Legislature(2015 - 2016)BARNES 124
03/11/2015 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Adjourn | |
| Start | |
| HB67 | |
| HB123 |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 123 | TELECONFERENCED | |
| *+ | HB 67 | TELECONFERENCED | |
HB 123-ESTABLISH MARIJUANA CONTROL BOARD
4:12:32 PM
CHAIR OLSON announced that the final order of business would be
HOUSE BILL NO. 123, "An Act establishing the Marijuana Control
Board; relating to the powers and duties of the Marijuana
Control Board; relating to the appointment, removal, and duties
of the director of the Marijuana Control Board; relating to the
Alcoholic Beverage Control Board; and providing for an effective
date."
4:12:38 PM
CHAIR OLSON said questions on the fiscal note arose. He then
reported that the fiscal note has been revised.
4:13:16 PM
MICALEA FOWLER, Legislative Liaison, Department of Commerce,
Community & Economic Development (DCCED), stated that in a
previous hearing, the committee discussed moving the funds from
the Governor's FY 16 budget into the FY 16 appropriation
request. She explained that the DCCED's fiscal note was revised
to reflect the FY 16-FY 21 projected costs.
4:14:09 PM
CYNTHIA FRANKLIN, Executive Director, Alcoholic Beverage Control
Board (ABC Board), Department of Commerce, Community & Economic
Development (DCCED), explained that HB 123 would create a
Marijuana Control Board (MCB), with the executive director
serving both the Alcoholic Beverage Control Board (ABC Board)
and the Marijuana Control Board (MCB). She explained details in
the fiscal note, such that the personal services adds four
fulltime employees in FY 16. She directed attention to the
narrative section of the fiscal note that contemplated six added
positions to implement proposed regulations related to
marijuana. Two positions were added in FY 15 to respond to the
substantial work necessary to regulate marijuana. In FY 16,
three investigator positions and one business licensing
examiner. The travel section includes travel for enforcement
and compliance, noting that enforcement officers travel
throughout the state to ensure that licensees are in compliance
and to ensure that licensees are not providing alcohol to
minors. She anticipated a similar need for enforcement travel
to oversee marijuana licensees.
MS. FRANKLIN explained that the new board would be comprised of
five members, set up in a similar fashion to the current ABC
board. She reviewed costs, in the first year, including an
anticipated $50,000 FY 16 for board related travel. She
reviewed services, which included legal services, information
technology services, employee support costs, enforcement
vehicles, printing and public notices. The department
anticipates needing additional legal services due to the need
for massive regulations. Colleagues in Washington and Colorado
have indicated a great deal of interest arose on data around the
regulation of recreational marijuana, that the Alcoholic
Beverage Control Board (ABC Board) was currently a paper-based
agency, but the agency will need necessity a database to better
track and provide information.
4:17:25 PM
MS. FRANKLIN related that the database includes software that
has the ability to track marijuana from "seed to sale." She
explained that the services costs include the initial cost of
the database and development in out years. The commodities
expenditures would include the cost of moving staff since the
current office location cannot accommodate the additional staff
required to implement the initiative.
4:18:22 PM
MS. FOWLER added that the fiscal note includes the supplemental
costs, including expedited regulation timeframe and the cost of
the initial staff.
4:18:49 PM
REPRESENTATIVE LEDOUX said the cost of moving offices appears to
cost more than the actual staff salaries and costs. She asked
whether commodities includes the office relocation.
MS. FRANKLIN answered that commodities includes equipment,
office space, furniture, moving expenses, and equipment
purchases; however, the one-time costs are not included after
the first year. She directed attention to FY 16 at $134.5, and
in the out years commodities was budgeted at $106.1, with the
difference between the two representing the cost of the move.
4:20:11 PM
REPRESENTATIVE LEDOUX asked for the rationale for the board
composition and whether the rules were different for the
marijuana industry than for the alcohol industry. She wondered
why the two boards would be treated differently.
MS. FRANKLIN answered that the Marijuana Control Board (MCB) was
modeled after the revised Alcoholic Beverage Control Board (ABC
Board), which means that it took into account the substantial
work the stakeholders group underwent during the Title 4
revisions, including to ensure that the ABC Board was
representative of the industry, public safety, and public health
sectors affected by the substance. She said that a bill has not
yet been introduced to reflect the proposed changes to Title 4,
but the language in the Marijuana Control Board (MCB) was
modeled after the revisions.
4:21:28 PM
REPRESENTATIVE LEDOUX, assuming the revisions would be
introduced and that the bill passed both bodies, asked whether
the two board would be similar boards.
MS. FRANKLIN answered yes.
4:21:42 PM
REPRESENTATIVE JOSEPHSON related his understanding that the
budget that moved out of House Finance Committee today does
include any funds for marijuana regulation.
MS. FRANKLIN answered that was also her understanding.
4:22:00 PM
REPRESENTATIVE JOSEPHSON offered his belief that the $1.57
million would be an addition to state spending if HB 123 passed.
MS. FOWLER answered that the House Finance subcommittee asked
the department to include all costs for regulating marijuana
associated with the initiative that passed be included in the
fiscal note for HB 123 rather than requesting these costs in the
DCCED's budget request.
4:22:39 PM
REPRESENTATIVE JOSEPHSON asked whether the out years also
reflect $1.4 million.
MS. FOWLER answered that if the bill passed with the fiscal
note, the department would not need to come back with an
additional request for the out years.
4:23:01 PM
REPRESENTATIVE HUGHES asked how the annual amount for the out
years compared to the ABC Board's budget. She asked whether the
investigator positions were solely based on Alcoholic Beverage
Control Board (ABC Board) or if the department anticipated there
will be more marijuana businesses.
MS. FRANKLIN answered that currently the Alcoholic Beverage
Control Board (ABC Board) oversees 1,875 licensees. The
original cost estimate to implement ballot measure 2 was a
"mirror image" of the ABC Board's staff. She commented that the
ABC Board currently has five investigators statewide, three
licensing employees, and two administrative staff. She trimmed
the estimate for FY 16, since it is not likely that the
Marijuana Control Board (MCB) will have as many licensees
initially; however, no decisions have been made as to limit
licenses, similar to the way the state limits liquor licenses in
the state. She said the potential exists for the need for
additional staff in the out years; however, it is difficult to
estimate until the state knows how restrictive or open the
industry might be and what the level of interest might be.
4:25:21 PM
REPRESENTATIVE HUGHES asked for the number of inquiries she has
had plus any feedback on inquiries that Colorado has experienced
as compared to the number of businesses that have opened.
MS. FRANKLIN explained that the closest analogy population-wise
to Alaska would be the City of Denver, which issues its own
marijuana licenses. The City of Denver anticipated an
additional 16 employees, but they added 21 more for next year
bringing the total to 37.5 fulltime employees for a population
of 650,000, serving approximately 900 marijuana licenses. She
compared the types of employees, and said that depending on how
the licensing process is structured there could be a fairly
urgent need for additional staffing in future years. However,
all of the positions in the City of Denver were fully funded by
the tax revenues received from regulating the substance. She
reported that Denver collected over $6 million in 2014 with the
37.5 fulltime employees, with the cost to the city at about $4.5
million. She suggested that in moving forward to establish the
industry, given that it may be easier to ask for additional
staffing once the tax revenue becomes apparent.
4:27:46 PM
REPRESENTATIVE LEDOUX asked whether the City of Denver has a
similar board that oversees alcohol.
MS. FRANKLIN explained that the state has 10 employees
statewide, including 5 enforcement officers The City of Denver
regulates marijuana through its Division of Revenue, regulating
alcohol, marijuana, and gaming without a board. She said the
marijuana enforcement division employees 55 fulltime employees,
of which about half are investigators.
4:28:46 PM
REPRESENTATIVE LEDOUX how many staff the City of Denver employs
to oversee the alcohol industry, noting the city may regulate it
differently than in Alaska. She recalled that Alaska has 5 or 6
staff to assist the ABC Board. She asked to hone in on how many
staff regulate alcohol in Denver to help her determine whether
the city was doing things more or less efficiently.
MS. FRANKLIN answered that she did not have the comparison, but
she has reviewed the State of Washington's structure, which is
similar to Alaska's system, with a liquor control board that
regulates marijuana and alcohol. She reported that 297
employees cover regulations of alcohol, with approximately 120
assigned to marijuana licensing and control. For comparison,
she stated that Washington has 15,000 liquor licenses, with
significantly more people working on alcohol than on the
marijuana industry with fewer licensees. She used Washington's
figures to help her determine staffing for marijuana control in
Alaska, noting that Alaska has 10 staff assigned to the alcohol
regulation, and potentially will be adding six employees, which
she said seemed fairly even.
CHAIR OLSON requested the information be sent to the committee
so it can be posted and distributed to committee members.
4:31:00 PM
REPRESENTATIVE COLVER asked about timing of the regulation
process.
MS. FRANKLIN answered that the marijuana initiative gave the
Department of Commerce, Community & Economic Development (DCCED)
nine months from February 24, 2015 to get regulations approved
by the board, whether it happens within the ABC Board or the
Marijuana Control Board (MCB). She anticipated the process
would begin as soon as session ends, once the statutory
framework is known. Further, she reported that Colorado and
Washington, who have marijuana programs, have been helping and
will continue to help Alaska. In addition, she has information
from the Title 4 revisions to review, all of which represents a
good starting place. The ABC Board released a preliminary
document so it has a good start, she said.
4:32:38 PM
REPRESENTATIVE COLVER asked about concepts for a definition of
public place.
MS. FRANKLIN answered that the ABC Board met in an emergency
meeting on February 24, 2015 and defined public place using the
definition from Title 11, AS 11.81.900 (53). The board defined
the term "in public" as given in AS 17.38.040 and has used the
definition in Title 11 for "public place" for the prohibition of
consumption of marijuana "in public." She stated that the ABC
Board will meet again on April 9, 2015 in the Anchorage
Legislative Information Office (LIO) to take public testimony on
whether to make that regulation permanent. She said she
received some initial feedback that the definition could
potentially shut down the possibility of businesses ever having
Cannabis cafés, in which businesses could invite members in to
smoke marijuana together. The overlay of smoking prohibitions
in many communities in Alaska makes it a second year
consideration since the MCB board would like to put some
baseline rules in first, prior to making decisions on the types
of businesses that will be allowed. She said that both
Washington and Colorado have struggled with this issue, but
started with the position of not including those types of
businesses in their initial regulations.
4:34:59 PM
REPRESENTATIVE KITO related his understanding that the initial
concept was to regulate marijuana like alcohol, but he suggested
some significant differences exist in the way these businesses
operate. For example, marijuana would have production,
manufacturing, testing, and sales functions, he said, stating
that Alaska has sales types of businesses in alcohol, but the
department does not anticipate allowing "consume in place"
businesses. Currently, the state doesn't have statutes that
govern the four types of [marijuana] businesses. He stated that
the board structure was meant to regulate the licensing of
marijuana; however, at this point, the state doesn't know much
about the proposed marijuana businesses.
REPRESENTATIVE KITO anticipated that the board would initially
spend most of its time developing regulations. He expressed
concern over a lack of expertise identified on the board for the
start-up period. During this initial period, the board will be
generating significant new regulations that will govern
operations of businesses, yet the state doesn't know exactly
what it will need to regulate. He asked whether the state can
identify who should be on board and if the state would need a
transition phase to provide expertise to board members in
developing regulations that will allow for the effective
operation of the marijuana businesses.
MS. FRANKLIN answered that under the ballot measure, AS
17.38.110 would give the ABC Board regulatory authority unless a
separate board was created and it does outline the four types of
licenses, including manufacturing or cultivating, processing,
retail, and testing facilities. She acknowledged AS 17.38
provided a sketchy outline of the four types of licenses. In
terms of composition of the proposed Marijuana Control Board
(MCB) and representation of the types of businesses, she
reported that in Title 4 manufacturing was kept out of
representation on the ABC board, primarily with the way alcohol
regulation developed over the years as a tiered system. She was
unsure on whether a similar tiered system would be developed for
marijuana; however, the differences between the two substances
makes it unlikely. In fact, prohibition has not been written in
as an industry tier. Theoretically, the proposed board member
industry representatives in HB 123 could be representative of
any of the four types of licensees. Initially, it might present
some challenges to identify industry representation for the
board; however, the agency has not had a shortage of people
coming forward who want to be part of the board. Thus the
governor could evaluate applicants, she said. Of course, the
difficulty will arise in finding an experienced grower since the
industry is currently illegal. However, she has some confidence
that the voters' will in passing the ballot measure will be
honored and that people will be able to openly speak about their
experiences in the industry. For example, some people have
already attested to having acquired experience of 40 years as
growers and these people have appeared at local government
meetings in the Mat-Su valley, she said.
4:39:53 PM
MS. FRANKLIN suggested that the board will be able to identify
people in the short run who claim to be part of the industry.
However, the state will need to get an industry going before it
can ascertain this, although the transition sections and
staggered terms may enable the governor to appoint someone into
shorter term board positions. If it turned out that a person
represented him/herself as part of the industry, but did not end
up having the necessary expertise, the governor could turn the
seat over to another person. It may be that people who
supported the ballot measure or who participated in the
Coalition for Responsible Cannabis Legislation (CRCL) might not
necessarily qualify as industry representatives, but the
governor's selection process can identify the necessary business
background. She said she has been contacted by numerous
businesses who have expressed an interest in the industry and
some existing businesses may provide appropriate experience to
fill one of the shorter-term appointments.
4:41:31 PM
REPRESENTATIVE KITO said her response helped, but people simply
having the desire to serve doesn't give him confidence that the
potential board members will end up having good business
experience. He acknowledged the need for a public health
member, a public safety member, a general public member, and a
rural member. However, by statute the two industry
representatives do not need business experience since the state
doesn't have a marijuana industry in Alaska. He maintained his
concern that the board might end up without the board having the
expertise to develop regulations that will regulate all the
types of businesses dispensing marijuana.
4:42:29 PM
CHAIR OLSON assured members it was important to spend sufficient
time on the bill to address concerns and ensure the regulatory
board and system was appropriate.
4:42:57 PM
CHAIR OLSON opened public testimony on HB 123.
4:43:14 PM
JAMES BARRETT began his testimony by stating he was interested
in entry into the marijuana industry. He offered his belief
that Alaska has an awesome opportunity to establish this
industry, recalling that historically the state has assisted new
industries, for example, the state helped establish the fishing
industry. A black market once existed with the fishing
industry, just as it currently exists with the marijuana
industry. He suggested that the Marijuana Control Board (MCB)
members will help bring expertise, but he emphasized the
necessity of doing it right the first time. He suggested that
it was important to have marijuana controlled separately from
alcohol since the substances are not the same, although they can
be similarly regulated. He offered his support for this bill
and concluded by commending Ms. Franklin's knowledge and
ability.
CHAIR OLSON agreed Ms. Franklin has been doing an incredible
job.
4:45:17 PM
ELLEN GANLEY, Member, Alcoholic Beverage Control Board (ABC
Board), Department of Commerce, Community & Economic Development
(DCCED), stated that substantial discussion has occurred on
whether it would be best to have one board or two boards. She
initially thought that marijuana should fall under one
regulatory board, but since then she has reevaluated this
viewpoint, in particular, given the amount of work that board
must accomplish. In addition, she has been involved in the
current work of the ABC Board, which oversees 1,800 licenses, as
well as during the two years it has taken to draft a rewrite of
Title 4, which will require significant time to implement. She
concluded that she believes it makes sense to have two boards.
4:46:20 PM
KIM KOLE, Coalition for Responsible Cannabis Legislation (CRCL),
who initially started the Anchorage chapter of CRCL, offered
support for HB 123, which would set up a separate Marijuana
Control Board (MCB) under the direction of Ms. Franklin. She
suggested that this structure seemed to make sense for a number
of reasons, including reducing financial costs by having one
administrator serve the Marijuana Control Board (MCB) and the
Alcoholic Beverage Control Board (ABC Board), and to help
identify regulations for this industry. She said that the
language allows up to two board members who represent the
cannabis industry to serve. She encouraged members support two
board members from the industry, including representatives of
cultivators, processors of non-consumables such as concentrates
and lotions, processors of consumable and edible products. She
hoped that ultimately retail stores, beer gardens or cafes will
sell or serve marijuana products. Since the industry is son
bard, no one person can know all aspects of the cannabis
industry, she said, which emphasized the need to have two
industry representatives on the board. She appreciated the
importance of the business perspective and background on the
board; however, she argued that it wasn't imperative to have
someone with only a business background since it was possible to
have an array of backgrounds represented by people who are
really passionate about this new industry.
4:47:56 PM
FRANK BERARDI, Chair, Coalition for Responsible Cannabis
Legislation (CRCL), offered the CRCL's support for HB 123. He
said the board supported having a separate autonomous Marijuana
Control Board (MCB) housed under the same framework as the
Alcoholic Beverage Control Board (ABC Board), directed by Ms.
Franklin. In terms of the vetting process for industry
representatives, the coalition believes that the CRCL membership
has extensive business experience, noting that several people
have an educational background in business and some have already
completed business plans for this venture. The coalition would
like to see the process be an open process that will allow
people be vetted for the positions. He said he personally
supported initial one-year terms for board members just to see
how "this thing shakes out." In closing, he offered support for
HB 123.
4:49:28 PM
GIONO BARRETT asked to testify in support of HB 123. He said it
was a good idea to put the regulations in the hands of the
Alcoholic Beverage Control Board (ABC Board), especially since
Ms. Franklin and her staff have done a great job thus far. He
stated that he was registered for medical marijuana and has been
a long-time marijuana user. He offered his belief that the key
to the regulation of the industry was education since it can
take years to learn the industry. He suggested that Ms.
Franklin has covered a lot of information really well, that he
has an interest in the industry and has found her to be "spot
on." In closing, he said he would trust Ms. Franklin to
regulate marijuana properly.
4:50:34 PM
GIRARD GAUL, Senior Spokesman, Coalition for Responsible
Cannabis Legislation (CRCL), asked to support HB 123. He
further supported having the Marijuana Control Board (MCB) as a
separate committee working alongside the Alcoholic Beverage
Control Board (ABC Board) under Ms. Franklin. He thanked
members for the work on this bill and offered his belief that HB
123 looked great.
4:51:15 PM
BRUCE SCHULTE, Public Relations Manager, Coalition for
Responsible Cannabis Legislation (CRCL), testified in support of
HB 123. He said that historically this group has been
advocating for a separate Marijuana Control Board (MCB);
however, given the combined constraints of schedule and budget,
he believed the hybrid board would be a terrific solution. He
said he has tremendous faith in Ms. Franklin's ability to guide
both boards. He echoed Ms. Kole's comments on board
representation, noting this bill would allow at least two
members with experience to serve on the board. He pointed out
that the schedule has actually begun on the regulatory process
and the board has until November 24 to complete it. He
suggested that this [bill] has become the critical process.
4:52:53 PM
BRANDON EMMETT, Executive Director, Coalition for Responsible
Cannabis Legislation (CRCL) asked to testify in support of HB
123. He suggested that HB 123 was a step in the right
direction. As Mr. Schulte stated, the CRCL's initial position
was to support a completely autonomous Marijuana Control Board
(MCB), but the CRCL now prefers a hybrid board nested under the
Alcoholic Beverage Control Board (ABC Board) to help the MCB
adopt regulations and rules in a timely fashion. He emphasized
the importance of having several board members with expertise in
the marijuana industry. He offered his belief that marijuana
industry board members will be unfettered by any conflict of
interest that could affect a board member directly involved in
the alcohol industry.
4:54:24 PM
CHAIR OLSON said he would hold public testimony open on HB 123.
[HB 123 was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB67 ver W.PDF |
HL&C 3/11/2015 3:15:00 PM |
HB 67 |
| HB67 Sponsor Statement.pdf |
HL&C 3/11/2015 3:15:00 PM |
HB 67 |
| HB67 Fiscal Note-LAW-CIV-03-06-15.pdf |
HL&C 3/11/2015 3:15:00 PM |
HB 67 |
| HB67 Supporting Documents-Letter CMI Construction.pdf |
HL&C 3/11/2015 3:15:00 PM |
HB 67 |
| HB67 Opposing Documents-Email John Deere 2-16-15.pdf |
HL&C 3/11/2015 3:15:00 PM |
HB 67 |
| HB67 Opposing Documents-Letter CNH Industrial 2-25-15.pdf |
HL&C 3/11/2015 3:15:00 PM |
HB 67 |
| HB67 Opposing Documents-Letter AEM 3-05-15.pdf |
HL&C 3/11/2015 3:15:00 PM |
HB 67 |
| HB67 Draft Proposed Blank CS ver E.pdf |
HL&C 3/11/2015 3:15:00 PM |
HB 67 |
| HB67 Sectional Analysis for Draft Proposed Blank CS ver E.pdf |
HL&C 3/11/2015 3:15:00 PM |
HB 67 |
| HB123 Letter from DOA-OAH regarding fiscal note revision.pdf |
HL&C 3/11/2015 3:15:00 PM |
HB 123 |
| HB123 Fiscal Note-DCCED-ABC-03-09-15.pdf |
HL&C 3/11/2015 3:15:00 PM |
HB 123 |
| HB67 Opposing Documents-Email CNH Industrial with Letter 3-10-15.pdf |
HL&C 3/11/2015 3:15:00 PM |
HB 67 |