
controlled substance.  She noted  that Ms. Schroeder  was shaking                                                               
her head  "no." She added  that besides the  promoting contraband                                                               
statute,  what  other  places  in law  will  the  Legislature  be                                                               
affected by leaving marijuana as a controlled substance.                                                                        
                                                                                                                                
SENATOR COGHILL joined the committee meeting.                                                                                   
                                                                                                                                
MS.  SCHROEDER   answered  that  taking  marijuana   out  of  the                                                               
controlled substance classification would  affect the entire drug                                                               
offense  statutes because  the statutes  all refer  to controlled                                                               
substances.  She stated  that a  change was  not impossible.  She                                                               
explained  that  an  easy  drafting   modification  would  be  to                                                               
specifically revise  the promoting contraband statute  by carving                                                               
out  marijuana   while  leaving   the  rest  of   the  controlled                                                               
substances as a class C felony.                                                                                                 
                                                                                                                                
SENATOR MCGUIRE  remarked that the  Department of  Law's detailed                                                               
presentation  specified the  places  where clarity  is needed  as                                                               
well  as  the  potential  for  absurd  results  if  marijuana  is                                                               
regulated  more like  alcohol.  She said  the  Department of  Law                                                               
pointed out  that marijuana is  still a controlled  substance and                                                               
its  effect as  to whether  the promoting  contraband statute  at                                                               
correctional  facilities should  be amended.  She asked  that the                                                               
Department  of  Law thoroughly  review  other  places where  they                                                               
would see a felony or a  misdemeanor crime come into place versus                                                               
a lesser penalty  for alcohol. She stated that  her assumption is                                                               
that there are more places.                                                                                                     
                                                                                                                                
CHAIR  STOLTZE concurred  that receiving  additional comments  on                                                               
practical  applications  would  be  a  good  guide  for  all  the                                                               
committees that address marijuana.                                                                                              
                                                                                                                                
9:24:15 AM                                                                                                                    
MIKE LESSMAN,  Legislative Liaison,  Alaska Department  of Public                                                               
Safety, Anchorage, Alaska.                                                                                                      
                                                                                                                                
9:24:37 AM                                                                                                                    
MAJOR  DENNIS  CASANOVAS,  Deputy Director,  Division  of  Alaska                                                               
State Troopers,  Alaska Department  of Public  Safety, Anchorage,                                                               
Alaska, presented his testimony as follows:                                                                                     
                                                                                                                                
     I   appreciate   the   opportunity  to   address   this                                                                    
     legislative committee and to  primarily reaffirm to you                                                                    
     that  the  Alaska  State   Troopers  are  committed  to                                                                    
     carrying  out  the  laws  of  the  state  in  the  most                                                                    
     professional and effective manner possible.                                                                                
                                                                                                                                
     While most  state legislation is carefully  crafted and                                                                    
     vetted and it includes  modifying existing statutory or                                                                    
     regulatory language  so the  intent of  new legislation                                                                    
     is  clear and  conflicting  language  and ambiguity  is                                                                    
     eliminated,  what  we  are faced  with  here  with  the                                                                    
     passage of Ballot Measure 2,  although it resulted in 8                                                                    
     community hearings  held during  September of  2014 and                                                                    
     now  that the  election  results  have been  certified,                                                                    
     Alaska State Troopers and  other Alaska law enforcement                                                                    
     officers around  the state  are expected  to understand                                                                    
     and legally  enforce the changes which  this initiative                                                                    
     provides for  and I point  out that it's just  going to                                                                    
     be in 27 days from now.                                                                                                    
                                                                                                                                
     I would  like to  outline where the  Alaska Legislature                                                                    
     may be able to assist  law enforcement in understanding                                                                    
     what is  expected of  us and to  better inform  the law                                                                    
     abiding public on what is expected of them as well.                                                                        
                                                                                                                                
9:26:05 AM                                                                                                                    
     The  primary issue  as you've  heard the  Department of                                                                    
     Law  talk about  is this  reconciliation or  merging of                                                                    
     definitions of  marijuana; again, that we  will need to                                                                    
     know  by February  24. There  are existing  statutes as                                                                    
     you have  heard testimony  to and this  slide primarily                                                                    
     points out  the differences in that  definition between                                                                    
     the  statute that  police  officers  are most  familiar                                                                    
     with, AS 11.71.900, and then  the new initiative on the                                                                    
     far right  hand side of  the slide. The  new initiative                                                                    
     is much more broad  and encompassing of the definition.                                                                    
     We have been accustomed to  just looking at a marijuana                                                                    
     plant  or marijuana  products and  saying there's  only                                                                    
     four  active  parts  of  that   plant  and  that's  the                                                                    
     flowers,  buds,  leafs, and  seeds.  Now  with the  new                                                                    
     initiative   that    definition   has    expanded   and                                                                    
     essentially includes  anything that could  be extracted                                                                    
     from the  plant to  include the resins,  compounds, and                                                                    
     the manufacture  of items from  this plant.  To further                                                                    
     sort of  complicate that  issue is  that in  the ballot                                                                    
     initiative  the definition  says what's  not there  and                                                                    
     that's  fiber produced  from the  stalks, oil,  or cake                                                                    
     made from  the seeds  of the plant,  etc. So  they have                                                                    
     the  word "oil"  in the  lower part  of the  initiative                                                                    
     that is not  part of the plant. I would  like to give a                                                                    
     few examples of the  circumstances that law enforcement                                                                    
     may  be faced  with here  next  month and  see if  it's                                                                    
     clear  to  the board  to  hear  what  it is  that  your                                                                    
     decision would be.                                                                                                         
                                                                                                                                
9:28:21 AM                                                                                                                    
     If  we   could  envision  a  law   enforcement  officer                                                                    
     contacting  a  citizen in  a  public  place, perhaps  a                                                                    
     street corner or an airport  or a Marine Highway System                                                                    
     terminal,  or  even  on  school  grounds  which  aren't                                                                    
     already   posted   prohibiting    the   possession   of                                                                    
     marijuana, or  even during a  traffic stop on  a public                                                                    
     roadway. So you  have a 21 year old citizen,  who has a                                                                    
     container  with  slightly  less than  one  ounce  of  a                                                                    
     substance that  appears to  be a  marijuana concentrate                                                                    
     and  6  marijuana plants,  only  3  of which  that  are                                                                    
     mature,  flowering plants.  Would  this  be a  criminal                                                                    
     offense? If you apply the  definition of the new ballot                                                                    
     measure, the answer  would be probably not.  But if you                                                                    
     apply  the definitions  found in  current statute  that                                                                    
     aren't being modified or revoked  yet, the answer would                                                                    
     be it could be a criminal offense.                                                                                         
                                                                                                                                
     So if  we add another  variable to that, let's  say the                                                                    
     law enforcement officer  contacts three 21-year-olds in                                                                    
     a vehicle  on a public  roadway, sitting in  the center                                                                    
     console of the vehicle is  a single container with just                                                                    
     under   three   ounces   of  marijuana   or   marijuana                                                                    
     concentrate  and that  there are  18 marijuana  plants,                                                                    
     only  9  of which  are  mature,  flowering plants.  The                                                                    
     citizens in  the stop claim  that each of them  own one                                                                    
     third  of the  products. Is  there a  criminal offense?                                                                    
     Applying the  definition of the new  Ballot Measure the                                                                    
     answer may be  no. But applying current  Alaska law and                                                                    
     court  rulings that  describe possession  which may  be                                                                    
     sole  or   actual  possession,  constructive   or  held                                                                    
     jointly  with others,  the answer  could  be that  this                                                                    
     could be a criminal offense.                                                                                               
                                                                                                                                
9:30:18 AM                                                                                                                    
     Let's examine  a law  enforcement officer  who responds                                                                    
     to  a residential  apartment  or home  for  a call  for                                                                    
     service;  while there,  the  officer  learns that  from                                                                    
     each  of  the  four  21-year-olds that  this  is  their                                                                    
     primary  residence. Found  in  the home  is 24  growing                                                                    
     marijuana  plants, 12  of which  are mature,  flowering                                                                    
     plants. Is this  a criminal offense by  one, or perhaps                                                                    
     all four  of the  residents, or  are they  within their                                                                    
     legal limits per the Ballot Measure?                                                                                       
                                                                                                                                
     And one additional  variable to that is  let's say that                                                                    
     in  addition  to  all these  plants,  there  are  three                                                                    
     pounds  of harvested  marijuana  located  in the  home.                                                                    
     Does  the language  found in  the  initiative under  AS                                                                    
     17.38.020(b),  which reads  that is  not a  criminal or                                                                    
     civil  offense  under  Alaska  law  to  possess,  grow,                                                                    
     process,  transport  more  than six  marijuana  plants,                                                                    
     three or fewer being  mature plants, and the possession                                                                    
     of  the  marijuana  produced  by   the  plants  on  the                                                                    
     premises  where the  plants  were  grown, meaning  that                                                                    
     there is potentially no maximum  limit to the amount of                                                                    
     marijuana  produced  by  the plants  in  the  residence                                                                    
     where  the   plants  are  that  can   be  harvested  or                                                                    
     retained.                                                                                                                  
                                                                                                                                
9:31:46 AM                                                                                                                    
MAJOR CASANOVAS summarized as follows:                                                                                          
                                                                                                                                
     Ballot Measure 2  is going to require  the Alaska State                                                                    
     Troopers  to  order, and  we  have,  over four  hundred                                                                    
     battery  operated scales  to hand  out to  Alaska State                                                                    
     Troopers  and Village  Public Safety  Officers so  that                                                                    
     they  may be  able  to accurately  weigh marijuana  and                                                                    
     marijuana concentrates  when encountered. We  intend to                                                                    
     produce a  PowerPoint presentation  to our  troopers as                                                                    
     to the policies for enforcement  of this new law but we                                                                    
     still need  your assistance in  clarifying some  of the                                                                    
     conflicting and ambiguous  language before February 24,                                                                    
     which will  assist us in designing  those policies. Our                                                                    
     Alaska law  enforcement officers and the  vast majority                                                                    
     of  Alaska's general  public wish  to  comply with  the                                                                    
     laws which are enacted, but  we need your direction and                                                                    
     support  in   making  those  laws   understandable  and                                                                    
     enforceable and to later withstand judicial review.                                                                        
                                                                                                                                
9:32:45 AM                                                                                                                    
CHAIR STOLTZE  asked if Major  Casanovas had concern  or optimism                                                               
regarding the Legislature  reaching the clear lines  to allow the                                                               
Alaska State Troopers to administer justice.                                                                                    
                                                                                                                                
MAJOR  CASANOVAS replied  that the  initiative was  certified two                                                               
months ago  and there is one  month left. He noted  that there is                                                               
at  least  one   bill  moving  forward.  He   revealed  that  the                                                               
Department  of Public  Safety has  met with  several other  state                                                               
departments  and he  remains optimistic  that the  department can                                                               
have some language reconciliation prior to February 24.                                                                         
                                                                                                                                
CHAIR STOLTZE asked  if the initiative is similar  to the Miranda                                                               
Ruling which had  a lot of opposition or concern  about it and it                                                               
eventually shook  out. He  inquired if the  initiative has  to be                                                               
tested by arrest.                                                                                                               
                                                                                                                                
MAJOR CASANOVAS  answered that  his hope is  that by  putting the                                                               
time upfront  in getting  the definitions  clarified so  that law                                                               
enforcement knows  what the  rules are, there  will be  less long                                                               
term, expensive  litigation and heartache  from citizens  and the                                                               
judiciary. He said  he thinks if we just burn  the candle at both                                                               
ends  right now,  perhaps a  lot of  consternation, anxiety,  and                                                               
expense can be avoided down the road.                                                                                           
                                                                                                                                
CHAIR  STOLTZE  commented that  Major  Casanovas  holds a  common                                                               
view.                                                                                                                           
                                                                                                                                
9:34:55 AM                                                                                                                    
SENATOR MCGUIRE  remarked that there  has been a narrow  focus on                                                               
what  is the  definition of  marijuana.  She stated  that from  a                                                               
broader  view,  the  reason  for   laws  pertaining  to  alcohol,                                                               
marijuana, and  other drugs is  due to the mind  altering effects                                                               
on  human beings  that may  or may  not create  public safety  or                                                               
other  types  of threats  or  concerns  within a  community.  She                                                               
asserted that  the Legislature in  many cases has been  forced to                                                               
go back  and reevaluate the state's  relationship with marijuana.                                                               
She  explained that  the initiative  has tried  to carve  out one                                                               
area,  but in  doing so  the  initiative has  thrown the  bigger,                                                               
broader issue on the Legislature's lap.                                                                                         
                                                                                                                                
SENATOR MCGUIRE said she is looking for the Department of                                                                       
Safety's point of view on the following:                                                                                        
                                                                                                                                
   · How does the department view marijuana?                                                                                    
   · How do the officers view marijuana?                                                                                        
   · What is marijuana's placement in Alaska's communities?                                                                     
   · What is marijuana's placement in society?                                                                                  
   · Where do you think the Legislature should come down in                                                                     
     terms of the regulation of marijuana?                                                                                      
  · What are the potential harms and threats to human beings?                                                                   
   · Where are the places you are seeing potential threats?                                                                     
   · Are your concerns in certain parts of the state?                                                                           
   · Are   your   concerns   more   on   the   manufacturer   and                                                               
     distribution?                                                                                                              
   · Are you seeing physical crimes occur alongside marijuana at                                                                
     a rate that is disproportionate to other mind altering                                                                     
     substances?                                                                                                                
   · What are the kinds of things from a public safety point of                                                                 
     view should the committee know?                                                                                            
                                                                                                                                
9:37:27 AM                                                                                                                    
MAJOR CASANOVAS replied as follows:                                                                                             
                                                                                                                                
     The  points  that  the  Department  of  Law  made;  for                                                                    
     example,  where the  line should  be drawn  between the                                                                    
     current understanding  of marijuana as a  6A controlled                                                                    
     substance:  flowers, seeds,  buds,  leaves?  How do  we                                                                    
     cross  that  next  bridge that  apparently  the  voters                                                                    
     supported in  this ballot initiative to  expand that to                                                                    
     things that are  a lot higher in  concentration of THC?                                                                    
     How  do we  bridge  that? Do  we say  that  there is  a                                                                    
     demarcation point  there or do  we not? Do we  say that                                                                    
     anything, everything  from a  marijuana plant  is going                                                                    
     to  be legal  in some  quantities or  not? That  is the                                                                    
     crux  of the  matter  and  I'll have  to  defer to  the                                                                    
     expertise of  the State Medical  Officer in  regards to                                                                    
     the  toxicity and  the impacts  upon  people and  those                                                                    
     sorts of things. But right  now law enforcement is very                                                                    
     focused  on  the  difference between  a  Schedule  IIIA                                                                    
     controlled substance, which is  more serious than a 6A,                                                                    
     and   the  IIIA   is  hashish,   hash  oil,   and  it's                                                                    
     Tetrahydrocannabinols and those  are considered at this                                                                    
     point to  be more serious  and we've been  very focused                                                                    
     on  drawing  the  distinctions between  those  two  for                                                                    
     approximately 30  years now in  those statutes  and now                                                                    
     to  sort  of merge  them  all  together based  on  this                                                                    
     ballot initiative  is the thing that  we are struggling                                                                    
     with in law enforcement.                                                                                                   
                                                                                                                                
9:39:24 AM                                                                                                                    
SENATOR MCGUIRE stated that she  is interested in creating policy                                                               
that  reflects common  sense and  that responds  to the  kinds of                                                               
challenges that  are out  there. She  noted that  Major Casanovas                                                               
made  a point  between Schedule  III and  6A drugs;  but, to  the                                                               
average public person, they don't  really understand all of that,                                                               
what matters  is the public  safety part  of it. She  pointed out                                                               
that over two years of  hearings with detailed testimony occurred                                                               
when  the  Legislature  lowered the  blood-alcohol  to  0.08  for                                                               
driving  under  the  influence. She  specified  that  the  blood-                                                               
alcohol change  was made not  because the Legislature  could, but                                                               
because driving  at 0.10 was  more of  a threat to  public safety                                                               
than  0.08. She  said law  enforcement is  on the  ground dealing                                                               
with  people who  distribute and  use marijuana.  She asked  what                                                               
Major Casanovas is seeing that  the committee should be concerned                                                               
about.  She conceded  that  everyone can  agree  that the  public                                                               
safety issue  of young  people using  marijuana is  not something                                                               
the  State of  Alaska should  encourage, but  as the  Legislature                                                               
moves into  the issue of  adults 21-and-over  using cannabinoids,                                                               
where should  the Legislature  be alarmed, in  the ounces  or the                                                               
concentrates? She asked that more  specific testimony be provided                                                               
in the  future where officers  observe a person's  behavior under                                                               
the   influence  of   cannabinoids.  She   reiterated  that   the                                                               
Department  of Public  Safety  is on  the  ground, responding  to                                                               
people under  the influence of  marijuana and the  department can                                                               
really help the Legislature.                                                                                                    
                                                                                                                                
9:41:12 AM                                                                                                                    
SENATOR HUGGINS joined the committee meeting.                                                                                   
                                                                                                                                
MAJOR CASANOVAS replied  that he will certainly  discuss with his                                                               
supervisors as  to what it is  that the department might  be able                                                               
to do to answer Senator McGuire's question.                                                                                     
                                                                                                                                
CHAIR STOLTZE commented  that the committee will  look forward to                                                               
the detailed follow up.                                                                                                         
                                                                                                                                
SENATOR  WIELECHOWSKI stated  that  he  appreciates the  examples                                                               
that Major Casanovas  gave and his comments. He  noted that there                                                               
is  a  strong  desire  to  get   this  right  on  behalf  of  the                                                               
Legislature. He  conceded that there clearly  are inconsistencies                                                               
between  the law  and  the initiative;  but,  the Legislature  is                                                               
going to  try to fix  it and get it  right. He remarked  that the                                                               
Legislature will possibly miss something when enacting the law.                                                                 
                                                                                                                                
CHAIR STOLTZE commented that it is likely.                                                                                      
                                                                                                                                
SENATOR  WIELECHOWSKI replied  that he  agreed. He  remarked that                                                               
the enforcement  should be to  enact the  will of the  people. He                                                               
said enforcement should  not be to say, "Well, under  the old law                                                               
you  have  one  plant  too  many  in  your  car,  but  under  the                                                               
initiative  that's okay;"  that's  the will  of  the people,  the                                                               
people  have  spoken. He  asserted  that  the enforcement  policy                                                               
should be to follow the will of the people.                                                                                     
                                                                                                                                
SENATOR MCGUIRE  affirmed that Senator  Wielechowski made  a good                                                               
point that  the Legislature's  job is  to enact  the will  of the                                                               
people. She  asserted that an  exception occurs where there  is a                                                               
public safety threat.  She agreed with the  scenario presented as                                                               
to  why a  person should  be charged  with a  felony rather  than                                                               
violation  or   misdemeanor  for  having  one   plant  more.  She                                                               
specified that  her intent is to  get at case examples  where the                                                               
Department  of   Safety  is  really   concerned  and   where  the                                                               
Legislature should draw the bright-lines.                                                                                       
                                                                                                                                
CHAIR  STOLTZE  commented  that  he   is  hoping  to  direct  the                                                               
committee's  attention to  the  Walker administration  presenting                                                               
what  Senator McGuire  is  asking  for. He  noted  that what  the                                                               
committee is debating usually occurs during the bill wrap up.                                                                   
                                                                                                                                
9:44:57 AM                                                                                                                    
SENATOR  COGHILL said  one of  the questions  the Legislature  is                                                               
wrestling  with  is  to  tell when  somebody  is  impaired  using                                                               
marijuana.                                                                                                                      
                                                                                                                                
MAJOR  CASANOVAS replied  that arrest  for impairment  depends on                                                               
the officer doing the following:                                                                                                
                                                                                                                                
   · Observes vehicle maneuvers that leads to a stop.                                                                           
   · Odor detection during initial encounter.                                                                                   
   · Asks the driver for a verbal explanation on his or her                                                                     
     condition and what they might have consumed.                                                                               
   · Have the subject, if willing, participate in a series of                                                                   
     field sobriety tests.                                                                                                      
   · Use a portable breath testing device to determine if                                                                       
     alcohol is involved.                                                                                                       
                                                                                                                                
MAJOR  CASANOVAS  continued  that  if there  is  no  evidence  of                                                               
alcohol and the person still  appears to exhibit all the symptoms                                                               
and  signs of  being under  the influence  of something,  whether                                                               
that is  a prescription or  illicit drugs, the officer  takes all                                                               
of the previously noted field  observations into consideration to                                                               
make the  decision whether  to arrest or  not. He  explained that                                                               
once an arrest is made, then a  consent for a blood draw from the                                                               
subject or  a search warrant  is obtained  for a blood  draw from                                                               
the subject to  try to be able to later  identify what substances                                                               
may  or may  not have  been onboard  the person  that would  have                                                               
resulted in the impairment.                                                                                                     
                                                                                                                                
He  specified  that an  officer  in  the field  cannot  ascertain                                                               
whether a person's impairment is  marijuana and marijuana only in                                                               
addition  to  identifying  whether marijuana  is  comingled  with                                                               
alcohol or prescription  drugs. He explained that there  is not a                                                               
field test  or a breath test  device that would at  this point be                                                               
available that would tell an officer  the level at which a person                                                               
might be impaired by marijuana alone.                                                                                           
                                                                                                                                
9:47:46 AM                                                                                                                    
SENATOR  COGHILL  responded  that  he  just  wanted  to  get  the                                                               
information as a starting point for discussion.                                                                                 
                                                                                                                                
CHAIR  STOLTZE  asked for  the  Department  of Public  Safety  to                                                               
provide a narrative which will be  useful all the way through the                                                               
committee process  as well  as the floor.  He requested  that the                                                               
department  submit an  official  document  that identifies  their                                                               
objective   and    subjective   applications    for   determining                                                               
impairment.                                                                                                                     
                                                                                                                                
SENATOR  HUGGINS  noted  that  Senator  Wielechowski's  statement                                                               
regarding "will  of the people"  is important. He  commented that                                                               
if a  parallel to alcohol  is used  with marijuana, what  are the                                                               
complicating enforcement  factors when a person  is prohibited to                                                               
use alcohol or marijuana by a court case.                                                                                       
                                                                                                                                
9:49:34 AM                                                                                                                    
MAJOR CASANOVAS answered that the  difficulty for law enforcement                                                               
will be  if the officer  is not  provided benefit of  the subject                                                               
themselves admitting or outlining what  it is that they have been                                                               
taking  or any  witnesses to  provide that  information. He  said                                                               
there is  very minimal  information available  to the  officer in                                                               
the field  for trying to  isolate whether  or not marijuana  or a                                                               
concentrate or  something was  used by the  subject that  may put                                                               
them in  violation of their  conditions of release  or conditions                                                               
of probation;  it is  a hurdle  for us to  overcome in  the field                                                               
with marijuana.                                                                                                                 
                                                                                                                                
SENATOR  HUGGINS noted  that there  has  been a  major influx  of                                                               
marijuana going into  states that border Colorado.  He asked what                                                               
would happen  from an enforcement perspective  if Wasilla decides                                                               
that they are  not going to participate in  the marijuana process                                                               
and neighboring  cities like  Anchorage or  Palmer decide  not to                                                               
opt out.                                                                                                                        
                                                                                                                                
9:51:26 AM                                                                                                                    
MAJOR CASANOVAS  replied that based  upon discussions he  has had                                                               
with the Department  of Law, a person 21 and  older will have the                                                               
right  to possess  and transport  marijuana in  public. He  noted                                                               
that he  has not  heard that  a community can  actually put  up a                                                               
fence for marijuana as is done  with alcohol. He said he believed                                                               
that  the  initiative  is  going   to,  in  essence,  disallow  a                                                               
community  from  prohibiting  possession;  but,  communities  can                                                               
regulate  or ban  marijuana cultivation,  manufacturing, testing,                                                               
and retail sales.                                                                                                               
                                                                                                                                
CHAIR  STOLTZE asked  if  marijuana equates  with  alcohol as  to                                                               
whether there is transferability in  areas that are "damp," "wet"                                                               
or "dry."                                                                                                                       
                                                                                                                                
MAJOR  CASANOVAS  surmised  that   there  is  no  transferability                                                               
because   even  though   communities  could   vote  against   the                                                               
possession or  importation of alcohol into  their communities, as                                                               
about  108 communities  currently  do,  the marijuana  initiative                                                               
appears to say  that people will have the right,  up to an ounce,                                                               
21 years of  age, to have possession of marijuana  when they come                                                               
into  the  city limits  of  communities  that  do not  allow  the                                                               
possession or importation of alcohol.                                                                                           
                                                                                                                                
CHAIR STOLTZE announced that  representatives from the Department                                                               
of Revenue will testify before the committee.                                                                                   
                                                                                                                                
9:54:31 AM                                                                                                                    
JERRY   BURNETT,  Deputy   Commissioner,  Alaska   Department  of                                                               
Revenue, Juneau, Alaska.                                                                                                        
                                                                                                                                
KEN ALPER, Director, Tax Division,  Alaska Department of Revenue,                                                               
Juneau, Alaska.                                                                                                                 
                                                                                                                                
BRANDON SPANOS, Deputy Director,  Tax Division, Alaska Department                                                               
of Revenue, Anchorage, Alaska.                                                                                                  
                                                                                                                                
MR. ALPER  noted that  Mr. Spanos oversees  the excise  tax group                                                               
which  is the  group that  will  be charged  with overseeing  any                                                               
marijuana taxation statutes.  He said the initiative  is a fairly                                                               
lengthy piece of  law, about 8 pages long and  taxation is fairly                                                               
brief,  approximately a  half of  a  page. He  revealed that  the                                                               
Department of  Revenue has  been working with  the ABC  Board and                                                               
other  agencies  from  the  beginning   to  make  sure  that  the                                                               
transition  is  relatively seamless.  He  asserted  that the  tax                                                               
portion of  the law  is a relatively  straight forward  corner of                                                               
the overall marijuana initiative.                                                                                               
                                                                                                                                
He stated that  the Department of Revenue is  expected to collect                                                               
$50  per ounce.  He said  the transfer  will occur  at the  first                                                               
transaction from the grower or  cultivator to the manufacturer or                                                               
retailer.  He specified  that the  law is  fairly clear  that the                                                               
plant itself, the useable part,  will be taxed at the cultivation                                                               
facility and not  a manufactured concentrate or  anything else in                                                               
those lines. He noted that the  follow up to the taxation section                                                               
in the statute  is that differential taxes on  different parts of                                                               
the plant can be established if  so chosen, but the $50 per ounce                                                               
is the baseline position.                                                                                                       
                                                                                                                                
9:56:16 AM                                                                                                                    
He  revealed  that  the Tax  Division  administratively  collects                                                               
taxes throughout  the state,  including: alcohol,  tobacco, motor                                                               
fuels,  vehicle  rentals,  and  tires.  He  set  forth  that  the                                                               
Department  of Revenue  anticipates that  the marijuana  taxation                                                               
functions will be  handled inside of the  department's excise tax                                                               
group. He asserted that adding  marijuana taxation is well within                                                               
the department's  competency to add  another one. He  shared that                                                               
the  department's one  concern  is to  maintain  taxation on  the                                                               
wholesale or producer level as  is done with tobacco and alcohol.                                                               
He stated  that taxation at  the individual retailer  level would                                                               
impose  a   much  more  complex  administrative   burden  on  the                                                               
department.                                                                                                                     
                                                                                                                                
He  revealed   that  preliminary   revenue  estimates   from  the                                                               
department's  economic  research  group  is  $5  million  to  $20                                                               
million  in the  first full  year of  taxation and  regulation of                                                               
marijuana. He  noted that the  relatively broad  revenue estimate                                                               
is attributed to some inherent  unknowns such as the quantity and                                                               
volume of current marijuana users  in the state. He reported that                                                               
the biggest variable is what  proportion of the current cohort of                                                               
marijuana  smokers and  consumers  are going  to transition  from                                                               
illegal  to the  legal tax  regulated market.  He noted  that the                                                               
only  points of  data where  from Colorado  and Washington  where                                                               
robust  and fully  functional  medical  marijuana industries  and                                                               
dispensaries  were   operating  with  marijuana  that   was  less                                                               
expensive than  the legal  recreational facilities.  He explained                                                               
that conversion  rates have been  relatively low in  Colorado and                                                               
Washington.  He pointed  out that  Alaska does  not have  a fully                                                               
developed  medical  marijuana  industry  despite  the  fact  that                                                               
medical marijuana  has been  legal and on  the state's  books for                                                               
some years.                                                                                                                     
                                                                                                                                
MR. ALPER stated that tax enforcement  is widely believed to be a                                                               
good way of  catching and prosecuting law breakers  that might be                                                               
hard to  catch in other ways.  He said the Department  of Revenue                                                               
envisions working with the licensing  agencies; for example, if a                                                               
selling facility after  inspection is found to  have seven pounds                                                               
of marijuana in  their possession and they can't  prove from whom                                                               
they bought  it and  the taxes  were paid when  they got  it, the                                                               
Department of Revenue has a  tax enforcement case with relatively                                                               
robust  fines  as  well  as  the $50  an  ounce  tax  itself.  He                                                               
specified   that    the   Department   of    Revenue's   Criminal                                                               
Investigations Unit works not just  for the Tax Division, but for                                                               
the  Alaska  Permanent Fund  and  the  Child Support  Enforcement                                                               
Agency, will  be working  with the department  to make  sure that                                                               
marijuana  taxes are  collected.  He revealed  the  fact that  Al                                                               
Capone did not go  to jail for being a gangster,  he went to jail                                                               
for not paying his income taxes.                                                                                                
                                                                                                                                
9:59:16 AM                                                                                                                    
He stated that he fully expects  that the Legislature will have a                                                               
robust and complex  role this Session. He surmised  that at least                                                               
one  bill will  be passed.  He  declared that  the Department  of                                                               
Revenue  will not  jump-the-gun  and start  a regulatory  process                                                               
until  the  department  receives  direction. He  noted  that  the                                                               
Department  of  Revenue is  under  a  requirement to  finish  the                                                               
marijuana  regulations by  November, a  solid seven  months after                                                               
the  Session.  He  stated  that  the  Department  of  Revenue  is                                                               
confident that the  regulatory process will be  completed well in                                                               
advance of the deadline.                                                                                                        
                                                                                                                                
CHAIR STOLTZE  related that the  Department of  Revenue projected                                                               
tax revenues to  be $5 million to $20 million.  He asked what the                                                               
department    anticipates    for    transactional    costs    for                                                               
implementation within the department.                                                                                           
                                                                                                                                
MR. BURNETT replied that the  transactional costs are going to be                                                               
small, assuming  that taxation continues at  the wholesale level.                                                               
He specified that with the  other excise taxes, the transactional                                                               
costs will amount to less than one fulltime employee.                                                                           
                                                                                                                                
SENATOR  COGHILL  asked  if  the   tax  scheme  methodologies  in                                                               
Colorado or Washington were reviewed for guidance.                                                                              
                                                                                                                                
MR. ALPER  replied yes.  He noted  that other  jurisdictions were                                                               
taxing  at the  retail level  which  makes the  tax process  more                                                               
complex.                                                                                                                        
                                                                                                                                
MR. SPANOS  added that  the Tax Division  has looked  at Colorado                                                               
and noted that  he has a meeting with their  contractor to assist                                                               
the division in  developing their software to  go over Colorado's                                                               
tax structure  in detail. He stated  that there does not  seem to                                                               
be a  lot that's going to  be useful from Colorado's  tax return.                                                               
He said  the tax and  tax return will  be fairly simple.  He said                                                               
the Tax Division already has  a draft-return that taxes ounces at                                                               
a certain  rate. He noted that  as Mr. Alper had  already stated,                                                               
the Tax  Division has  an opportunity to  tax different  parts of                                                               
the plant at  a different rate and that's  the multi-complex part                                                               
of the return.                                                                                                                  
                                                                                                                                
SENATOR COGHILL  remarked that the  committee is still  trying to                                                               
figure out what  does an "ounce" mean. He  specified that "ounce"                                                               
could be the  "plant" or the "derivatives." He asked  how the Tax                                                               
Division will interpret  "ounce." He noted that  Colorado is bar-                                                               
coding each plant and asked if the  state will do the same or use                                                               
an  aggregate methodology.  He added  that  the Legislature  will                                                               
continue  to discuss  the marijuana  regulation scheme  and noted                                                               
that the  ABC Board is  currently reviewing taxation  schemes. He                                                               
asked  what would  be  the  best and  cleanest  way  for the  Tax                                                               
Division to tax marijuana.                                                                                                      
                                                                                                                                
10:02:56 AM                                                                                                                   
MR.  ALPER answered  that  from  the point  of  view  of the  Tax                                                               
Division, an ounce  taxed will be the plant matter  that is being                                                               
sold  for  future  consumption.   He  detailed  that  within  the                                                               
cultivation  facility, there  might be  the following:  trimming,                                                               
packaging, creating  of the  package, whatever  that is  to which                                                               
the plant  will be  transferred. He  added that  there will  be a                                                               
scale, stamp,  and some sort of  mechanism to prove that  the tax                                                               
has been  paid. He asserted that  he does not envision  the issue                                                               
of  concentrates being  at  all relevant  to  the Tax  Division's                                                               
definition of an ounce for tax  purposes, it's purely going to be                                                               
the plant itself.                                                                                                               
                                                                                                                                
SENATOR COGHILL replied  that the committee will  have to address                                                               
the retail-level because the plant value  at a stem is one thing,                                                               
but  the plant  value  in  its concentrate  is  a very  different                                                               
thing. He summarized that there  are possession issues as well as                                                               
value  issues that  the committee  will have  to think  about. He                                                               
noted that  the ABC Board  is probably addressing  the possession                                                               
and value  issues. He stated that  value will be an  issue at the                                                               
Tax Division.  He summarized that  once a  plant goes out  and if                                                               
taxation  is  totally  wholesale  based,  which  looks  like  the                                                               
initiative  wants the  Legislature to  do, value  will likely  be                                                               
placed on an individual plant.                                                                                                  
                                                                                                                                
10:04:14 AM                                                                                                                   
MR.  BURNETT set  forth that  the Tax  Division will  not have  a                                                               
problem  with value  taxation at  the first  transaction that  is                                                               
based  upon  ounces.  He  noted  that  the  initiative  specifies                                                               
ounces. He  stated that the Tax  Division does not, for  the most                                                               
part, do retail taxes at the  state level in Alaska. He mentioned                                                               
that there  is a  question as to  whether from  the Legislature's                                                               
perspective  that taxability  be  reserved  for local  government                                                               
entities as is currently done with alcohol and tobacco.                                                                         
                                                                                                                                
SENATOR  COGHILL  concurred  that  many  communities  have  sales                                                               
taxes.  He agreed  that retail  taxation  probably more  properly                                                               
belongs to the local governments.                                                                                               
                                                                                                                                
MR. ALPER added  that the Department of Revenue  has learned that                                                               
the concentrates  in other  states tend  to be  manufactured from                                                               
lower value parts  of the plant, things that might  not be usable                                                               
by the  traditional smokables  market. He  detailed that  a large                                                               
amount of lower  value product is being used to  generate a small                                                               
amount  of concentrate  and there  would be  consideration for  a                                                               
different tax  rate or  different tax regime  on the  lower value                                                               
portion of the marijuana plant.                                                                                                 
                                                                                                                                
10:06:00 AM                                                                                                                   
CHAIR STOLTZE noted  that Mr. Alper has been involved  with a lot                                                               
of tax  issues. He asked if  Mr. Alper has considered  himself to                                                               
be pretty knowledgeable with marijuana as well.                                                                                 
                                                                                                                                
MR. ALPER responded that when he  was asked to be the Director of                                                               
the Tax Division, marijuana was  not part of the conversation nor                                                               
did  he realize  that it  was going  to be  part of  the job.  He                                                               
stated  that he  does  not  consider himself  to  be  much of  an                                                               
expert. He explained  that he is somewhat aware  of the marijuana                                                               
industry, but he noted that he has  had to learn a lot during his                                                               
two months on the job.                                                                                                          
                                                                                                                                
CHAIR STOLTZE noted  that Mr. Alper is a part-owner  of a bakery-                                                               
confection shop.                                                                                                                
                                                                                                                                
MR. ALPER answered that is true.                                                                                                
                                                                                                                                
CHAIR STOLTZE  asked if Mr.  Alper or  his family have  looked at                                                               
the  possibility  of  being involved  in  the  marijuana  edibles                                                               
portion.                                                                                                                        
                                                                                                                                
MR.  ALPER  replied that  he  and  his  wife  were aware  of  the                                                               
initiative  and  have  had   almost  joking  conversations  about                                                               
edibles. He  specified that their  realization early on  was that                                                               
they would need to  see what the rules are going  to be and would                                                               
need to run the economics. He  specified that he and his wife are                                                               
by no  means opposed, but  by no  means gun-ho. He  asserted that                                                               
ultimately  in his  role as  Tax Director  that it  might not  be                                                               
appropriate. He  said even if  he and his wife  thought marijuana                                                               
edibles might  be a  good business decision,  they might  opt out                                                               
just to avoid any appearance of conflict.                                                                                       
                                                                                                                                
CHAIR  STOLTZE   asked  to  confirm   that  Mr.  Alper   has  had                                                               
discussions about the business opportunities.                                                                                   
                                                                                                                                
MR. ALPER answered  that he has had informal  discussion with his                                                               
wife who is his business partner.                                                                                               
                                                                                                                                
CHAIR  STOLTZE  asked to  confirm  that  Mr.  Alper has  not  had                                                               
discussions with any other people as well.                                                                                      
                                                                                                                                
MR. ALPER replied that he does not understand the question.                                                                     
                                                                                                                                
10:07:47 AM                                                                                                                   
CHAIR STOLTZE  asked if  Mr. Apler  and his  wife have  talked to                                                               
another   person  at   any  time   about  a   marijuana  business                                                               
opportunity.                                                                                                                    
                                                                                                                                
MR.  ALPER  replied  that  he  and his  wife  have  had  informal                                                               
discussions at  a party  or casual  conversations. He  noted that                                                               
Chair Stoltze  is not the  first person who  has asked if  he and                                                               
his  wife  would be  interested  in  getting into  the  marijuana                                                               
industry due to their bakery business.                                                                                          
                                                                                                                                
CHAIR  STOLTZE   asked  to  verify  that   Mr.  Alper's  business                                                               
enthusiasm is very damp for marijuana.                                                                                          
                                                                                                                                
MR. ALPER answered  that on a scale from 1  to 10, his enthusiasm                                                               
is a 4.                                                                                                                         
                                                                                                                                
SENATOR HUGGINS  stated that  his assumption is  that THC  can by                                                               
produced synthetically.  He asked if  THC can indeed  be produced                                                               
synthetically and  economically. He  inquired if  the Legislature                                                               
should  have a  concern for  synthetic THC,  particularly from  a                                                               
taxation standpoint  where inexpensive THC might  be incorporated                                                               
into edibles.                                                                                                                   
                                                                                                                                
10:09:17 AM                                                                                                                   
MR. BURNETT  answered that a  synthetic THC would be  illegal. He                                                               
specified  that   there  are  different   laws  that   allow  the                                                               
Department  of Revenue  to look  at whether  a business  is using                                                               
artificial or imitation substances.                                                                                             
                                                                                                                                
SENATOR HUGGINS  pointed out that certain  states license ethanol                                                               
dealers  to  produce  alcohol.  He asked  if  the  Department  of                                                               
Revenue  has considered  quasi-legalized THC  production that  is                                                               
similar to "moonshine" produced in the alcohol industry.                                                                        
                                                                                                                                
MR.  ALPER  replied  that  initiative allows  a  person  to  grow                                                               
marijuana  and  not be  taxed  or  regulated. He  specified  that                                                               
growing larger quantities of marijuana  than what is specified is                                                               
illegal. He stated  that tip-offs to the  department from legally                                                               
licensed growers  will hopefully be  one of the  best enforcement                                                               
mechanisms.                                                                                                                     
                                                                                                                                
10:12:03 AM                                                                                                                   
CHAIR STOLTZE asked  if the Department of  Revenue has considered                                                               
progressive taxes that increases based upon value.                                                                              
                                                                                                                                
MR. ALPER  answered no. He said  he is not interested  in testing                                                               
or comparing relative  quality of marijuana and  declaring that a                                                               
certain product is worth more.                                                                                                  
                                                                                                                                
SENATOR HUGGINS asked what the  Department of Revenue anticipates                                                               
what the value of one ounce of marijuana will be.                                                                               
                                                                                                                                
MR. ALPER  answered that  he did  not know what  the value  of an                                                               
ounce of  marijuana in  Alaska is  today. He  said he  knows that                                                               
marijuana  prices are  regionally  distinctive due  to  a lot  of                                                               
local regional economies.                                                                                                       
                                                                                                                                
MR. SPANOS remarked that the  Tax Division has done the research,                                                               
but he does not have the data  in front of him. He explained that                                                               
he has  looked at  Alaska's value  via the  internet and  the Tax                                                               
Division does have an idea.                                                                                                     
                                                                                                                                
MR.  ALPER stated  that he  anticipates, because  of the  federal                                                               
illegality on  the restrictions on  transportation that  go along                                                               
with  pricing,  that  Alaska  will  have  a  series  of  regional                                                               
"locally grown" economies with differential prices.                                                                             
                                                                                                                                
CHAIR STOLTZE  remarked that  finding Alaska's  current marijuana                                                               
prices on the internet is interesting.                                                                                          
                                                                                                                                
SENATOR HUGGINS  asked if  the state  should look  at progressive                                                               
tax due to higher regional values.                                                                                              
                                                                                                                                
10:14:53 AM                                                                                                                   
MR. BURNETT remarked that higher  regional prices should be taxed                                                               
locally. He said whether the  state should be taxing marijuana at                                                               
a higher rate or local communities  ought to be looking at taxing                                                               
higher values is certainly open to discussion.                                                                                  
                                                                                                                                
MR.  ALPER  opined  that local  pricing  discrepancies  is  quite                                                               
likely  due  to  there  not being  locally  grown  and  available                                                               
supply. He surmised  that marijuana is possibly  being brought in                                                               
illegally  and that  activity is  something other  agencies would                                                               
need to be looking into.                                                                                                        
                                                                                                                                
SENATOR HUGGINS  pointed out that  there has been  speculation on                                                               
the  state having  some sort  of  banking system  in addition  to                                                               
transportation  challenges.  He  asked to  confirm  that  federal                                                               
agencies do  not allow marijuana  to be transported  on airlines.                                                               
He inquired if the state should be involved with transportation.                                                                
                                                                                                                                
MR.  BURNETT  replied  that  Senator  Huggins'  query  is  not  a                                                               
function  of the  Department  of Revenue,  but  he believes  that                                                               
addressing  both   banking  and  transportation  is   a  rational                                                               
question.   He  remarked   that  both   the  Administration   and                                                               
Legislature should be looking at banking and transportation.                                                                    
                                                                                                                                
MR. ALPER stated  that the Tax Division would  prefer that people                                                               
not bring large amounts of cash to pay their excise taxes.                                                                      
                                                                                                                                
10:16:48 AM                                                                                                                   
SENATOR MCGUIRE  commented that saying higher  pricing based upon                                                               
marijuana being a black market  item is not necessarily true. She                                                               
pointed out that marketing for  Copper River sockeye salmon is an                                                               
example  where  higher  value  is  placed  upon  a  commodity  by                                                               
purchasers.                                                                                                                     
                                                                                                                                
SENATOR  MCGUIRE addressed  taxation and  surmised that  like oil                                                               
taxes, marijuana  taxes will  evolve over  time. She  opined that                                                               
marijuana's initial taxation will not be the only way forever.                                                                  
SENATOR  MCGUIRE  said if  marijuana  becomes  a huge  commercial                                                               
industry, lots of  people will be talking about  different way to                                                               
tax it.                                                                                                                         
                                                                                                                                
She  stated  that  her  question to  the  Department  of  Revenue                                                               
pertains to  synthetics. She mentioned that  Senator Huggins made                                                               
a good point  when he referenced synthetics from  a public safety                                                               
standpoint. She  remarked that synthetics are  illegal, but noted                                                               
that the initiative made edibles legal.                                                                                         
                                                                                                                                
She asked that the Department of Revenue address the following:                                                                 
                                                                                                                                
   · Confirm that marijuana will have a chain of custody that                                                                   
     will verify taxation in a way that is similar to a tobacco                                                                 
     stamp.                                                                                                                     
   · Verify that a chain of custody will monitor THC and                                                                        
     synthetic THC levels as well as follow marijuana into the                                                                  
     edibles.                                                                                                                   
   · Corroborate that taxes appropriately provide for the social                                                                
     services associated with marijuana.                                                                                        
                                                                                                                                
MR.  BURNETT explained  that the  Department of  Revenue will  be                                                               
working with  the ABC Board to  set up the regulations.  He added                                                               
that the  ABC Board  will be  on point  to address  the structure                                                               
that Senator McGuire noted.                                                                                                     
                                                                                                                                
CHAIR STOLTZE concurred  that all kinds of  evolutions will occur                                                               
with  marijuana.  He  pointed  out   that  with  cigarettes,  the                                                               
Legislature and local governments have  raised the taxes with the                                                               
stated  policy purpose  to make  sure tax  revenue and  usage are                                                               
reduced.  He  opined that  marijuana  may  evolve into  something                                                               
similar to cigarettes.                                                                                                          
                                                                                                                                
10:20:49 AM                                                                                                                   
CYNTHIA  FRANKLIN, Director,  Alcoholic  Beverage Control  Board,                                                               
Alaska Department  of Community and Regional  Affairs, Anchorage,                                                               
Alaska, noted that Colorado has  "medical" and "retail" marijuana                                                               
pricing. She revealed that medical-pricing  was $150 an ounce and                                                               
retail-pricing was  $385 an ounce. She  specified that Colorado's                                                               
retail-marijuana  is taxed  at  a  rate of  about  25 percent  in                                                               
addition to sales and local  taxes while medical-marijuana is not                                                               
subject  to many  of the  retail taxes.  She said  the ABC  Board                                                               
urges the  Legislature not to  go down  the path of  creating two                                                               
separate  types of  marijuana  in Alaska.  She  pointed out  that                                                               
Colorado's medical  card holders continue  to grow as  people get                                                               
cheaper marijuana.  She stated that  Alaska has the  advantage of                                                               
starting with a blank slate.                                                                                                    
                                                                                                                                
10:23:41 AM                                                                                                                   
MS. FRANKLIN  revealed that  Colorado indicated  that definitions                                                               
are  very  important.   She  asserted  that  the   role  for  the                                                               
Legislature is to  define terms. She said the ABC  Board can work                                                               
with the definitions that the  Legislature creates when the board                                                               
is looking at the regulations.                                                                                                  
                                                                                                                                
She  pointed  out that  the  term  "edibles"  is not  defined  in                                                               
AS.17.38  and the  ABC  Board  would like  to  see a  bright-line                                                               
regarding  adulterated edibles.  She  explained that  adulterated                                                               
edibles is a  separate category where existing  food products are                                                               
sprayed with marijuana and repackaged.  She noted that Colorado's                                                               
public  health and  safety representatives  found  edibles to  be                                                               
particularly   objectionable   and  particularly   appealing   to                                                               
children.  She  suggested  that   a  bright-line  definition  for                                                               
edibles could say that it  does not include adulterated products,                                                               
meaning  edibles  must  be  made from  scratch.  She  noted  that                                                               
members  of  the early  aspects  of  Alaska's marijuana  industry                                                               
unilaterally agreed  that adulterated  edibles was not  what they                                                               
had in mind where something already made was sprayed down.                                                                      
                                                                                                                                
She addressed synthetic cannabinoid  and explained that synthetic                                                               
THC is a myth.  She divulged that there is no  THC in a synthetic                                                               
cannabinoid,  the term  was  used  as a  marketing  ploy and  the                                                               
elicit substance  is not  related to marijuana  at all.  She said                                                               
synthetic cannabinoid is a cocktail  of various sundry drugs that                                                               
is marketed  as "synthetic marijuana"  to appeal to  young people                                                               
who were  looking for  a high  that they  thought was  legal. She                                                               
opined  that synthetic  cannabinoids  is off  the  table and  the                                                               
discussion of  marijuana is really  about a natural  product that                                                               
is grown and what can be done with the plant itself.                                                                            
                                                                                                                                
10:26:47 AM                                                                                                                   
CHAIR STOLTZE  remarked that the initiative's  sponsors testified                                                               
about  dosages and  controlling dosages.  He pointed  out that  a                                                               
half liter of  vodka with a non-resealable, pop-off  cap would be                                                               
frowned upon. He  noted that while in Denver he  had taken photos                                                               
of marijuana edibles and noted  that one cookie had 70 milligrams                                                               
(mg) of THC, or 7 doses. He  said he does not smoke marijuana and                                                               
hypothetically  asked if  someone  has the  self-control to  just                                                               
nibble off a single dose from  the cookie. He inquired if the ABC                                                               
Board  would have  a regulatory  and policy  role in  delineating                                                               
dosages and controlling packaging.                                                                                              
                                                                                                                                
MS.  FRANKLIN  replied that  several  elements  are important  to                                                               
assure  safe recreational  use  of edibles.  She  noted that  the                                                               
products Chair Stoltze  saw in Colorado were due to  come off the                                                               
shelves  on January  31, 2015.  She said  Colorado went  back and                                                               
rewrote  their rules  on edibles  to take  effect on  February 1,                                                               
2015. She  explained that Colorado  revised rules  around edibles                                                               
and  created  a  serving  size.   She  said  the  debate  in  the                                                               
stakeholders group  that made the  new edibles rules  was whether                                                               
the THC serving size  should be 5 mg or 10  mg. She revealed that                                                               
Colorado settled on  10 mg and asserted that Alaska  could have 5                                                               
mg. She  explained that  the reason  for a 5  mg serving  size is                                                               
based  upon  Colorado's  public education  program  on  marijuana                                                               
edibles to "Start low and go slow."                                                                                             
                                                                                                                                
CHAIR STOLTZE  asked if a 5  mg serving size would  be a consumer                                                               
advisory or  legal imperative. He  remarked that serving  size is                                                               
not indicative of what a person actually eats.                                                                                  
                                                                                                                                
10:29:48 AM                                                                                                                   
MS. FRANKLIN  replied correct. She  pointed out that  alcohol has                                                               
rules on  serving sizes and  serving sizes for  marijuana edibles                                                               
could be legislated.                                                                                                            
                                                                                                                                
CHAIR STOLTZE asserted  that there must be an  imperative to lead                                                               
the Legislature  to set serving  sizes relating to  public health                                                               
or public safety justifications. He  stated that he does not want                                                               
to emphasize  what the  Legislature is  able to  do, but  why the                                                               
Legislature should  do it  and what  public safety  aspects there                                                               
are.                                                                                                                            
                                                                                                                                
MS. FRANKLIN  explained that the  reason why Colorado  settled on                                                               
10 mg was basically the scientific  basis of a person who has not                                                               
previously used edibles, what type  of serving of THC would begin                                                               
to have the  psychoactive effect and how the  person would react.                                                               
She detailed that  a person will feel  uncomfortable after eating                                                               
or smoking too  much marijuana. She noted that  there really were                                                               
not any scientific effects that  were brought forward in terms of                                                               
poisoning  in the  equivalent of  alcohol poisoning.  She pointed                                                               
out that ingesting  too much alcohol certainly can  lead to death                                                               
and that  has not  been seen with  marijuana; however,  people in                                                               
Colorado  and Washington  have been  admitted to  emergency rooms                                                               
with  uncomfortable sensations  due  to marijuana's  psychoactive                                                               
effect. She stated  that the 5 mg serving size  was determined to                                                               
be a small serving size  where someone will feel the psychoactive                                                               
effect.                                                                                                                         
                                                                                                                                
CHAIR STOLTZE stated  that the Legislature has  an imperative not                                                               
to  jump   into  a  "Reefer   Madness"  mode,  but   to  actually                                                               
concentrate  on  what the  empirical  science,  data, and  public                                                               
safety aspects are.                                                                                                             
                                                                                                                                
10:32:14 AM                                                                                                                   
MS. FRANKLIN  opined that the 5  mg serving size is  a reasonable                                                               
serving size with a maximum of  50 mg per package that included a                                                               
clear  demarcation. She  explained that  on February  1, Colorado                                                               
will require a cholate bar to  have a clear demarcation for 10 mg                                                               
squares.                                                                                                                        
                                                                                                                                
CHAIR STOLTZE asked  to verify that rather than a  large block, a                                                               
chocolate bar would have to have scorings that shows 10 mg.                                                                     
                                                                                                                                
MS. FRANKLIN answered  correct. She detailed that  Colorado has a                                                               
maximum  of 100  mg  per package.  She stated  that  there is  no                                                               
reason why Alaska could not have a 50 mg maximum per package.                                                                   
                                                                                                                                
CHAIR STOLTZE  related that  when he was  in Colorado  he noticed                                                               
the "Peanut Budda Buddha" bar with 210 mg.                                                                                      
                                                                                                                                
MS. FRANKLIN  replied that the  product Chair Stoltze  noted will                                                               
be removed  from stores  on January 31.  She detailed  that under                                                               
Colorado's new  rules, a  chocolate bar  that contains  more than                                                               
[100] mg cannot be sold.                                                                                                        
                                                                                                                                
She  addressed childproof  packaging  in  Colorado and  suggested                                                               
that Alaska adopt a similar rule  where an edible packaged in a 5                                                               
mg serving  size does  not require  childproof packaging,  but an                                                               
edible  in  a 50  mg  package  would  have  to be  resealable  to                                                               
childproof. She noted  that she toured a company  that made fizzy                                                               
THC  drinks  that  had  to   change  their  bottling  machine  to                                                               
incorporate childproof caps.                                                                                                    
                                                                                                                                
She  pointed out  that prior  to Colorado  going to  recreational                                                               
marijuana  in  January  2014,  the state  catered  to  a  medical                                                               
marijuana  market.  She  explained  that  the  medical  marijuana                                                               
market tends to want and  demand higher concentration of THC. She                                                               
noted  that Colorado  experienced  problems when  the higher  THC                                                               
products sold  to the  medical marijuana  market was  consumed by                                                               
individuals in  the recreational market that  had lower tolerance                                                               
levels. She  asserted that  Alaska is  ahead of  the game  by not                                                               
having an established medical marijuana market.                                                                                 
                                                                                                                                
10:35:01 AM                                                                                                                   
She addressed  the limitation of  products appealing to  kids and                                                               
noted  that  there  is  a   trifold  role  for  the  Legislature,                                                               
regulators, and  the local governing bodies.  She said Washington                                                               
has a  system where edibles  require a pre-approval  process. She                                                               
detailed  that manufacturers  or processors  submit products  and                                                               
plans  to Washington's  liquor  control  board, products  clearly                                                               
marketed towards children are not  permitted. She said Washington                                                               
has  a  stopgap  that  prevents the  edibles  market  from  being                                                               
entirely gummy-bears and silly-straws.                                                                                          
                                                                                                                                
MS. FRANKLIN  called attention to  warning labels and  noted that                                                               
Colorado's  are fairly  elaborate. She  pointed out  that warning                                                               
labels are required for alcohol  and she anticipates the same for                                                               
marijuana  edibles. She  recommended that  Alaska uses  a warning                                                               
label that  clearly identifies the  product and suggested  that a                                                               
symbol  be  associated with  the  warning.  She detailed  that  a                                                               
warning symbol will  work for people who cannot  read English and                                                               
can  immediately  associate the  product  as  being infused  with                                                               
marijuana.                                                                                                                      
                                                                                                                                
She  noted  that  Major  Casanovas  made  a  good  point  on  the                                                               
definition of marijuana in the  initiative. She asserted that the                                                               
Legislature has to be very  careful about altering the definition                                                               
too severely because  the only way to make edible  products is to                                                               
use  marijuana  concentrates.   She  said  incorporating  smashed                                                               
marijuana leaves into  a brownie is not going to  taste very nice                                                               
in addition  to not having  the desired psychoactive  effect. She                                                               
explained  that  marijuana must  be  heated  for  there to  be  a                                                               
psychoactive effect.  She specified  that putting  marijuana into                                                               
an edible requires  the marijuana to be heated in  an oil base to                                                               
make  a concentrate.  She noted  that bakeries  in Colorado  make                                                               
what  is called  "cannabutter"  where marijuana  is infused  into                                                               
butter  over  a  slow  heating process.  She  asserted  that  the                                                               
marijuana edibles  industry will be eliminated  if "concentrates"                                                               
is taken out  of the marijuana definition and dialed  back to the                                                               
Title 11 definition with just stems, flowers, and buds.                                                                         
                                                                                                                                
She noted that  the definition referenced by  Major Casanovas had                                                               
a  strange  portion at  the  end  that  says marijuana  does  not                                                               
include "oil."  She pointed out  that "oil"  is one word  used to                                                               
describe a product that is  a result of solvent based extraction.                                                               
She  revealed that  solvent  extractions in  homes  has been  the                                                               
cause of hash oil explosions.                                                                                                   
                                                                                                                                
10:39:49 AM                                                                                                                   
CHAIR STOLTZE commented  that some of the  home extractions using                                                               
solvents make meth labs look tame.                                                                                              
                                                                                                                                
MS. FRANKLIN replied that the  Alaska contingency in Colorado saw                                                               
a couple of explosions on video.                                                                                                
                                                                                                                                
CHAIR STOLTZE asked to specify  that Ms. Franklin is referring to                                                               
unregulated extractions occurring at home.                                                                                      
                                                                                                                                
MS. FRANKLIN  answered yes.  She said  the solvent  extraction in                                                               
homes is not a particularly  successful method. She asserted that                                                               
solvent extractions  in homes is  something that Alaska  does not                                                               
want,  but governing  bodies should  be aware  of. She  specified                                                               
that  licensees will  not use  the  nefarious extraction  methods                                                               
used in  homes. She  pointed out that  licensees in  Colorado are                                                               
required  to use  closed-loop extraction  systems for  solvent or                                                               
CO2 extractions with certain safety precautions in place.                                                                       
                                                                                                                                
She set  forth that  addressing marijuana  regulations is  a very                                                               
difficult  area  due  to  figuring out  where  the  rules  around                                                               
marijuana  stop and  the existing  rules begin.  She pointed  out                                                               
that the rules in  Title 4 for alcohol are in  one place and that                                                               
alcohol  is  not  in  the Controlled  Substances  Act.  She  said                                                               
officers do  not have to look  up two different codes  and try to                                                               
figure  out which  one the  substance  falls in.  She noted  that                                                               
Title  4 has  many misdemeanor  and felony  crimes that  apply to                                                               
individuals who are  not licensed or regulated by  the ABC Board,                                                               
but who  are dealing with  a dangerous substance.  She summarized                                                               
that  alcohol is  a  regulated substance,  but  not a  controlled                                                               
substance.                                                                                                                      
                                                                                                                                
10:43:03 AM                                                                                                                   
She  revealed  that edibles  are  40  percent of  the  recreation                                                               
market in Colorado. She stated  that due to smoking prohibitions,                                                               
edibles are likely to be  the most commonly purchased product for                                                               
tourist consumption.                                                                                                            
                                                                                                                                
She revealed  that labs are  big in  Colorado. She said  she does                                                               
not know  where the labs  are going to  come from in  Alaska, but                                                               
labs are essential to certify  the THC content for edible serving                                                               
size. She  related that Alaska  was advised  to have its  labs up                                                               
and running before edible licenses are issued.                                                                                  
                                                                                                                                
CHAIR STOLTZE  declared that the  committee will have  the Alaska                                                               
Department  of  Environmental   Conservation  (DEC)  address  the                                                               
committee. He  noted that the  initiative's pamphlet  referred to                                                               
"crime lab" and that does not make sense.                                                                                       
                                                                                                                                
MS.  FRANKLIN added  that  the ABC  Board works  a  lot with  DEC                                                               
regarding alcohol regulation.                                                                                                   
                                                                                                                                
MS.   FRANKLIN  stated   that  Alaska   should  have   reasonable                                                               
advertising limits  and public  education about  marijuana rules,                                                               
especially around edibles. She noted  that Colorado has developed                                                               
a good-to-know  public education  campaign and  basically offered                                                               
to provide the program to Alaska for free.                                                                                      
                                                                                                                                
She  asserted that  local government  control  is important.  She                                                               
noted that an  earlier question referenced not being  able to ban                                                               
possession is  based on the  Ravin v.  State decision and  not by                                                               
the initiative. She explained that  the Title 4: Local Option Law                                                               
allows  communities to  ban transport,  sale, manufacturing,  and                                                               
distribution,  but  does  not  ban  possession  of  alcohol.  She                                                               
detailed that Local Option 4  applies to municipalities and Local                                                               
Option 3 applies villages. She  disclosed that the Title 4: Local                                                               
Option Law is the  best that a community is going  to get to. She                                                               
noted  that  local  governments  in  Colorado  issued  their  own                                                               
licenses  in  addition  to state  licenses.  She  suggested  that                                                               
consideration  be  given  to allow  local  governments  to  issue                                                               
licenses,   a   question   that   has  been   posed   by   Alaska                                                               
municipalities.                                                                                                                 
                                                                                                                                
She  stated that  banking and  licensing will  be presented  at a                                                               
later committee  meeting. She noted  that many states  in issuing                                                               
their medical licenses have been  sued because of their licensing                                                               
selection process. She recommended  that the state look carefully                                                               
at its licensing structure.                                                                                                     
                                                                                                                                
CHAIR  STOLTZE asked  that  Ms. Franklin  address  in the  future                                                               
whether licenses should  have an economic vested  value or should                                                               
another  commercial fishing  entitlement type  license or  a taxi                                                               
medallion  be   created.  He   asserted  that   licensing  merits                                                               
discussion  due to  its  impact on  barriers  for average  people                                                               
versus big businesses.                                                                                                          
                                                                                                                                
10:46:45 AM                                                                                                                   
JEFF JESSEE, Chief Executive Officer,  Alaska Mental Health Trust                                                               
Authority,  Anchorage, Alaska,  stated that  despite claims  that                                                               
marijuana may not  be as dangerous as alcohol,  marijuana is: not                                                               
safe,  good for  a person,  and  is addictive.  He revealed  that                                                               
adolescents  that  begin  smoking  marijuana have  a  14  percent                                                               
addiction rate,  adults at 6 percent.  He added that many  of the                                                               
Trust's beneficiaries  have an issue  with marijuana as  well. He                                                               
revealed that 2.7 million Americans are addicted to marijuana.                                                                  
                                                                                                                                
He asserted  that ending marijuana's prohibition  did not require                                                               
the creation of a large  scale commercial industry to promote the                                                               
increased use and  normalization of marijuana. He  noted that the                                                               
Rand Corporation has  developed a list of 12  different ways that                                                               
one  could  decriminalize  marijuana  and  the  most  extreme  is                                                               
exactly what the initiative proposes to do.                                                                                     
                                                                                                                                
10:48:35 AM                                                                                                                   
MR. JESSE pointed out the following:                                                                                            
                                                                                                                                
   · The black market is not going to go away.                                                                                  
    -Small business owners are not going to ban together and                                                                    
      open a business.                                                                                                          
     -Entry into the marijuana industry will require more than                                                                  
      $100,000 in cash.                                                                                                         
   · Marijuana will not be regulated like alcohol.                                                                              
     -Infusing alcohol into edibles is illegal.                                                                                 
     -THC will be allowed to be infused into edibles.                                                                           
                                                                                                                                
He said  there are many  questions that the Legislature  needs to                                                               
consider.  He  asserted  that the  Legislature  is  the  ultimate                                                               
regulators no  matter what the  sponsors say. He opined  that the                                                               
Legislature will spend  the next two sessions  on the initiative;                                                               
however,  he   noted  that   the  Alaska   Constitution  provides                                                               
protection from initiatives by allowing  the Legislature to amend                                                               
within a  two year  period. He pointed  out that  the Legislature                                                               
has a right to repeal the  initiative in 2017. He opined that the                                                               
marijuana  industry insisted  on the  9 month  regulatory process                                                               
because they know  the Legislature cannot put the  "genie back in                                                               
the bottle." He noted that he  has spent 2 years working with the                                                               
alcohol industry on  overhauling Title 4 and pointed  out that in                                                               
many  cases where  the board  has given  licenses to  unqualified                                                               
candidates, licensees  where "grandfathered" in. He  said for the                                                               
government to change the rules  and eliminate a person's economic                                                               
investment is not appropriate for the government.                                                                               
                                                                                                                                
He recommended that the  Legislature seriously consider extending                                                               
the regulatory process to scrutinize the following:                                                                             
                                                                                                                                
   · Unlimited licensing.                                                                                                       
   · Licensing where the licenses have economic value.                                                                          
   · Population based licensing or other limits.                                                                                
   · Vaping.                                                                                                                    
   · Child protection and childproofing.                                                                                        
   · Advertising.                                                                                                               
   · Addressing areas in Alaska that do not have local                                                                          
     governments.                                                                                                               
                                                                                                                                
MR.  JESSE urged  that the  Legislature not  be stampeded  by the                                                               
constant  refrain,  "The  people  have  voted,  the  people  have                                                               
voted." He  said he does not  think the people had  the knowledge                                                               
of  what the  nine month  regulatory process  would mean  and how                                                               
complex  the  marijuana issue  would  be.  He asserted  that  the                                                               
Legislature  would   not  be  out   of  line  in   repealing  the                                                               
initiative.                                                                                                                     
                                                                                                                                
CHAIR STOLTZE  asked if Mr.  Jesse could provide  the Legislature                                                               
with data  on the  percentage of  the Trust's  beneficiaries that                                                               
were served  through addiction programs  and if he  can delineate                                                               
marijuana.                                                                                                                      
                                                                                                                                
MR. JESSE  replied that he  does not  have the data.  He asserted                                                               
that data collection  is one thing the Legislature  needs to look                                                               
at  and start  collecting data  for the  initiative's health  and                                                               
legal impacts.                                                                                                                  
                                                                                                                                
10:53:41 AM                                                                                                                   
There being  no further  business to  come before  the committee,                                                               
Chair  Stoltze  adjourned  the   Senate  State  Affairs  Standing                                                               
Committee hearing at 10:53 a.m.