03/12/2015 01:30 PM Senate LABOR & COMMERCE

            SB  60-ESTABLISH MARIJUANA CONTROL BOARD                                                                        
                                                                                                                                
2:19:05 PM                                                                                                                    
CHAIR  COSTELLO   reconvened  the   hearing  and   announced  the                                                               
consideration  of  SB  60. "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."  She  noted that  this  was the  second                                                               
hearing and opened public testimony.                                                                                            
                                                                                                                                
2:19:50 PM                                                                                                                    
KIM  KOLE,   Coalition  for  Responsible   Cannabis  Legislation,                                                               
Anchorage, Alaska, testified  in support of SB  60. She advocated                                                               
for having  two members from  the cannabis industry serve  on the                                                               
board because the  industry is so diversified that  no one person                                                               
can know all  aspects. She also stated support  for the staggered                                                               
appointment  schedule because  it  would  create consistency  and                                                               
momentum throughout the years.                                                                                                  
                                                                                                                                
2:21:34 PM                                                                                                                    
BRUCE SCHULTE,  Spokesperson, Coalition for  Responsible Cannabis                                                               
Legislation, Anchorage,  Alaska, testified  in support of  SB 60.                                                               
He  stated  agreement  with  the  previous  testimony  about  the                                                               
importance  of  having  two knowledgeable  people  on  the  board                                                               
representing the  cannabis industry. He also  suggested rewording                                                               
the language  on page 4,  lines 8-9,  to clarify that  the powers                                                               
and duties  of the  board relate  to the  commercial cultivation,                                                               
manufacture,  possession, and  sale  of marijuana  in the  state,                                                               
because  the  personal  component   is  not  within  the  board's                                                               
purview.                                                                                                                        
                                                                                                                                
2:23:53 PM                                                                                                                    
CYNTHIA  FRANKLIN,  Director,  Alcoholic Beverage  Control  (ABC)                                                               
Board,   Department   of   Commerce,   Community   and   Economic                                                               
Development (DCCED), introduced herself.                                                                                        
                                                                                                                                
CHAIR COSTELLO asked where people  with expertise in the cannabis                                                               
industry might be found.                                                                                                        
                                                                                                                                
MS. FRANKLIN  related her expectation that  initially individuals                                                               
who demonstrate  enough experience  to fill industry  seats would                                                               
be  considered. These  individuals  could come  from  one of  the                                                               
already formed  organizations like the Coalition  for Responsible                                                               
Cannabis Legislation or they could  have previous experience with                                                               
medical marijuana.  She noted that  the regulations  and statutes                                                               
relating  to marijuana  licenses may  include an  opportunity for                                                               
individuals who  have previously grown  the plant in more  than a                                                               
personal amount to enter the  legal commercial market. She didn't                                                               
know that  she or any members  of the ABC Board  would have input                                                               
as to who is selected  because governor appointment decisions are                                                               
often  made without  input from  an  agency. She  noted that  she                                                               
suggested that  the staggered terms  could perhaps  accommodate a                                                               
short-term fill  for the  industry seat.  She further  noted that                                                               
the language in the bill provides  that "not more than two people                                                               
may be actively engaged in  the marijuana industry" as opposed to                                                               
the other designations  which state "one person  shall" come from                                                               
each of the other sectors.                                                                                                      
                                                                                                                                
2:28:13 PM                                                                                                                    
SENATOR STEVENS  asked if she  had concerns with the  language on                                                               
page  4, lines  8-9, that  doesn't  clarify that  the powers  and                                                               
duties of the  board relate only to commercial  regulation of the                                                               
cannabis industry, not personal use.                                                                                            
                                                                                                                                
MS.  FRANKLIN  replied that  language  mirrors  Title 4  and  she                                                               
believes that's  important because limiting the  authority of the                                                               
board to those  individuals who have licenses  would eliminate it                                                               
as a resource for shutting down the black market.                                                                               
                                                                                                                                
CHAIR COSTELLO  asked if she envisions  a seat on the  board that                                                               
represents the safety of youth.                                                                                                 
                                                                                                                                
MS.  FRANKLIN  said  she  believes that  some  of  the  strongest                                                               
candidates for  the public  health and  public positions  will be                                                               
those  who have  experience  in  the public  health  arena as  it                                                               
relates to underage substance abuse.                                                                                            
                                                                                                                                
CHAIR  COSTELLO referenced  the  fiscal note  and questioned  the                                                               
need for two boards.                                                                                                            
                                                                                                                                
MS. FRANKLIN  replied her initial  reaction was that a  new board                                                               
wasn't  needed,  but  she  has since  changed  her  mind.  Adding                                                               
appropriate  representation  from  the marijuana  industry  would                                                               
result in  a seven-member  volunteer board  that is  dominated by                                                               
industry. Adding two  public members to get to an  odd number for                                                               
voting  purposes would  result in  a nine-member  volunteer board                                                               
that would  be unwieldy  to gather  for the  statutorily required                                                               
meetings.  After a  lot of  discussion  and scrutiny  of the  two                                                               
boards,  the most  sensible option  appeared  to be  to create  a                                                               
Marijuana Control  Board within  the ABC  Board agency  and share                                                               
the executive director and staff of the ABC Board.                                                                              
                                                                                                                                
2:34:30 PM                                                                                                                    
CHAIR COSTELLO  asked if the  bill diverges from  the traditional                                                               
structure of  boards and commissions  with regard to the  role of                                                               
the executive director.                                                                                                         
                                                                                                                                
MS.  FRANKLIN  agreed   that  it  is  unusual   to  consider  the                                                               
background  and  experience  of the  executive  director  in  the                                                               
composition of  the board. She  related that it was  a compromise                                                               
after two  and one-half  years of debate  between members  of the                                                               
Title  4 stakeholders  group about  the  size of  the board.  She                                                               
offered her belief that it is  an acknowledgement of the way that                                                               
the board  and agency  work together. Because  it is  a volunteer                                                               
board that meets  just five times a year, much  of the day-to-day                                                               
work  falls to  the  director and  the  director's background  in                                                               
bringing items to the board for its agenda has an influence.                                                                    
                                                                                                                                
MS. FRANKLIN  advised that  that valuable  work was  brought into                                                               
the  Marijuana  Control  Board  bill because  it  resulted  in  a                                                               
product that was supported not only  by the industry but also the                                                               
public health  and public safety stakeholders  who certainly have                                                               
a role and interest in how marijuana will be regulated.                                                                         
                                                                                                                                
2:37:21 PM                                                                                                                    
CHAIR  COSTELLO noted  that she  previously  stated concern  that                                                               
this  structure  might  give  one  applicant  an  advantage  over                                                               
another who  is equally  qualified if one  had a  background that                                                               
filled the missing designation.                                                                                                 
                                                                                                                                
SENATOR  GIESSEL  asked for  clarification  about  the number  of                                                               
times per year that the board  will meet because the bill doesn't                                                               
specify a number; it says the board  will meet at the call of the                                                               
chair.                                                                                                                          
                                                                                                                                
2:39:54 PM                                                                                                                    
MS. FRANKLIN opined  that the bill should mirror  the language in                                                               
Title 4 requiring  the board to meet at least  four times a year,                                                               
once  in each  jurisdiction  and  at a  call  of  the chair.  She                                                               
offered her expectation that the  language would be included in a                                                               
forthcoming  amendment that  would also  have the  missing sunset                                                               
language.                                                                                                                       
                                                                                                                                
SENATOR ELLIS  asked her to  comment on 1) the  vigorous lobbying                                                               
effort by  the alcohol industry  to move  the ABC Board  from the                                                               
Department of Public Safety (DPS)  to the Department of Commerce,                                                               
Community and  Economic Development  (DCCED); 2)  what's happened                                                               
since then; and 3) if there  is any practical import for marrying                                                               
the marijuana  board with the  ABC Board  and having it  in DCCED                                                               
rather than DPS.                                                                                                                
                                                                                                                                
MS. FRANKLIN stated  that the Marijuana Control  Board is located                                                               
in  DCCED  because that  is  what  the  initiative and  AS  17.38                                                               
directed. She  wasn't with the  agency in 2012 when  the industry                                                               
lobbied to  relocate to DCCED, but  she understands it had  to do                                                               
with  the  sense  that  having  the  agency  in  DPS  created  an                                                               
adversarial  relationship between  the  board  and the  industry.                                                               
During  her tenure  she's  observed  that the  board  has a  keen                                                               
awareness  of  its  role  and  is  sensitive  to  the  sentiments                                                               
regarding  public health  and public  safety, perhaps  because of                                                               
the controversy around that move.                                                                                               
                                                                                                                                
SENATOR ELLIS  thanked her for  the explanation  and acknowledged                                                               
that it was logical that  the new, legal marijuana industry would                                                               
want to  be in  commerce rather than  public safety.  That's what                                                               
the  initiative  said and  the  legislature  is sorting  out  the                                                               
details.                                                                                                                        
                                                                                                                                
2:45:35 PM                                                                                                                    
CHAIR  COSTELLO  thanked  Ms.  Franklin  for  her  expertise  and                                                               
ongoing efforts.                                                                                                                
                                                                                                                                
SENATOR MEYER  recalled his tenure  on the Anchorage  Assembly in                                                               
the 1990s  and asked  how often  the ABC  Board actually  pulls a                                                               
liquor license.                                                                                                                 
                                                                                                                                
MS. FRANKLIN said  that since September 2014 she's  seen a number                                                               
of suspensions  and fines against  licensees and a  revocation in                                                               
Kodiak. She  pointed out  that if a  local government  objects or                                                               
protests the issuance,  transfer, or retention of  a license, the                                                               
law under  AS 4.11.490 says that  the board shall uphold  a local                                                               
governing  body's  decision  unless  the  board  finds  that  the                                                               
decision was  arbitrary, capricious, and unreasonable.  She cited                                                               
a recent  example to illustrate  the board's commitment  to react                                                               
to  public  safety  concerns.  Last December  the  City  of  Nome                                                               
protested the  transfer of a beverage  dispensary license stating                                                               
that the reason  was that Nome has too many  liquor licenses. The                                                               
ABC Board upheld the protest and killed the license.                                                                            
                                                                                                                                
SENATOR MEYER said he appreciates  that and expects the same type                                                               
of enforcement for marijuana licensees.                                                                                         
                                                                                                                                
MS. FRANKLIN related that she's  been a vocal advocate for making                                                               
marijuana  licenses nontransferable  to  avoid some  of the  less                                                               
desirable effects  of regulation of  alcohol where people  have a                                                               
property interest in  the license that leads  to some undesirable                                                               
outcomes at the board level.                                                                                                    
                                                                                                                                
SENATOR  MEYER expressed  concern that  some marijuana  licensees                                                               
might try to sell things like  spice or sell to minors and opined                                                               
that if the law is enforced strictly the word will get out.                                                                     
                                                                                                                                
2:50:28 PM                                                                                                                    
CHAIR COSTELLO  announced she would  hold SB 60 in  committee and                                                               
keep public testimony open.