Legislature(2023 - 2024)SENATE FINANCE 532

04/04/2024 09:00 AM Senate FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
* SB 187 APPROP: CAP; REAPPROP
<Bill Hearing Canceled>
+ Bills Previously Heard/Scheduled: TELECONFERENCED
+= SB 234 EXTEND MARIJUANA CONTROL BOARD TELECONFERENCED
Heard & Held
-- Invited & Public Testimony --
+= SB 243 ALASKA ENERGY AUTHORITY GOVERNANCE TELECONFERENCED
-- Above Item Removed from Agenda --
+= SB 228 EXTEND BOARD OF MASSAGE THERAPISTS TELECONFERENCED
Moved SB 228 Out of Committee
SENATE BILL NO. 234                                                                                                           
                                                                                                                                
     "An Act relating to the Marijuana Control Board; and                                                                       
     providing for an effective date."                                                                                          
                                                                                                                                
9:05:22 AM                                                                                                                    
                                                                                                                                
Co-Chair Olson relayed  that the committee heard  SB 234 the                                                                    
previous  day.  He  noted that  the  committee  intended  to                                                                    
finish the bill hearing and take public testimony.                                                                              
                                                                                                                                
9:05:59 AM                                                                                                                    
                                                                                                                                
SENATOR  JESSE  BJORKMAN,  SPONSOR, introduced  himself  and                                                                    
explained  that  SB  234  was  a  board  extension  for  the                                                                    
Marijuana Control  Board (MCB)  for three years.  He relayed                                                                    
that  the  reasons for  the  three-year  extension had  been                                                                    
spoken  to  the previous  day  by  Legislative Auditor  Kris                                                                    
Curtis.  He  considered  that  it  was  important  that  the                                                                    
extension also match up with  the Alcoholic Beverage Control                                                                    
(ABC) Board and treat the  items as the voters intended when                                                                    
marijuana  was  legalized  in  2010  to  be  regulated  like                                                                    
alcohol.                                                                                                                        
                                                                                                                                
9:07:10 AM                                                                                                                    
                                                                                                                                
JOAN  WILSON,   DIRECTOR,  ALCOHOL  AND   MARIJUANA  CONTROL                                                                    
OFFICE,  DEPARTMENT  OF  COMMERCE,  COMMUNITY  AND  ECONOMIC                                                                    
DEVELOPMENT  (via teleconference),  spoke to  the bill.  She                                                                    
noted that  she had served  in the  role of Director  of the                                                                    
Alcohol and Marijuana Control Office  (AMCO) since May 2022.                                                                    
She  noted that  the  response of  the  Commissioner of  the                                                                    
Department of  Commerce, Community and  Economic Development                                                                    
(DCCED),  and  the  Chair  of  the MCB  were  in  the  audit                                                                    
recommendations.  She noted  that  the  committee had  heard                                                                    
from the legislative auditor about  the positive findings of                                                                    
the  audit, which  she thought  was  that the  MCB had  been                                                                    
operating  in  the public  interest  and  had conducted  its                                                                    
meetings in accordance with the Open Meetings Act.                                                                              
                                                                                                                                
Ms. Wilson continued that audit  findings showed the MCB had                                                                    
actively   amended   its   regulations  as   it   considered                                                                    
necessary, and  it had conducted its  enforcement activities                                                                    
in a timely  manner. She cited that the  number continued to                                                                    
change,  but  that  there  were  currently  474  active  and                                                                    
operating licensed  marijuana businesses  in the  state. She                                                                    
continued that 178 of the  businesses were stores; and there                                                                    
were 63 manufacturers, 2 testing  labs, and 231 cultivators.                                                                    
She cited  that in  FY 23  the state  received approximately                                                                    
$29 million in excise taxes  from the cultivators, and there                                                                    
were significant  contributions from all licensees  in local                                                                    
taxes.                                                                                                                          
                                                                                                                                
Ms.  Wilson  recalled  that Ms.  Curtis  had  indicated  the                                                                    
previous  day  that  over  half   of  cultivators  had  been                                                                    
delinquent in  taxes and clarified that  the information was                                                                    
not  accurate.  She  noted that  there  was  currently  $3.1                                                                    
million in back  taxes, the majority of which  was from now-                                                                    
defunct licensees.  There were approximately  20 cultivators                                                                    
that  owed   approximately  $500,000   in  taxes,   and  the                                                                    
department had written accusations  to revoke licenses of 15                                                                    
of  the cultivators.  She noted  that the  vast majority  of                                                                    
licensees were complying with tax obligations.                                                                                  
                                                                                                                                
Ms.  Wilson spoke  to some  findings and  actions that  were                                                                    
underway.  There   was  a  recommendation  that   the  state                                                                    
maintain  criminal   background  information   on  marijuana                                                                    
handler  permits, so  results could  be verifiable  in audit                                                                    
review.  She  concurred  with  the  recommendation  and  was                                                                    
working with  the department on  the matter. She  noted that                                                                    
there  was a  new  license and  enforcement  system in  some                                                                    
degree  of operation  and development.  Much of  the funding                                                                    
had  come from  a  revision to  alcohol  law. The  marijuana                                                                    
licensing  system was  still in  development, and  she noted                                                                    
that  an associated  capital  request  could be  forthcoming                                                                    
from  the governor  to expand  the service,  which was  also                                                                    
funded from program receipts.                                                                                                   
                                                                                                                                
Ms. Wilson  suggested that  the board  chair could  speak to                                                                    
the  matter of  keeping the  majority of  the quorum  as the                                                                    
appropriate number  to approve regulation. She  mentioned an                                                                    
issue with  vacancies as reasoning. She  addressed fees, and                                                                    
thought  Ms. Curtis  had indicted  correctly  that the  fees                                                                    
were set to pay back $5.5  million loan to the General Fund.                                                                    
She affirmed  that the resources  would be available  to pay                                                                    
back the loan in the current  fiscal year. The board had set                                                                    
an  agenda  item  to  reassess  license  fees  to  recommend                                                                    
additional services  of AMCO or  reduce fees to  address the                                                                    
cost of running the office without additional change.                                                                           
                                                                                                                                
9:11:49 AM                                                                                                                    
                                                                                                                                
Ms. Wilson  asserted that AMCO was  a tight-knit hardworking                                                                    
office whose motto was  no  government as usual.  The office                                                                    
believed it  was key to successful  business operations. She                                                                    
expressed that  timeliness mattered.  She noted that  at the                                                                    
time of  the audit, some of  the queues were up  to 8 months                                                                    
before looking  at license  applications, and  currently the                                                                    
time  frame was  down  to  60 days.  She  looked forward  to                                                                    
proving  the work  of AMCO  in three  years and  agreed with                                                                    
aligning  the   audit  with  the  ABC   Board  to  determine                                                                    
effectiveness.                                                                                                                  
                                                                                                                                
Co-Chair Olson  asked if  Ms. Wilson would  comment on  FN 1                                                                    
from  DCCED,  which  showed  a  cost  of  $2.1  million  for                                                                    
extending the existing program.                                                                                                 
                                                                                                                                
Ms. Wilson  relayed that the  amount was  approximately half                                                                    
the cost  of running the  AMCO office since there  were more                                                                    
alcoholic beverage  licensees. The  funding would  go toward                                                                    
ten    full-time    positions   including    four    special                                                                    
investigators, three  Occupational Licensing  Examiners, one                                                                    
Program Coordinator,  one Records and  Licensing Supervisor,                                                                    
and one  Local Government Specialist 3.  She mentioned costs                                                                    
for  statutorily-required travel  to each  judicial district                                                                    
for  board  meetings.  She noted  that  the  board  actively                                                                    
enforced  AS 17.38  and  its  implementing regulations  with                                                                    
accusations to take actions  against licenses. She commented                                                                    
that  the   note  showed  relatively  high   bill  from  the                                                                    
Department  of   Law  and   the  Office   of  Administrative                                                                    
Hearings, which she considered the  cost of due process. She                                                                    
pointed out commodities  and capital outlay as  shown on the                                                                    
second page of the fiscal note.                                                                                                 
                                                                                                                                
Co-Chair Olson asked  if the funds were new money  or from a                                                                    
source other than Unrestricted General Funds (UGF).                                                                             
                                                                                                                                
Ms. Wilson  noted that  the funding  should all  be existing                                                                    
Designated  General Funds  (DGF) from  the program  receipts                                                                    
from  the  marijuana licensees.  She  noted  that there  was                                                                    
$19.2  thousand  in UGF  related  to  salary increases.  She                                                                    
offered to provide  more detail on the UGF funds  at a later                                                                    
time.                                                                                                                           
                                                                                                                                
Co-Chair Olson referenced back taxes and the audit of MCB.                                                                      
                                                                                                                                
9:16:00 AM                                                                                                                    
                                                                                                                                
KRIS  CURTIS,   LEGISLATIVE  AUDITOR,  ALASKA   DIVISION  OF                                                                    
LEGISLATIVE AUDIT, drew attention  to the document "A Sunset                                                                    
Review  of   the  Department  of  Commerce,   Community  and                                                                    
Economic  Development,  Marijuana  Control Board"  (copy  on                                                                    
file).  She   highlighted  page  16  of   the  audit,  which                                                                    
addressed  the number  of  marijuana  cultivators that  were                                                                    
delinquent  in payment  of  taxes,  collectively owing  $3.1                                                                    
million.  She referenced  Exhibit 4  on page  10, and  noted                                                                    
that there  was an itemization  of the number  of licensees.                                                                    
She  clarified  that Ms.  Wilson  was  correct in  that  the                                                                    
number  of delinquent  licensees did  not represent  half of                                                                    
the total.                                                                                                                      
                                                                                                                                
9:17:17 AM                                                                                                                    
                                                                                                                                
Co-Chair Olson OPENED public testimony.                                                                                         
                                                                                                                                
9:17:31 AM                                                                                                                    
                                                                                                                                
Co-Chair Olson CLOSED public testimony.                                                                                         
                                                                                                                                
SB  234  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                

Document Name Date/Time Subjects
SB 228 Written Testimony-Annetta Atwell_Brd Chair 04.03.24.pdf SFIN 4/4/2024 9:00:00 AM
SB 228