Legislature(2015 - 2016)BARNES 124
02/03/2015 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| Municipal Regulation of Marijuana Presentations | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
February 3, 2015
8:01 a.m.
MEMBERS PRESENT
Representative Cathy Tilton, Chair
Representative Paul Seaton, Vice Chair
Representative Shelley Hughes
Representative Benjamin Nageak
Representative Lora Reinbold
Representative Harriet Drummond
Representative Dan Ortiz
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
MUNICIPAL REGULATION OF MARIJUANA PRESENTATIONS
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
HEATH HILYARD, Staff
Representative Tilton
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided remarks regarding the municipal
regulation of marijuana.
LARRY DEVILBISS, Mayor
Matanuska-Susitna Borough
Palmer, Alaska
POSITION STATEMENT: Provided comments regarding the municipal
regulation of marijuana.
NICHOLAS SPIROPOULOS, Borough Attorney
Matanuska-Susitna Borough
Palmer, Alaska
POSITION STATEMENT: Provided comments regarding the municipal
regulation of marijuana.
JIM SYKES, Member
Matanuska-Susitna Borough Assembly
Matanuska-Susitna Borough
Palmer, Alaska
POSITION STATEMENT: Provided comments regarding the municipal
regulation of marijuana.
DELANA JOHNSON, Mayor
City of Palmer
Palmer, Alaska
POSITION STATEMENT: Offered testimony regarding the municipal
regulation of marijuana from the perspective of a city within an
organized borough.
DENNIS WHEELER, Municipal Attorney
Municipality of Anchorage
Anchorage, Alaska
POSITION STATEMENT: Provided comments regarding the municipal
regulation of marijuana.
ERNIE HALL, Member
Anchorage Assembly
Municipality of Anchorage
Anchorage, Alaska
POSITION STATEMENT: Provided comments regarding the municipal
regulation of marijuana.
ACTION NARRATIVE
8:01:20 AM
CHAIR CATHY TILTON called the House Community and Regional
Affairs Standing Committee meeting to order at 8:01 a.m.
Representatives Drummond, Seaton, Nageak, Reinbold, Ortiz, and
Tilton were present at the call to order. Representative Hughes
arrived as the meeting was in progress. Also in attendance was
Representative Millett.
^Municipal Regulation of Marijuana Presentations
Municipal Regulation of Marijuana Presentations
CHAIR TILTON announced that the only order of business would be
presentations regarding the municipal regulation of marijuana.
8:03:40 AM
HEATH HILYARD, Staff, Representative Tilton, Alaska State
Legislature, informed the committee that prior to this session
Representative Tilton was in contact with a number of municipal
officials who expressed that some of the initiative language was
somewhat vague or unclear regarding how they would have the
ability to regulate at the local level. Therefore,
Representative Tilton introduced HB 75, which he characterized
as largely placeholder legislation. The goal, he explained, is
to craft legislation that is responsive to the testimony
received from stakeholders. The committee [over the course of a
few meetings] will hear from five municipalities and the Alaska
Municipal League (AML). The committee will also hear from
representatives from the Division of Community & Regional
Affairs and the executive director of the Alcoholic Beverage
Control (ABC) Board regarding language in Title 4 that may be
used as a basis to draft legislation. Mr. Hilyard noted that he
has been working with a number of municipal attorneys throughout
the state that have been providing background on the issue. He
expressed the intent to bring before the committee a
comprehensive committee substitute to HB 75 that is responsive
to the testimony received.
8:06:42 AM
LARRY DEVILBISS, Mayor, Matanuska-Susitna Borough, began by
highlighting that the Matanuska-Susitna Borough has three
incorporated cities within the municipality, which creates
challenges in terms of the marijuana regulations.
8:08:54 AM
NICHOLAS SPIROPOULOS, Borough Attorney, Matanuska-Susitna
Borough, informed the committee that Ballot Initiative 2 failed
areawide in the Matanuska-Susitna Borough, but passed in Palmer
and Houston, and failed in Wasilla. All the votes, he noted,
were fairly close.
8:09:57 AM
MAYOR DEVILBISS related that shortly after the vote, the mayors
in [the borough] gathered to determine how to move forward.
They immediately realized there were issues with Ballot Measure
2 that needed to be resolved at the state level prior to
beginning [to address the initiative at the municipal level].
Following the meeting of the mayors, a town hall meeting was
held to take public testimony. The issues brought forth through
the public testimony were included in the resolution, which was
forwarded to the committee. He noted that the Matanuska-Susitna
Borough Assembly formed an advisory committee to continue to
address this issue. He further noted that [the Matanuska-
Susitna Borough Assembly] met with Taylor Bickford, Campaign to
Regulate Marijuana Like Alcohol, and Bruce Schulte, Coalition
for Responsible Cannabis Regulation, which shared some of the
same concerns. Most recently, there was a meeting with Lance
Kitterling, Alaska State Trooper, who had recently been to
Arizona and could provide information as to how the legalization
of marijuana was progressing in Arizona. He reminded the
committee that the language of Ballot Measure 2 was very similar
to that of Arizona's language.
8:13:33 AM
MR. SPIROPOULOS explained that one of the issues for the
Matanuska-Susitna Borough is that it's not a home rule
municipality but rather a second class borough, a general law
municipality, such as Fairbanks, Ketchikan, Kenai, and Kodiak.
The Matanuska-Susitna Borough has cities within its borough, and
therefore for the marijuana regulations the question becomes
whether the borough's powers extend into the cities within it,
an areawide power. Although the law specifies that
municipalities can vote to ban growing, processing, testing, and
selling of marijuana, further clarification is necessary because
it's a planning function. In terms of the planning function,
the concern is with regard to land use patterns, impacts,
compatibility with surrounding areas, and whether it fits within
the comprehensive plan. He pointed out that there are
regulations at the local level for alcohol, regarding both
package stores and liquor dispensaries. In the Matanuska-
Susitna Borough, a conditional use permit is required. Mr.
Spiropoulos directed attention to the third Whereas clause of
Matanuska-Susitna Borough Resolution 15-006, which express the
need for clarification regarding the powers granted to boroughs
and cities within those boroughs. He then highlighted that the
Matanuska-Susitna Borough is a strong manager form of
government, and thus the manager is the day-to-day administrator
unlike Fairbanks and Kenai. He related that the Matanuska-
Susitna Borough manager's preference is for this to be an
areawide power and for the borough to work with the cities. He
then provided the example of the sale of fireworks in Houston.
The sale of fireworks is a non areawide power, and the situation
is one in which Houston allows the sale of fireworks, but the
surrounding areas do not. Therefore, the 400,000 people between
Anchorage and the Matanuska-Susitna Borough can go to Houston to
purchase fireworks [and take them back to other areas whey they
may be illegal]. The borough wants to avoid such a situation
with marijuana and wants to have some coordination and say in
what happens. Although cities may be resistant to [an areawide
power], he opined that it could be worked out. Mr. Spiropoulos
clarified that the Matanuska-Susitna Borough prefers [that
marijuana regulation be an areawide power] and if not, that
there be clarification at the legislative level.
8:17:13 AM
REPRESENTATIVE NAGEAK inquired as to whether each city could
make its own rules within its city limits.
MR. SPIROPOULOS specified that the Matanuska-Susitna Borough is
requesting clarification on that matter as the initiative is
only a broad framework. Specifically, he inquired as to the
outcome of a situation in which a city and the borough, both a
local government, want to allow limit, restrict, or prohibit the
growing, processing, testing, and retail differently for the
same area. When looking at it as a land use issue, it's more
appropriately an areawide power, he opined. Mr. Spiropoulos
stressed that in either case, whether it's viewed as an areawide
or non areawide power, clarification is necessary.
8:18:56 AM
REPRESENTATIVE SEATON asked, drawing a parallel between alcohol
and marijuana, whether Mr. Spiropoulos intends for all boroughs
to have the ability to dictate whether the communities within
the borough are dry, wet, or damp.
MR. SPIROPOULOS opined that alcohol is somewhat different as it
and the rules surrounding it have long been present. The
numerical limits are set by state law, while the local option
goes before voters. The local option for marijuana, however,
does not have to go before voters as it can be done by the
assembly. In the Matanuska-Susitna Borough, planning powers
were delegated to the cities. Therefore, so long as the cities'
plans and laws fit within the overall borough comprehensive
plan, the borough has delegated to the cities the power to zone,
plan, and set permits. The borough reserves the right to take
actions if something in the city is impacting major traffic
patterns or overall growth and development. He reiterated the
need for clarification in this area whether through legislation
or the administrative board overseeing marijuana.
8:21:29 AM
CHAIR TILTON reminded the committee that it isn't going to
address the criminal aspect of marijuana rather only with regard
to the local governing agencies.
8:22:14 AM
REPRESENTATIVE NAGEAK, highlighting that Alaska has had the
personal use clause for marijuana since the 1970s, asked whether
there will be any change in terms of the possession limits under
the initiative.
MR. SPIROPOULOS related his understanding that [the existing
possession clause] allows for the possession of four ounces of
marijuana in the home, whereas the initiative allows possession
of one ounce of marijuana anywhere. This is a new type of
business, and the focus for the Matanuska-Susitna Borough will
be in terms of land use and business districts.
8:24:30 AM
REPRESENTATIVE ORTIZ inquired as to whether the commercial and
zoning laws vary between the communities in the Matanuska-
Susitna Borough. If that is the case, then he surmised that
each community could have its own rules related to the
commercial activity of marijuana.
MR. SPIROPOULOS agreed that if the term local government in the
initiative means cities can make their own rules, then
potentially every city in the Matanuska-Susitna Borough could
have different rules as well as the borough having different
rules. He opined that the aforementioned may not be the best
path in terms of businesses, land use patterns, commerce, and
activity because it could lead to inconsistencies when crossing
borders. He informed the committee that the Matanuska-Susitna
Borough has delegated to the cities the power to do their local
land use and planning. However, the Matanuska-Susitna Borough
didn't give the power to subdivide to the cities, it remains
with the borough. Furthermore, several years ago the borough
revoked the cities' planning powers for power plants to ensure
that the rules were consistent as the effects of power plants
reach outside of the cities. Although the effects of the sale
of fireworks goes well beyond Houston, the borough can't do
anything about it since it's a non areawide power.
8:26:58 AM
REPRESENTATIVE ORTIZ asked whether it would be within the
purview of the state to develop a uniform regulation for
marijuana that would apply [throughout the state] regardless of
how an area is organized or not.
MR. SPIROPOULOS explained that the unorganized boroughs are
generally governed by the legislature, and therefore the rules
passed by the legislature apply there. The initiative clearly
specifies that municipalities can prohibit, limit, and regulate
numbers and quantities, which is what the legislature would do
for the unorganized areas. How the rules reach into the general
law boroughs would be dependent upon the legislature's rules, he
opined. He related his understanding that the initiative
contemplated that boroughs would retain some authority to limit
or prohibit [activities], depending upon the regulations.
8:28:58 AM
REPRESENTATIVE HUGHES asked if consideration has been given to
what might make sense for the division of powers between
boroughs and cities for marijuana if the legislature doesn't
have an appetite for boroughwide control.
MR. SPIROPOULOS reminded the members of the mayors' meetings
during which there was the opportunity to have a dialogue with
their citizens and city councils. Therefore, the dialogue has
started and hopefully after clear rules are established by the
state, the [local governments] can work within those.
8:32:39 AM
REPRESENTATIVE NAGEAK questioned whether the marijuana issue may
be an impetus for unorganized boroughs to organize so that they
don't fall under the state's control.
MAYOR DEVILBISS agreed that this issue could be an incentive for
an unorganized area to organize.
8:34:36 AM
MAYOR DEVILBISS, continuing his testimony, expressed the need
for the state to clarify what one ounce of marijuana means.
Strictly following the initiative language, he surmised that one
ounce could include an ounce of raw fiber or an ounce of liquid
concentrate. The aforementioned is the definition in Arizona
and it's a problem because one dose of marijuana is 10
milligrams of Tetrahydrocannabinol (THC) while one ounce of
liquid concentrate is 28,300 grams of THC. He related that
discussions with those who promoted the initiative found that
the initiative promoters agreed the aforementioned is an
unreasonable range to be included in [the definition] of one
ounce of marijuana. Mayor DeVilbiss then suggested the state
prohibit non Alaska produced marijuana in order to promote
Alaska agriculture and business. He pointed out that there is
ambiguity with regard to the per person definition, particularly
in terms of the personal use allowance of one ounce of marijuana
and six plants. He posed a scenario in which six adults over 21
years of age live in one residence and questioned how the
[personal use allowance] would be applied, particularly if some
of those residents work on the North Slope and are absent for
chunks of time.
8:37:15 AM
REPRESENTATIVE DRUMMOND inquired as to whether there is a limit
on the amount of alcohol one living in the Matanuska-Susitna
Borough can possess in their home.
MAYOR DEVILBISS replied no.
8:37:34 AM
MAYOR DEVILBISS related that although users have said there
won't be a problem with the per person rules, he believes there
is room for abuse since these are living plants rather than
liquid. He then emphasized the need to restrict packaging that
entices minors. The state should also differentiate between
medicinal and recreational marijuana and industrial hemp in
terms of both definition and regulation. Mayor DeVilbiss
opined that taxes on the different products should be different.
The state, he further suggested, needs to offer minimum
standards in terms of contaminants and potency and appropriate
labeling.
8:39:35 AM
MR. SPIROPOULOS stressed the need for a clear definition of the
term "public" as the consumption of marijuana in public is
prohibited. He pointed out that the Matanuska-Susitna Borough
is a second class borough that doesn't have a police department,
and thus doesn't perform criminal law enforcement. If the
definition is going to be promulgated through an agency, the ABC
Board has a definition of "public" for purposes of this law on
its web site. Mr. Spiropolous requested the legislature ensure
that agency has the authority to define the language because
that isn't entirely clear at this point. However, the
Matanuska-Susitna Borough would prefer that the legislature
define the term "public."
8:41:38 AM
REPRESENTATIVE NAGEAK expressed concern with controlling the
contaminants in marijuana as well as marijuana that is laced
with other drugs.
MAYOR DEVILBISS suggested that the contaminants in marijuana
could be addressed in the same manner as with food products such
that a minimum level of contaminants are allowed or some
contaminants are disallowed. He related his understanding that
Colorado has addressed contaminants after the fact by
prohibiting the use of butane as an extraction medium as it's a
source of explosions.
8:43:46 AM
JIM SYKES, Member, Matanuska-Susitna Borough Assembly,
Matanuska-Susitna Borough, expressed hope that Alaska can learn
from the other states who have legalized marijuana. To that
end, Mr. Sykes highlighted Eagle County, Colorado, which is a
rural community with highly populated areas and rural
unpopulated areas similar [to Alaska]. With regard to comments
that the industry needs to be small, home grown, and Alaska
based, he related his understanding that there is the desire to
have a vertically integrated business in which there is growing,
manufacturing, processing, and sales in one location. Although
the aforementioned may make sense for a very small business, the
vertical integration that allows an industrial corporation to
enter the market would be a different matter. He then related
the need to establish regulations sooner rather than later
because the longer it takes to establish regulations, the longer
the black market will continue. Mr. Sykes noted that the
committee will be provided with an audio file and transcript of
the public comments to the [Matanuska-Susitna Borough]. He then
directed attention to the membership of the Matanuska-Susitna
Borough's proposed Marijuana Advisory Committee, as listed in
Resolution 15-007. In closing, Mr. Sykes said he looked forward
to working with the legislature and having a good flow of
information.
8:48:30 AM
REPRESENTATIVE DRUMMOND related that after she and her husband
visited marijuana dispensaries in Seattle, Washington, she
surmised that the largest problem is going to be the cash basis
of these systems. Because marijuana is illegal at the federal
level, these businesses operate on a cash basis. Washington
marijuana dispensaries all use the same sophisticated point of
sale (POS) system through which the State of Washington can
enter for review. There is no [private information] in terms of
customer names because it's a cash system that doesn't accept
credit cards or checks. In Alaska, where 63 percent of
residents carry guns, a cash-based system needs to be addressed.
MAYOR DEVILBISS pointed out that the Marijuana Advisory
Committee includes a member from the financial community in
order to address that perspective. However, since it's a
federal problem, the issue isn't included in the resolution
because he wasn't sure the state could solve that problem.
MR. SYKES informed the committee that during discussions on the
banking aspect, he learned there are two state-chartered credit
unions in Washington that only do in-state business and
contemplate using a two-step process [with marijuana revenue].
North Dakota has its own sovereign bank, which he didn't know
what that means. There is at least one state-chartered credit
union in Alaska that may or may not be an answer. Mr. Sykes
noted his agreement that this aspect needs to be addressed.
8:51:51 AM
REPRESENTATIVE DRUMMOND described the dispensaries as having
heavy metal doors that were pulled down in front of the windows.
Although the dispensaries were not in a ghetto-like
neighborhood, it looked as if it was in a ghetto neighborhood
that needed to arm itself. The surrounding businesses were
normal looking without all the visible [heavy security measures
of the marijuana dispensaries]. She attributed the cash basis
of the marijuana dispensaries as the reason for them being
heavily armed. She further related that the marijuana
dispensary employees are paid in cash.
8:52:55 AM
MAYOR DEVILBISS, in response to Chair Tilton, related that the
bulk of the testimony [the Matanuska-Susitna Borough Assembly]
received was for the creation of a separate board for the
regulation and control of marijuana.
8:54:14 AM
MAYOR DEVILBISS, concluding his testimony, expressed the need
for the state to clarify whether the farm use tax exemption is
to include the growth and production of marijuana. He
recommended that taxation on the state level be for prevention,
treatment, testing, enforcement, and security. He then
emphasized the need for the state to establish rules for the
unorganized borough as it would impact the borough. Since other
states have found infused edible products to be problematic, the
state regulations should clearly address the matter. He
reiterated earlier testimony relating that the preponderance of
testimony the Matanuska-Susitna Borough Assembly heard requested
an unlimited number of small vertically integrated operations,
for which the assembly asked. The aforementioned is the model
that works best for agriculture in Alaska. He related there was
general agreement that public advertising shouldn't be allowed
if marijuana is being treated like pornography. He then
requested the state establish business hours [if the borough
cannot]. Mayor DeVilbiss informed the committee that there was
the suggestion for the state to consider allowing permits for
cultivation facilities four months prior to retail sales. Mayor
DeVilbiss emphasized that [the borough] hasn't even discussed
commercialization of marijuana as it wants to see the landscape
prior to any decisions regard commercialization.
8:57:45 AM
MR. SPIROPOULOS highlighted the need to consider the Landlord
Tenant Act and whether a landlord can tell a tenant he/she can't
possess marijuana in the rental. He then reminded the committee
that the initiative was put forth as marijuana would be
regulated like alcohol. However, there are severe limits on the
ability to tax alcohol at the local level such that alcohol can
only be taxed by a sales tax that matches the rate. The
Matanuska-Susitna Borough, he related, would like to preserve
all the local options for taxation. The assembly could then
decide how to allocate those tax funds for education or
treatment. As the legislature considers definitions, he
encouraged the committee to define "assist," particularly in
terms of business transporters who "assist" various customers
and thus are in possession of more than one ounce of marijuana.
9:00:00 AM
MR. SPIROPOULOS, in response to Representative Drummond,
explained that there is a state law specifying that the only tax
that can be levied on alcohol is a sales tax. There is also an
Alaska Supreme Court ruling that the sales tax rate [on alcohol]
must match the other sales tax rate. In further response to
Representative Drummond, Mr. Spiropoulos specified that cities
within the Matanuska-Susitna Borough each have a sales tax while
the borough has a bed tax of 5 percent that is considered the
sales tax for purposes of taxing alcohol.
REPRESENTATIVE DRUMMOND surmised then that Anchorage's tax
structure is different since a recent increase in the bed tax
was dedicated to the construction of a convention center. All
of the sales taxes in Anchorage must be placed before the
voters, she noted.
9:01:50 AM
MR. SYKES informed the committee that those who are considering
business models to grow marijuana have encouraged not setting
the tax rate too high because it could continue the influence of
the black market. There was also the suggestion that if another
medical marijuana section of the law is created, the tax rate on
it should be addressed because in other states medical marijuana
use rose since it was cheaper. The expected need to fund
regulations, inspections, enforcement, education, public health,
and other aspects of marijuana are upfront costs. Since the
state doesn't allow dedicated funds, he suggested that perhaps
licensing regulations can address paying for services the state
and local governments need to provide to implement the law. He
noted that Colorado has had some success in that area. While
there is differing opinion as to whether to limit the number of
licenses, there is widespread agreement that licenses shouldn't
become an economic asset like liquor licenses. In conclusion,
he told the committee that the State of Washington is
instituting an evaluation process that monitors the
effectiveness of the laws they are creating. He further told
the committee that Colorado reported decreases in some areas of
crime, but increases in medical responses.
9:04:26 AM
REPRESENTATIVE NAGEAK expressed concern with airport security in
Alaska and questioned what happens if a traveler is found in
possession marijuana, which is federally prohibited.
MR. SYKES said he didn't know what would happen.
MR. SPIROPOULOS interjected that a lot of that will be driven by
federal policymakers, the U.S. attorney general, and the
secretary of Homeland Security. He related his understanding
that U.S. Attorney General Holder has said he won't
substantially interfere with the legal operations in those
states that have legalized marijuana. However, banks and air
carriers aren't willing to risk their charters. The current
nominee for the U.S. Attorney General, Loretta Lynch, has
testified in opposition to the legalization of marijuana.
9:07:59 AM
REPRESENTATIVE SEATON noted that the House Health and Social
Services Standing Committee is hearing HB 59 that addresses
health and social services issues, including mixing marijuana
with other drugs.
9:08:46 AM
DELANA JOHNSON, Mayor, City of Palmer, speaking from the
perspective of a city within an organized borough, informed the
committee that cities have police powers. Mayor Johnson
emphasized the importance of self-determination of the
communities, which she opined is the intent of the reference to
local government in the initiative. She then pointed out that
cities have health powers within public spaces in terms of
smoking, vaping, and other methods of inhalation and those are
already covered in city code. Therefore, she encouraged the
committee not to allow the borough to change the city's
regulations that are already in place.
9:11:56 AM
REPRESENTATIVE NAGEAK noted that he had received concerns with
regard to the municipality overriding what the local government
[city/village] had voted in terms of legalization of marijuana.
MAYOR JOHNSON recalled that Palmer voted in support of the
legalization of marijuana while most of the borough did not.
Mayor Johnson cautioned against broad stroke regulations,
particularly for the cities. The cities do have planning
powers. In fact, Palmer had planning and zoning powers long
before statehood. She opined that no one outside of the city
council and planning and zoning understand where sales might be
intrusive and what marketing should look like. Speaking
personally, she agreed with the notion of not allowing the
marketing of marijuana just anywhere. She expressed the need
for cities to have the choice with regard to marijuana. Mayor
Johnson opined that a separate board [for the regulation of
marijuana] is essential. She pointed out that since cities have
police powers and boroughs do not, the finances of the cities
will be impacted. Ultimately, no one knows a community as well
as those local residents.
9:15:36 AM
REPRESENTATIVE NAGEAK informed the committee that the North
Slope Borough has a boroughwide police force.
MAYOR JOHNSON pointed out that Anchorage is a unified
municipality and thus has both city and borough powers as does
Sitka and Juneau. She related her understanding that police
powers are generally designated to cities, which she opined
would be helpful for whomever is making decisions at the borough
level.
REPRESENTATIVE NAGEAK related that the only powers cities have
in the North Slope Borough are boats, parks, and cemeteries.
MAYOR JOHNSON remarked that the City of Palmer has a number of
powers, including planning powers delegated to the city by the
borough. She emphasized the importance of local determination,
particularly since it's difficult to address the details of
various communities from a 10,000 foot level.
9:18:35 AM
DENNIS WHEELER, Municipal Attorney, Municipality of Anchorage,
identified the need to define "public" and "consume in public".
The Municipality of Anchorage recently passed an ordinance to
address the aforementioned because the assumption is that people
will begin to consume on February 24, 2015. Anchorage's
ordinance copied the criminal code definition from the state's
criminal code with an exception for those things properly
permitted or licensed per state or municipal code. He then
expressed the need to define the terms "marijuana concentrate"
and "marijuana products." With regard to the issues surrounding
the number of plants per person per household, Mr. Wheeler
related his understanding that in Colorado the medical marijuana
[possession] limits were combined with the recreational
marijuana [possession] limits, which resulted in a loophole.
Additionally, the tax rate for medical marijuana was different
than that for recreational marijuana. Therefore, individuals
could have more marijuana plants than they anticipated and the
use of medical marijuana increased significantly because of the
significant price difference. The aforementioned is why the
existing medical marijuana statutes will have to be reviewed as
well. He then expressed concern with a cohabitation situation
in which multiple individuals have multiple plants that could
reach the level of a grow operation. Another area of concern is
the term "display" and what it means to display one ounce of
marijuana. He noted that there is a provision specifying that
marijuana plants can't be grown within public view. If one is
allowed to display marijuana, it would seem that open exchanges
of marijuana in public places could occur, he surmised, which
would need to be addressed.
9:23:13 AM
MR. WHEELER then turned to the home processing of marijuana,
particularly the use of flammable gases. He related his
understanding that there were about 30 house fires resulting
from individuals trying to use this method of processing
marijuana on their kitchen stove. To address the
aforementioned, the Municipality of Anchorage is introducing an
ordinance to ban [butane processing] locally. He then expressed
concern with regard to open containers of marijuana,
particularly within a vehicle. He suggested that perhaps open
marijuana containers would have to be out of arm's reach of
those in the vehicle. Mr. Wheeler then related the need for a
public education campaign, such as Colorado's Good to Know
campaign, so that people understand the rules. With regard to
statewide data collection, he acknowledged that there would be a
cost but there needs to be some method of data collection in
order to understand what is and is not working well. In regard
to taxation, he reiterated the concern with regard to pushing
people toward medical marijuana use as was the case in Colorado.
Furthermore, when regulations are layered an expense is
associated with that and increases the cost of the product,
which drives the black market. The black market for marijuana
in Colorado is thriving. In fact, two states adjacent to
Colorado have sued Colorado because of the amount of marijuana
transported out of Colorado and into those states. Therefore,
it's a balancing act between the regulations, the costs, and the
black market. Mr. Wheeler then turned to the concern
surrounding edibles, including the amount of THC, the serving
size, packaging, testing, and work environment. With respect to
licensing, Colorado has a two-year residency requirement in
order to obtain a business license. Although Mr. Wheeler wasn't
sure Alaska could impose a two-year residency requirement, he
felt there is merit in [a residency requirement] if the desire
is to create a home grown environment.
9:28:35 AM
MR. WHEELER then turned to the question as to whether marijuana
should have its own control board. He opined that there is a
need for some state level centralized authority. Generally
speaking, the ABC Board model works well, particularly since it
allows a local government to protest the issuance of a state
level license. He said he has heard discussions about using
some of the same ABC Board staff to support the marijuana board,
which may have some merit as those existing staff would have
experience investigating individual cases, reviewing individual
licenses, and processing [licenses]. Using the ABC Board model
for a marijuana board would be of particular merit if the model
for marijuana incorporates similar concepts from the alcohol
model. With regard to the notion of having local advisory
boards, Mr. Wheeler pointed out that in the Matanuska-Susitna
Valley that would place quite a demand on resources whether it
was one local advisory board on one in each local jurisdiction,
all the cities and the borough. He opined that it's very
difficult to consistently staff advisory boards and there are
costs associated with providing support staff. Because the
assembly or city council is very accessible in the Matanuska-
Susitna Valley, he wasn't convinced an advisory board is
necessary. Therefore, he said he was more comfortable with the
city council or city assembly addressing issues as they arise.
Mr. Wheeler said that he concurred with today's testimony as
well as the comments submitted in the Fairbanks North Star
Borough letter, particularly with respect to consumption in
private clubs and local government control in terms of zoning
and land use. The Municipality of Anchorage has local land use
powers and with respect to alcohol has a conditional use permit
process in which every alcohol license provided by the state
must be accompanied by a local conditional use permit that has
been approved by the assembly. The Anchorage Assembly can deny
the conditional use permit after reviewing how a particular
establishment fits in a particular neighborhood. The
Municipality of Anchorage, he said, would like to retain its
power with respect to conditional use permits.
9:32:46 AM
REPRESENTATIVE SEATON inquired as to whether the conditional use
permit requirement is through the local option or a specific
state statute for alcohol licenses.
MR. WHEELER answered that it's part of Title 29 for local
government land use powers. He explained that there are
conditional use permit processes for all types of land use,
alcohol just happens to one of them.
REPRESENTATIVE SEATON surmised then that if the state doesn't
prohibit that Title 29 power, the local government would retain
it.
MR. WHEELER replied yes, in so much as the initiative doesn't
explicitly prohibit the exercise of the power. However, Mr.
Wheeler said he prefers [language] that is more direct and
explicit such that local government planning powers are
retained.
9:34:07 AM
REPRESENTATIVE REINBOLD asked if Anchorage has reviewed the
various fines in Chapter 38 and determined whether they are
reasonable or not.
MR. WHEELER explained that when the Municipality of Anchorage
adopted a definition of public place in its ordinance, the state
fine provisions were also incorporated. Therefore, someone
caught consuming marijuana in a public place would face a $100
citation. Mr. Wheeler didn't recall the assembly commenting on
whether that fine [schedule] is high enough or too high but
rather would follow it and determine how it works. Although he
suspected that the $100 citation may not be high enough to keep
people from consuming in public, he wasn't sure there is the
latitude to increase the fine.
9:36:19 AM
REPRESENTATIVE REINBOLD expressed the need to maintain local
control, particularly in terms of Section 3, which read:
The provisions of this Act are independent and
severable, and, except where otherwise indicated in
text, shall supersede conflicting statutes, local
charter, ordinance, or resolution, and other state and
local provisions. If any provision of this Act, or
the application thereof to any person or circumstance,
is found to be invalid or unconstitutional, the
remainder of this Act shall not be affected and shall
be given effect to the fullest extent possible.
MR. WHEELER confirmed that he is aware of Section 3 and added
that it's not uncommon language. He said that the municipality
doesn't want to create conflict that invites litigation. Still,
the municipality, to the extent possible, wants to exercise some
local control or control either through the recommendation
process that is used for alcohol licensing or the ability for
the municipality to enact its own provisions not inconsistent
with the initiative.
9:38:20 AM
REPRESENTATIVE DRUMMOND, noting that many of Anchorage's
conditional use permit files have been lost, opined that this
will provide Anchorage the opportunity to track all of its
conditional use permits. She also reiterated her concerns with
regard to the cash basis of the marijuana industry.
MR. WHEELER related his understanding that Colorado experienced
an increase in crime related to the cash basis of the marijuana
industry and is working with state-chartered credit unions to
address the reluctance of the banking industry to become
involved with the marijuana industry. He then mentioned that
armored car carriers initially wouldn't serve marijuana
dispensaries, but now are coming around to the idea. Mr.
Wheeler agreed with [Representative Drummond's concern] and said
he didn't know how to address it since [the cash basis of the
marijuana industry] is due to the concern with the federal law
and their ability to operate. A further chilling effect could
result from the new U.S. Attorney General's comments that she
isn't in favor of the legalization of marijuana. Although he
said he didn't know how these concerns could be addressed at the
local level, he did specify that in terms of land use there
would be concerns with regard to security, lighting, and secure
doors. However, the aforementioned doesn't address when
consumers, employees, or the owner of the establishment leave
the establishment. The aforementioned may be a reason to
consider where marijuana [dispensaries] should be located to
reduce the chances of the aforementioned crimes.
REPRESENTATIVE DRUMMOND opined that it will behoove the
legislature to pay close attention to the cash side of the
marijuana industry, including the tax payments that will likely
also be made in cash.
9:41:35 AM
ERNIE HALL, Member, Anchorage Assembly, Municipality of
Anchorage, informed the committee that the Municipality of
Anchorage will continue to follow the leadership of Mr. Wheeler
and the municipality's legal department as they continue to do a
good job raising red flags. He recalled when the municipality
was considering opting-out there was a tremendous amount of
testimony that the municipality would be able to develop
regulations and collect a lot of tax revenue to solve the
state's fiscal gap. However, once the decision was made to opt-
in, the messages almost immediately changed to one saying the
initiative language shouldn't be changed since the public
approved it as it is and the taxes should be kept low enough for
[businesses] to operate. Therefore, the local assembly is
looking to the state to do a good job and handle the heavy
lifting in terms of establishing a good set of state
regulations. He then pointed out that the marijuana statute
doesn't refer to a license but rather says "register with the
state". He expressed concern with regard to the number of
licenses that will be issued and the process for licensure. He
said he considered Mr. Wheeler's earlier comment about a two-
year residency requirement as appropriate. Mr. Hall indicated
[his agreement] with an earlier suggestion that people not be
allowed to actually own [a marijuana dispensary] license and
thus avoid financial value accruing to the license. There is
already an issue with this with liquor licenses. The
Municipality of Anchorage, he related, is interested in
continuing to use its land use and conditional use [powers] as
that's how the municipality was able to interject itself in the
alcohol process. He emphasized the need for everyone to play
by the same rules, which is why the vast majority of [rules and
regulations for marijuana] should be addressed at the state
level in order to avoid local level confusion while allowing the
local governments discretion only with the local conditional use
permits. In closing, Mr. Hall said he didn't envy the job
before the legislature, but opined that Cynthia Franklin with
the ABC Board is definitely an asset. He then expressed his
desire to have any regulations put forth by the ABC Board
approved by the legislature prior to their implementation.
9:48:22 AM
REPRESENTATIVE SEATON highlighted the need for the committee to
discuss the definition of marijuana in the law, which seems to
exclude fiber and such things when growing hemp. The question,
he opined, is whether hemp without THC will be regulated as
marijuana or not as it could have some impacts with this dual
definition of what is and is not marijuana.
9:49:54 AM
REPRESENTATIVE DRUMMOND noted that the testing issue wasn't
addressed today, which she attributed to the fact that it will
likely be heard in the House Health and Social Services Standing
Committee in terms of definitions and amounts.
9:50:49 AM
ADJOURNMENT
There being no further business before the committee, the House
Community and Regional Affairs Standing Committee meeting was
adjourned at 9:50 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| News Articles, Marijuana and municipalities.pdf |
HCRA 2/3/2015 8:00:00 AM |
Municipal regulation of marijuana |
| Ballot Measure2, text.pdf |
HCRA 2/3/2015 8:00:00 AM |
Text of Ballot Measure 2 |
| 2015-09, FNSB Draft Ordinance.pdf |
HCRA 2/3/2015 8:00:00 AM |
Draft Ordinance, Fairbanks North Star Borough |
| O2015-02, KPB Draft Ordinance.pdf |
HCRA 2/3/2015 8:00:00 AM |
Draft Ordinance, Kenai Peninsula Borough |
| MatSuBoroughRes15-006.pdf |
HCRA 2/3/2015 8:00:00 AM |
MatSu Borough, Resolution 6 |
| MatSuBoroughRes15-007.pdf |
HCRA 2/3/2015 8:00:00 AM |
MatSu Borough, Resolution 7 |
| MunicipalAttorneysLegalMemo, 01262015.pdf |
HCRA 2/3/2015 8:00:00 AM |
Legal Memorandum |
| FNSBLegalMemo, 01302015.pdf |
HCRA 2/3/2015 8:00:00 AM |
Faribanks North Star Borough Legal Memorandum |