04/03/2018 09:00 AM Senate FINANCE

HOUSE BILL NO. 273                                                                                                            
                                                                                                                                
     "An Act extending the termination date of the                                                                              
     Marijuana Control Board; and providing for an                                                                              
     effective date."                                                                                                           
                                                                                                                                
10:06:42 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  SAM KITO,  SPONSOR, discussed  the bill.  He                                                                    
stated that the bill was  a basic extension of the Marijuana                                                                    
Control Board.  He remarked that  there was not even  a full                                                                    
year of revenue collection for  the new board, but there was                                                                    
a sunset in  order to have a review to  determine whether it                                                                    
was operating  in the  state's interest.  He shared  that it                                                                    
was  found  that the  board  was  operating in  the  state's                                                                    
interest. He noted the difference  between the board and the                                                                    
other  professional boards  in that  if the  sunset did  not                                                                    
occur, there  was no "wind  down" period. Therefore,  it was                                                                    
stop functioning, if there was no sunset extension.                                                                             
                                                                                                                                
CRYSTAL KOENEMAN, STAFF,  REPRESENTATIVE SAM KITO, discussed                                                                    
the  bill. She  stated that  the bill  was a  six-year board                                                                    
extension.   He   shared   that  there   were   four   audit                                                                    
recommendations. The board was created  in 2015, and had met                                                                    
over  24  times  since  July   2015  to  establish  the  new                                                                    
industry.  She  remarked  that  the  board  was  created  to                                                                    
control the cultivation, manufacture,  and sale of marijuana                                                                    
in  the state.  She stated  that since  June 2016  the board                                                                    
approved  278 license  applications, denied  8 applications,                                                                    
and revoked 2 licenses. She  stated that Mx. McConnell could                                                                    
detail the operations of the board.                                                                                             
                                                                                                                                
10:09:48 AM                                                                                                                   
                                                                                                                                
KRIS  CURTIS,   LEGISLATIVE  AUDITOR,  ALASKA   DIVISION  OF                                                                    
LEGISLATIVE AUDIT,  discussed the document "A  Sunset Review                                                                    
of  the  Department  of Commerce,  Community,  and  Economic                                                                    
Development,  Marijuana  Control  Board (board),"  (copy  on                                                                    
file).  She stated  that  it was  the  board's first  sunset                                                                    
review. Report conclusions began on  page 5, and overall the                                                                    
audit  found  that  the  board   was  serving  the  public's                                                                    
interest by  effectively licensing  marijuana establishments                                                                    
by   establishing   regulations   that   allowed   for   the                                                                    
cultivation, manufacture,  and sale of marijuana  in Alaska.                                                                    
The audit  recommended a  six-year extension.  She explained                                                                    
that in  order to help  assess the effectiveness of  the new                                                                    
board, there was a survey  sent to licensees, and a separate                                                                    
survey  to local  governments. The  survey was  sent to  101                                                                    
licensees,  and  there  was  a  70  percent  response  rate.                                                                    
Another survey  was sent to  16 local government,  and there                                                                    
was an 88 percent response  rate. The survey instruments and                                                                    
the responses were  summarized in Appendices B and  C of the                                                                    
audit. She  stated that, overall, the  responses were fairly                                                                    
positive.   She  announced   that  100   percent  of   local                                                                    
government survey  respondents, and  75 percent  of licensee                                                                    
survey respondents  rated the board's  overall effectiveness                                                                    
at  serving  the  public's interest  as  effective  or  very                                                                    
effective.   Additionally,   over   93  percent   of   local                                                                    
government    survey   respondents    rated   the    board's                                                                    
effectiveness at  enforcing marijuana laws in  their area as                                                                    
good  or excellent.  She pointed  to  exhibit 2  on page  8,                                                                    
which showed  that the  board issued  122 new  licenses form                                                                    
July 2016 through April 2017.  She stated that 80 percent of                                                                    
licensee  survey  respondents  rated their  overall  license                                                                    
experience as  good or excellent.  She noted that on  page 8                                                                    
it was  outlined that  the FY  17 operating  budget included                                                                    
intent  language  that  stated   that  the  application  and                                                                    
licensing  fees  should cover  the  cost  of regulation  and                                                                    
recover  the unrestricted  general fund  appropriations made                                                                    
during the establishment of the program.                                                                                        
                                                                                                                                
10:15:14 AM                                                                                                                   
                                                                                                                                
Co-Chair MacKinnon OPENED public testimony.                                                                                     
                                                                                                                                
ERIKA  MCCONNELL, DIRECTOR,  MARIJUANA  AND ALCOHOL  CONTROL                                                                    
OFFICE, NOME (via teleconference),  asserted that there were                                                                    
enforcement priorities related to health and safety issues.                                                                     
                                                                                                                                
Co-Chair  MacKinnon  asked if  Ms.  McConnell  was going  to                                                                    
comply with the audit's request.                                                                                                
                                                                                                                                
Ms. McConnel. answered in the affirmative.                                                                                      
                                                                                                                                
Senator von  Imhof asked if  the board had begun  any action                                                                    
to address the complaints.                                                                                                      
                                                                                                                                
Ms. McConnell  replied that  the recommendation  was already                                                                    
resolved.  The board  was  able to  add  a criminal  justice                                                                    
technician  to   the  staff,   who  was   an  administrative                                                                    
assistant  to  the  enforcement   unit.  That  staff  member                                                                    
entered  every complaint  received into  the Alaska  Records                                                                    
Management System,  and documenting  any resolution  of that                                                                    
complaint.                                                                                                                      
                                                                                                                                
Co-Chair MacKinnon CLOSED public testimony.                                                                                     
                                                                                                                                
Vice-Chair Bishop discussed the fiscal note.                                                                                    
                                                                                                                                
Senator Micciche asked about the transition.                                                                                    
                                                                                                                                
                                                                                                                                
HANNAH  LAGER,  BUDGET   MANAGER,  DEPARTMENT  OF  COMMERCE,                                                                    
COMMUNITY AND  ECONOMIC DEVELOPMENT, explained that,  in the                                                                    
FY  19,  there were  general  fund  receipts supporting  the                                                                    
marijuana  program,   but  there   was  an   expectation  to                                                                    
eventually be  fully funded by program  receipts starting in                                                                    
FY 20.                                                                                                                          
                                                                                                                                
Senator Micciche  wondered how  the transition  would occur,                                                                    
and  asked why  unrestricted  general funds  would still  be                                                                    
used for the program.                                                                                                           
                                                                                                                                
Ms.   Lager   responded   that   there   was   carry-forward                                                                    
authorization in the current year.                                                                                              
                                                                                                                                
Co-Chair  MacKinnon  asked  if  Ms. Lager  stated  that  the                                                                    
department was forward-funding for an anticipated loss.                                                                         
                                                                                                                                
10:21:46 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:23:34 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair  MacKinnon   informed  that   there  would   be  an                                                                    
examination of the general fund spend on the fiscal note.                                                                       
                                                                                                                                
HB  273  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.