Legislature(2015 - 2016)CAPITOL 120
03/30/2015 01:00 PM House JUDICIARY
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| Audio | Topic |
|---|---|
| Start | |
| SB35 | |
| HB123 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 123 | TELECONFERENCED | |
| += | SB 35 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 123-ESTABLISH MARIJUANA CONTROL BOARD
1:34:22 PM
CHAIR LEDOUX 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."
1:34:38 PM
MICAELA FOWLER, Legislative Liaison, Special Assistant to the
Commissioner, Office of the Commissioner, Department of
Commerce, Community, and Economic Development (DCCED), advised
this is Governor Bill Walker's bill to create a separate
marijuana control board. The initiative specified that the
legislature has the authority to create a new board otherwise
the regulation fall to the Alcoholic Beverage Control Board (ABC
Board). Initially, she offered, the idea of a stand-alone
agency was pursued. However, she remarked, given the fiscal
climate Alaska is facing it did not appear to be a prudent
approach. The compromise then developed to a separate marijuana
control board served by the same staff as the ABC Board. She
described the board as a semi-judicial agency, with the vast
amount of work at the direction of the board performed by agency
staff. This option allows capitalization on both the experience
of the ABC Board staff, as well as reducing costs and overlap.
The majority of CSHB 123 is reflective of Title 4 statutes,
which are the alcohol statutes. She noted that there are
changes due to differences in the substance, and proposed
changes to Title 4 that a working group has been developing for
the last several years. She said there is anticipation that
before session ends a bill will likely be introduced that would
begin the process of looking at those recommended changes, of
which some were included in CSHB 123.
1:37:41 PM
MS. FOWLER referred to Section 1, and stated that it amends
Title 4, by saying the director of the ABC Board shall also
serve as the director of the Marijuana Control Board. It also
amends the process for appointment and removal of the director,
to require a majority vote from both boards. The ABC Board
director is a position appointed by the governor, as with the
Marijuana Control Board, but can be removed only by a vote of
the board unless there are extenuating circumstances.
CHAIR LEDOUX questioned whether a new governor would not be
allowed to appoint a director of either board.
MS. FOWLER stated "That is correct."
1:38:29 PM
MS. FOWLER referred to Section 2, and stated it establishes the
five member Marijuana Control Board in Title 17, and designates
the five voting members as follows:
(1) one person from the public safety sector;
(2) one person from the public health sector;
(3) one person from a rural area;
(4) one person actively engaged in the marijuana
industry; and
(5) one person who is either from the general public
or actively engaged in the marijuana industry
MS. FOWLER advised that this is one of the sections that maybe
reflects the wish of how alcohol is regulated, and not the way
alcohol is currently regulated as there is no requirement for a
public health or public safety representative on the current ABC
Board. It has been found that it is especially important given
the nature of the marijuana industry, and new territory. The
sponsor strongly supports a five member designation on the
Marijuana Control Board. She noted that there are five
designated seats, and the intent of this legislation is that the
background of the executive director is taken into consideration
in the formulation of the board. For example, Cynthia
Franklin's background would be considered when showing that all
of the designations were filled in that she has a public safety
background, she explained.
1:40:02 PM
CHAIR LEDOUX surmised that if this bill were to be adopted in
its present form there would be no need for a board member from
the public safety sector because Ms. Franklin would serve with
that expertise.
MS. FOWLER responded "That is correct." She then referred to
Section 3, which establishes terms of office for board members
and chair, sets out requirements for board meetings and provides
for board member per diem. She pointed out that the section
also outlines the board's powers and duties to propose and adopt
regulations, establishes qualifications for licensure, review
applications for licensure, hear appeals from actions of the
director, reduce the area of license premise, and adopt
regulations according to AS 44.63. Finally, she noted, the
section establishes the board's enforcement powers as mirroring
those of the ABC Board, as outlined in Title 4. She said this
is one area amended in the last committee of referral because
marijuana is not entirely in one section of statute. She
advised that all alcohol rules, including criminal statutes are
included in Title 4, so the ABC Board only needs statutory
authority over that title. She said with marijuana there are
provisions in Title 11, and at this point it is unknown where
marijuana will end up in statute. There is some broader
language included in this version of the bill that gives the ABC
Board the authority to regulate outside of Title 17, if it is a
marijuana statute.
1:41:53 PM
MS. FOWLER continued her presentation and referred to Section 4,
which defines the board in the initiative language to mean the
Marijuana Control Board, as created by this Act, she remarked.
She advised that Section 5, defines director as the director of
the ABC Board and Marijuana Control Board, and defines
registration to mean registration or licensure as determined by
regulations. She pointed to Section 6, which amends the duties
of the Department of Commerce, Community, and Economic
Development (DCCED) to include providing clerical and
administrative support for the Marijuana Control Board. Section
7, amends the uncodified law for initial appointment of board
members. Section 8, provides for transition regulations such
that if the ABC Board adopts any regulations before the
Marijuana Control Board is created, those regulations can be
implemented, enforced, or amended by the Marijuana Control
Board. It provides that any regulations adopted during the
transition period shall take effect after the effective date of
the Act. She stated this also provides that initial industry
seats will be filled by members of the alcohol industry as there
was concern regarding designated seats for marijuana industry
members given that there is not a prior legal marijuana industry
in Alaska. She offered that Section 9, provides for the
immediate effective date.
1:43:48 PM
CHAIR LEDOUX opened public testimony.
1:43:57 PM
TIMOTHY HALE related that this is a good bill as almost
everything is in line with the alcohol industry which is
excellent. His concern is Section 8, wherein it reads "shall
instead appoint two persons with experience in the alcohol
retail, or wholesale business." He stated he understands the
reasoning behind this because currently there is not a marijuana
industry, but believes a better way would be to have the two
people affirm they intend to apply for licenses when they become
available. He opined that the alcohol industry might see the
marijuana industry as somewhat of a competitor and therefore,
persons from the alcohol industry may not have the marijuana
industry's best interests at heart.
1:45:56 PM
CYNTHIA FRANKLIN, Director, Alcoholic Beverage Control Board
(ABC Board) Department of Commerce, Community, and Economic
Development (DCCED), said the bill is a compromise between
creating a completely new agency, and a chance to utilize the
experience of staff of the agency in both enforcing rules and
regulations in the statutes around a dangerous substance and the
experience of the staff in licensing businesses, and assisting
in the commerce section of this agency. She said the agency is
encouraged by the development of the changes of the bill overall
which reflect well the input of the legislature.
1:47:21 PM
CHAIR LEDOUX expresses her concern regarding [Sec. 8], page 7,
lines 2-6, which read:
(b) Notwithstanding AS 17.38.080(b), the governor, in
making the initial appointments to the Marijuana
Control Board of two persons actively engaged in the
marijuana industry, shall instead appoint two persons
with experience in the alcohol retail or wholesale
business. The governor shall appoint two individuals
to serve the term of two years under (a)(2) of this
section.
CHAIR LEDOUX stated she understands the reasoning, but is
concerned whether there might be some way of phrasing this so
people with industry knowledge are not appointed giving them the
benefit for having broken the law in the past. But at the same
time, she offered, that people are appointed who actually know
what they are doing in a particular industry.
1:48:30 PM
MS. FRANKLIN related that she believes that individuals can be
found appropriate for appointment into the industry seats
outside of the alcohol retail or wholesale business. She opined
it would take a bit of crafting to address the concerns of the
previous committee that individuals not be appointed into these
seats whose experience in the marijuana industry is illegally
obtained experience. However, she offered, since November 4,
2014, she has been contact by and responded to numerous people
in "our" business community and Alaska business community who
are interested in entering into this new industry and new
business opportunities who have substantial experience in
regulated industries other than alcohol. She opined there is a
way to craft language that is more inclusive than the language
in the current version of the bill. However, she further
opined, it is the version of the bill that passed through and is
simply the first two years of this industry. She stated she
does not feel strongly enough about this section to hold up the
bill, as she would like the bill to make it through in the time
frame left.
1:51:12 PM
CHAIR LEDOUX advised that the bill will be held in committee
today and there is time to work on language.
1:51:19 PM
REPRESENTATIVE CLAMAN referred to (b) on page 7, lines 2-6, and
stated that possibly a way to fix that topic but still give the
governor flexibility in looking beyond the alcohol industry
would be to change the word "shall" to "may" on line 4.
MS. FRANKLIN responded that she believes that would work as
there are people out there that are "findable."
1:52:26 PM
CHAIR LEDOUX referred to Ms. Franklin's comment that even if
this version were to go forward, it would only be two years.
She questioned whether those two years would be the most
critical two years in formulating the regulations.
MS. FRANKLIN answered that Chair LeDoux is correct in that it
will be "frontend loaded" and will probably be crafted in the
next two years.
1:53:00 PM
REPRESENTATIVE GRUENBERG referred to page 7, lines 5-6, "the
governor shall appoint the two individuals to serve the term of
two years under (a)(2) of this section," which is talking about
people who are actively engaged in the alcohol industry. He
questioned how this is going to work when the two people
representing the marijuana industry terms expire at the same
time, rather than in a staggered fashion. He advised it would
seem there should not be two new people coming on the board at
the same time.
MS. FRANKLIN advised Representative Gruenberg that she agrees in
that as it currently uses the term "shall" it requires the
governor to appoint two alcohol industry members into terms that
expire at the same time. She pointed out that the language of
the bill, and the current ABC Board has the term "may" with
those designations overall. This section, which is intended
just to be the beginning of this board, says "shall" so that the
terms would expire at the same time. She opined that in terms
of replacing them with individuals from the marijuana industry,
the more general term in AS 17.38.080(b) of the bill provides
for up to two persons on the board "may be actively engaged in
the marijuana industry." She opined that as the bill is
written, there is an opportunity for the governor to space them
out over time depending upon who is available to fill the seats
from the marijuana industry once these two alcohol seats
expired.
1:56:18 PM
REPRESENTATIVE KELLER referred to [Sec. 3, AS 17.38.083(b)],
page 4, lines 10-13, which read:
(b) Three members of the board constitute a quorum for
the conduct of business. A majority of the whole
membership of the board must approve applications for
new licenses, renewals, transfers, suspensions, and
revocations of existing licenses, and product
approvals as provided in regulations adopted by the
board.
REPRESENTATIVE KELLER noted that there is no language enabling
participation electronically for the quorum.
MS. FRANKLIN responded that this is language copied from the ABC
Board language, and she does not have issues with this.
1:56:56 PM
REPRESENTATIVE CLAMAN surmised that under the current
regulations adopted by the ABC Board, telephonic participation
is already allowed.
MS. FRANKLIN answered in the affirmative.
REPRESENTATIVE CLAMAN surmised the language would not be
necessary in the statute because it is already being done.
MS. FRANKLIN answered that she does not know if the statute is
silent on telephonic participation, but there is nothing in it
that would prohibit telephonic participation. She advised that
the ABC Board brings the members to each meeting as part of the
cost borne by the agency, but there are rare occasions when an
ABC Board member is unable to attend in person and there has
been telephonic participation by the board member.
1:58:29 PM
REPRESENTATIVE KELLER referred to [Sec. 3, AS 17.38.081(c)],
page 3, lines 28-29, which read:
(c) A vacancy occurring in the membership of the board
shall be filled within 30 days by appointment of the
governor for the unexpired portion of the vacated
term.
REPRESENTATIVE KELLER noted that if this vacancy happened early
in the term there should be legislative approval.
1:59:16 PM
CHAIR LEDOUX said it was a good point although it seems the
legislature would have to come back for a special session.
REPRESENTATIVE KELLER pointed out that especially in this
transition time it could become a significant factor.
2:00:04 PM
DALE FOX, President and CEO, Cabaret Hotel Restaurant &
Retailers Association (CHARR), said that Alaska CHARR supports
the proposed marijuana board and believes it is an important
board to deal with special industry issues that will come up
under marijuana. He believes it is imperative to have at least
two members of the marijuana industry on the board as there will
be different views from growers, retailers, testers, and other
members of the marijuana community. He opined that the board
will function best if at least two different views from that
industry are on the board to help inform the board of the
impacts of issues before them. He pointed out that this bill
mirrors the language for the ABC Board, and indicated that the
executive director works for and can be removed by the board
which would be two boards. He said there must be a way to
resolve the issue because it could happen that one board votes
to remove and the other board votes to retain. He stated there
should be some way the two boards can make a decision together
or have some procedure for that issue. He pointed to an
amendment added during the previous committee to have two
alcohol people on the board until the marijuana industry is set
up. He said it is better to have someone that is knowledgeable
about a controlled industry, as the alcohol industry people
could teach legislators a lot about wine, spirits, and beer but
they are less knowledgeable about oils, butters, concentrates,
and clones. He opined that Alaska will be better served with
two members representing the marijuana industry who have studied
and learned about the unique issues facing the marijuana
industry. He pointed out that there are people who have
educated themselves about the industry that could be excellent
representatives for the marijuana industry particularly in this
critical startup stage when things like butters are discussed.
2:04:05 PM
BRUCE SCHULTE, Coalition for Responsible Cannabis Legislation,
said the coalition prefers a separate marijuana control board.
He said it is best for the industry and also implementation of
the initiative. The first two years of the marijuana board will
be critical and he referred to the stipulation that the two
individuals from the marijuana industry would have the same two
year terms and thought staggered terms might be a good idea for
those two seats. He then referred to the requirement on page 7,
that the two representatives of the marijuana industry must be
from the alcohol industry. He described that as problematic in
that there is currently a tremendous marijuana industry in
Alaska now and has been for decades, it is just not a legal
industry. In that manner, there are people out there that have
sufficient knowledge of how to grow, process, and sell
marijuana. He opined that if the second board has members from
the alcohol industry the legislature has essentially created a
second alcohol control board. He remarked that there could be a
potential conflict of interest even though he envisioned the
alcohol and marijuana industry as being partners rather than
competitors. Nevertheless, someone who has only worked in the
alcohol industry may not have the requisite or best perspective
to bring to the table. He remarked that they could bring some
legacy perspective to marijuana regulation, but they are not
compatible with the regulation of marijuana from their
experience in alcohol. He said it is entirely possible that
someone with prior experience in the alcohol industry may have
experience with marijuana, but it is not a given. In that
event, the governor may be required to appoint someone with less
experience and knowledge when others are out there. He pointed
to Washington and stated they had problems because they had
people writing regulations who did not understand marijuana and,
for example, issued permits for retail stores before issuing
permits for growers in which a market was created with no
product to sell which was problematic for several months, he
offered.
2:08:16 PM
MR. SCHULTE continued his testimony and said that appointing
someone with experience in alcohol rather than marijuana is like
appointing someone to the Board of Game based on prior
experience with oil and gas exploration. He stated that the
language itself in the bill may be problematic as it reads "two
persons actively engaged in the marijuana industry, ..." raises
the question of whether there is an industry, are they actively
engaged, are they illegal players, and so forth. He suggested
that defining the two individuals as having demonstrated
knowledge in the marijuana industry would get over the hurdle of
reaching out to someone from a different industry. He opined
there are many people in the state with knowledge, not just of
marijuana, but also other regulated industries and they would
bring to the table a prospective and willingness to work within
the regulatory framework to make sure the marijuana industry
works.
2:10:18 PM
REPRESENTATIVE CLAMAN surmised that the bill proposes there is a
separate Marijuana Control Board from the ABC Board but it is
still within the same division with the state with some cross-
over staff. He asked whether Mr. Schulte supports that
approach.
MR. SCHULTE responded "I actually do," in that given the
constraints of the budget in setting up a separate board and
schedule. He pointed out that the clock is already ticking on
the regulatory process and this appears to be the quickest way
to get a board empowered, and put in place, thereby working on
that deadline.
2:11:18 PM
DENNIS WADE, said he is in support of CSHB 123, and believes the
questions previously discussed could be answered by putting in
someone from the medical marijuana community that has been
working in that system and making oils. Also, in the public-at-
large there will be two persons and one should be from the
medical marijuana community as they could add insight. He re-
emphasized that when searching for someone to fill the slots
there would be someone highly qualified from the medical
marijuana community that is making substances beyond just
growing bud.
2:13:12 PM
CHAIR LEDOUX closed public testimony and advised it is not her
intention to move the bill out of committee today.
REPRESENTATIVE CLAMAN suggested a committee amendment on page 7,
which changes "shall" to "may" for purposes of the governor's
appointments.
2:13:50 PM
CHAIR LEDOUX related that the committee is not taking amendments
today as it is her intention to develop a committee substitute
and incorporate a solution to problems that have been pointed
out.
[HB 123 was held over.]
2:14:14 PM
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 123 Sectional Analysis.pdf |
HJUD 3/30/2015 1:00:00 PM |
HB 123 |
| HB 123 Transmittal Letter.pdf |
HJUD 3/30/2015 1:00:00 PM |
HB 123 |
| HB123 CS ver H.PDF |
HJUD 3/30/2015 1:00:00 PM |
HB 123 |
| HB123 Fiscal Note - DOA.pdf |
HJUD 3/30/2015 1:00:00 PM |
HB 123 |
| HB123 Letter of Opposition.pdf |
HJUD 3/30/2015 1:00:00 PM |
HB 123 |
| HB123 Memo regarding fiscal note revision-DOA.pdf |
HJUD 3/30/2015 1:00:00 PM |
HB 123 |
| HB123 Supporting Documents - ABC.pdf |
HJUD 3/30/2015 1:00:00 PM |
HB 123 |
| HB123 Ver A.pdf |
HJUD 3/30/2015 1:00:00 PM |
HB 123 |
| HB123-DCCED-ABC-03-09-15.pdf |
HJUD 3/30/2015 1:00:00 PM |
HB 123 |