Legislature(2021 - 2022)BELTZ 105 (TSBldg)

05/10/2022 09:00 AM Senate LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Convene at 5:30 pm --
-- Please Note Time Change --
Moved CSHB 133(L&C) Out of Committee
-- Testimony <Invitation Only> --
Scheduled but Not Heard
-- Invited & Public Testimony --
Moved CSHB 289(FIN) Out of Committee
Moved CSHB 145(HSS) Out of Committee
Moved SCS HB 227(L&C) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
**Streamed live on AKL.tv**
             HB 289-AK MARIJUANA INDUSTRY TASK FORCE                                                                        
5:38:21 PM                                                                                                                    
CHAIR  COSTELLO   reconvened  the   meeting  and   announced  the                                                               
consideration  of  CS  FOR  HOUSE   BILL  NO.  289(FIN)  "An  Act                                                               
establishing  the  Alaska  marijuana  industry  task  force;  and                                                               
providing for an effective date."                                                                                               
She noted that  this was the first hearing and  the intention was                                                               
to hear the introduction, take  public testimony, and look to the                                                               
will of the committee.                                                                                                          
5:38:50 PM                                                                                                                    
REPRESENTATIVE GRIER  HOPKINS, Alaska State  Legislature, Juneau,                                                               
Alaska,  sponsor   of  HB  289,  stated   that  this  legislation                                                               
establishes  the Alaska  Marijuana  Industry Task  Force for  the                                                               
purpose of  taking an  overall look  at the  state's regulations,                                                               
permitting, certificates, tax laws,  and statutes relating to the                                                               
marijuana industry.  The task force  will meet  for approximately                                                               
six  months  and  bring its  nonbinding  recommendations  to  the                                                               
legislature next  January for consideration. He  highlighted that                                                               
the House  Labor and  Commerce Committee amended  to bill  so the                                                               
task  force  will meet  virtually.  The  Marijuana Control  Board                                                               
agreed with  the amendment, which  reduced the fiscal  note about                                                               
$100,000. He  paraphrased the sponsor  statement as  he described                                                               
the need for the legislation: It read as follows:                                                                               
[Original punctuation provided.]                                                                                                
     Since the  2014 legalization of  recreational marijuana                                                                    
     by citizen  initiative, the state of  Alaska has sought                                                                    
     to  create  a   vibrant,  sustainable  and  responsible                                                                    
     marijuana   industry.  Under   the  oversight   of  the                                                                    
     Marijuana  Control  Board,  marijuana  businesses  have                                                                    
     sprung  up across  Alaska    putting Alaskans  to work,                                                                    
     creating  new revenue  streams  for local  governments,                                                                    
     and moving an unregulated black  market out of the dark                                                                    
     and into the public light.                                                                                                 
     While  many  businesses  initially  thrived  under  the                                                                    
     terms  of   Alaska's  marijuana  market,   the  ongoing                                                                    
     inequities  and inflexible  fiscal terms  of the  voter                                                                    
     initiative   has   left   many   marijuana   businesses                                                                    
     struggling to comply with the  letter and spirit of the                                                                    
     law. Limited scope of  enforcement powers have resulted                                                                    
     in scattershot  oversight, resulting in too  many small                                                                    
     businesses running afoul of regulations.                                                                                   
     With the wide, varied scope  and size of the businesses                                                                    
     competing   in  Alaska's   marijuana   market,  it   is                                                                    
     difficult to  find a single  solution to  stabilize our                                                                    
     business model, maintain revenue  streams for state and                                                                    
       local governments and preserve our unique Alaskan-                                                                       
     controlled marijuana industry.                                                                                             
     HB  289 would  convene  a task  force of  knowledgeable                                                                    
     Alaskans  to analyze  this problem,  propose solutions,                                                                    
     create models  to see how these  proposed changes would                                                                    
     impact    taxpayers,   businesses    and   governmental                                                                    
     entities, and  offer their findings to  the next Alaska                                                                    
     legislature  for action.  Chaired  by the  head of  the                                                                    
     Marijuana  Control  Board,  the   task  force  will  be                                                                    
     composed  of  the  heads of  relevant  state  agencies,                                                                    
     local  government   leaders,  representatives   of  the                                                                    
     marijuana industry, a  public health representative and                                                                    
     an economist from the University  of Alaska. Members of                                                                    
     the Alaska  House and Senate  will serve  as ex-officio                                                                    
     task force members.                                                                                                        
     This task  force will meet  over the 2022  interim, and                                                                    
     make their  recommendations for  action to  the Thirty-                                                                    
     Third Alaska  Legislature. I urge  your support  for HB
5:41:15 PM                                                                                                                    
CHAIR COSTELLO opened public testimony on HB 289.                                                                               
5:41:35 PM}                                                                                                                   
LACY  WILCOX, President,  Alaska  Marijuana Industry  Association                                                               
(AMIA), Juneau,  Alaska, stated enthusiastic support  for HB 289.                                                               
She said the excise tax on  marijuana at the point of cultivation                                                               
is destabilizing  the industry. For  example, the $800  per pound                                                               
excise  tax in  Alaska  is  the wholesale  price  of  a pound  of                                                               
marijuana in Oregon.  She said AMIA has  been analyzing potential                                                               
changes, but without  access to tax experts and  state data, it's                                                               
been like  shooting darts  at the wall.  She expressed  hope that                                                               
passage of HB 289 would  result in robust, smart, and data-driven                                                               
conversations  between  the  industry, regulators,  tax  experts,                                                               
municipal stakeholders, and the legislature.                                                                                    
She expressed  appreciation that  AMIA was  named as  a qualified                                                               
industry  representative.  She  acknowledged  that  AMIA  doesn't                                                               
represent the views of the  entire industry, but pointed out that                                                               
it  is the  only  statewide  trade group  in  the  state, so  the                                                               
appointment was  appropriate. AMIA's goal  is to help  identify a                                                               
sustainable, enforceable, and fair  tax structure that allows for                                                               
growth  and better  compliance. She  characterized the  future of                                                               
the industry in Alaska as bright.                                                                                               
5:43:40 PM                                                                                                                    
SENATOR GRAY-JACKSON asked what marijuana costs pound.                                                                          
MS. WILCOX replied it's about $3,400  and can be as low as $2,800                                                               
for lower quality, $800 of which goes to the excise taxe.                                                                       
5:44:27 PM                                                                                                                    
SAM HACHEY, Owner, Tanana Herb  Company (THC), Fairbanks, Alaska,                                                               
stated that  as both a  manufacturing and a retail  operation, he                                                               
appreciates the opportunity to  provide information and hopefully                                                               
find a  solution to  tax issues plaguing  the industry.  He looks                                                               
forward  to  the  federal legalization  of  marijuana  and  wants                                                               
Alaska's tax structure to align with other states.                                                                              
5:45:14 PM                                                                                                                    
SENATOR MICCICHE joined the meeting.                                                                                            
5:45:26 PM                                                                                                                    
TRAVOR HAYNES, representative,  Good Cannabis, Fairbanks, Alaska,                                                               
stated  that  Good  Cannabis holds  a  retail,  cultivation,  and                                                               
manufacturing  license.  He  said  he'd  testified  on  the  bill                                                               
several times before,  but the perspective he  was offering today                                                               
was about  the economic viability  of communities and  the state.                                                               
He  relayed  that  he  spoke   to  someone  recently  who  had  a                                                               
pessimistic outlook  about the  Fairbanks economy,  and recounted                                                               
the reasons. After  some thought, he realized  that those reasons                                                               
could  be extrapolated  to  the  entire state.  He  found this  a                                                               
little disconcerting  because the  cannabis industry  is growing.                                                               
It's a  bright spot in  the Alaska economy  in a time  when there                                                               
aren't as many as there could be, he said.                                                                                      
MR. HAYNES  said this  highlights the  importance of  getting the                                                               
tax structure  for the industry  right because it  will literally                                                               
make  or break  some cannabis  businesses. He  stressed that  the                                                               
task force  has a great  opportunity to  help one bright  spot in                                                               
the Alaska economy.                                                                                                             
5:47:22 PM                                                                                                                    
BRANDON  EMMETT,  representing  self, Fairbanks,  Alaska,  stated                                                               
that he is  the owner/operator of a cannabis  company called Good                                                               
Titrations  and is  on  the  board of  directors  for the  Alaska                                                               
Marijuana Industry  Association (AMIA). He described  the bill as                                                               
well written and  inclusive of a broad range  of stakeholders. He                                                               
offered  his  perspective that  the  existing  tax structure  for                                                               
marijuana   needs  to   be  adjusted.   The  price   has  dropped                                                               
considerable since 2017  but the tax floor is  immobile. He views                                                               
this as  poor policy for  an agricultural product in  an emerging                                                               
market. HB 289 provides the  structure to create a more equitable                                                               
tax for the industry.                                                                                                           
5:48:45 PM                                                                                                                    
SARAH OATES,  representing self, Anchorage, Alaska,  advised that                                                               
she is the  President and CEO of Alaska CHARR,  but today she was                                                               
speaking as an  individual. She related that when  she worked for                                                               
the Alcohol and Marijuana Control  Office in 2017, she was tasked                                                               
with implementing the regulated  marijuana industry. She said the                                                               
tax structure  that was implemented  at the time is  not working.                                                               
She  stressed  that  restructuring  is essential  to  preserve  a                                                               
robust, legal, and regulated cannabis  industry and to help small                                                               
Alaska cannabis businesses  succeed. HB 289 works to  this end by                                                               
authorizing a diverse  group of stakeholders to  meet and provide                                                               
recommendations to the state on  how to help the existing, highly                                                               
regulated industry be successful. She urged passage of HB 289.                                                                  
5:50:13 PM                                                                                                                    
CHAIR  COSTELLO noted  that Aaron  Morse, CEO  of Great  Northern                                                               
Cannabis  was available  to  answer questions.  She  asked if  he                                                               
supported the legislation.                                                                                                      
5:50:25 PM                                                                                                                    
AARON  MORSE,   CEO  and   Co-Owner,  Great   Northern  Cannabis,                                                               
Anchorage, Alaska,  answered that GNC is  a vertically integrated                                                               
operation and he was speaking in support of HB 289.                                                                             
5:50:57 PM                                                                                                                    
CHAIR COSTELLO  closed public testimony  on HB 289 and  asked the                                                               
will of the committee.                                                                                                          
5:51:06 PM                                                                                                                    
SENATOR MICCICHE stated strong support  for HB 289. He summarized                                                               
that there had  been a good faith effort to  follow the marijuana                                                               
initiative, but  the tax structure  was fundamentally  flawed and                                                               
was   preventing  businesses   from  succeeding.   Thus  it   was                                                               
appropriate to convene  a task force to adjust  the tax structure                                                               
and get the industry back on track.                                                                                             
SENATOR  GRAY-JACKSON  stated  support  for  convening  the  task                                                               
force, but questioned why it couldn't meet in person                                                                            
5:52:07 PM                                                                                                                    
REPRESENTATIVE HOPKINS answered that it  was a policy call by the                                                               
House Labor and  Commerce Committee to save  money. The committee                                                               
worked with the Alcohol and  Marijuana Control Office (AMCO), the                                                               
board, and  industry members and  the meetings have  been virtual                                                               
for several years.  He offered his understanding that  AMCO has a                                                               
conference room that could be  available but that would add cost.                                                               
He  relayed  that the  six-month  task  force  is paid  for  with                                                               
designated  general fund  (DGF) dollars  from industry  licensing                                                               
SENATOR GRAY-JACKSON  clarified that  she likes Zoom  meetings as                                                               
opposed to in-person, she was just curious.                                                                                     
5:53:23 PM                                                                                                                    
CHAIR COSTELLO  asked if task  forces must meet in  person unless                                                               
specifically authorized to meet virtually.                                                                                      
REPRESENTATIVE  HOPKINS   said  he  wasn't  aware   of  any  such                                                               
limitation. The  bill specifically provides for  virtual meetings                                                               
to save money.                                                                                                                  
CHAIR COSTELLO voiced support for  subsection (f) on page 3, line                                                               
17 that  specifically states the  meetings may not take  place in                                                               
SENATOR REVAK provided supportive quips  about the bill, the task                                                               
force, and the industry.                                                                                                        
5:54:35 PM                                                                                                                    
SENATOR REVAK moved  to report the committee  substitute (CS) for                                                               
HB 289,  work order 32-LS1317\G,  from committee  with individual                                                               
recommendations and attached fiscal note(s).                                                                                    
CHAIR  COSTELLO  found  no  objection,   and  CSHB  289(FIN)  was                                                               
reported from the Senate Labor and Commerce Standing Committee.                                                                 

Document Name Date/Time Subjects
HB 227 Amendment W.2.pdf SL&C 5/10/2022 9:00:00 AM
HB 227