Legislature(2015 - 2016)ANCH LIO AUDITORIUM
09/14/2016 01:00 PM House JUDICIARY
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| Audio | Topic |
|---|---|
| Start | |
| Implementation and Regulation Status of Alaska Marijuana Legalization, Ballot Measure 2, and Commercial Marijuana Industry. | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
JOINT MEETING
SENATE JUDICIARY STANDING COMMITTEE
HOUSE JUDICIARY STANDING COMMITTEE
Anchorage LIO Auditorium
September 14, 2016
1:03 p.m.
MEMBERS PRESENT
SENATE JUDICIARY
Senator Lesil McGuire, Chair
Senator John Coghill, Vice Chair
Senator Mia Costello
Senator Peter Micciche
Senator Bill Wielechowski
HOUSE JUDICIARY
Representative Gabrielle LeDoux, Chair
Representative Bob Lynn
Representative Charisse Millett
Representative Jonathan Kreiss-Tomkins
MEMBERS ABSENT
SENATE JUDICIARY
All members present.
HOUSE JUDICIARY
Representative Wes Keller, Vice Chair
Representative Neal Foster
Representative Matt Claman
Representative Kurt Olson
OTHER LEGISLATORS PRESENT
Representative Dan Saddler
Representative David Guttenberg
COMMITTEE CALENDAR
IMPLEMENTATION AND REGULATION STATUS OF ALASKA MARIJUANA
LEGALIZATION, BALLOT MEASURE 2, AND COMMERCIAL MARIJUANA
INDUSTRY
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
CYNTHIA FRANKLIN, Director
Alcoholic Beverage Control Board and Marijuana Control Board
Anchorage, Alaska
POSITION STATEMENT: Provided an update on the implementation of
the marijuana legalization initiative.
PETER MLYNARIK, Chair
Marijuana Control Board
Soldotna, Alaska
POSITION STATEMENT: Testified on the Marijuana Control Board.
KEN ALPER, Director
Tax Division
Department of Revenue
Juneau, Alaska
POSITION STATEMENT: Explained tax collection on marijuana sales.
BRANDON SPANOS, Deputy Director
Tax Division
Department of Revenue
Juneau, Alaska
POSITION STATEMENT: Described Alaska's marijuana sales tax.
PATRICE WALSH, Chief of Examinations
Division of Banking and Securities
Department of Commerce, Community and Economic Development
Anchorage, Alaska
POSITION STATEMENT: Answered questions regarding banking and the
marijuana industry.
JAHNA LINDEMUTH, Attorney General (AG)
Department of Law (DOL)
Juneau, Alaska
POSITION STATEMENT: Described how Alaska law does not allow for
marijuana social clubs.
JANA WELTZIN, Owner/Operator
JDW, LLC
Anchorage, Alaska
POSITION STATEMENT: Described legal issues encountered by the
marijuana industry.
BRUCE SCHULTE, Former Chair
Marijuana Control Board
Anchorage, Alaska
POSITION STATEMENT: Provided updates and suggestions for the
marijuana regulatory process.
RHONDA MARCY
Wasilla, Alaska
POSITION STATEMENT: Commented on the limits imposed by marijuana
regulations and provided suggestions.
SAMANTHA LAUDERT-RODGERS
Chugiak, Alaska
POSITION STATEMENT: Testified that the marijuana regulatory
process is taking too long.
MARTIN CHRISTENSEN
Anchorage, Alaska
POSITION STATEMENT: Testified in favor of marijuana clubs.
MARGE STONEKING, Executive Director
American Lung Association
Anchorage, Alaska
POSITION STATEMENT: Explained the health risks of second-hand
marijuana smoke and vapor.
EUGENE CARL HABERMAN
Matanuska-Susitna Valley, Alaska
POSITION STATEMENT: Criticized time limits for public testimony
and the absence of many committee members.
JOSHUA TOBIN
Anchorage, Alaska
POSITION STATEMENT: Expressed frustration with the marijuana
regulatory process.
MAGGIE MULDONADO (Last name was unclear)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of Pot Luck Events
marijuana club.
DON HART
Wasilla, Alaska
POSITION STATEMENT: Testified on the constitutionality of zoning
by initiative with regard to marijuana laws.
TIMOTHY HALE
Butte, Alaska
POSITION STATEMENT: Encouraged the legislature to address
marijuana clubs and spoke of testing drivers for marijuana.
JOHN RANDALL
Anchorage, Alaska
POSITION STATEMENT: Testified in support of marijuana clubs.
HEATHER THOMAS
Anchorage, Alaska
POSITION STATEMENT: Expressed support for clubs that are not
alcohol-centered.
UNIDENTIFIED SPEAKER (Name given but indecipherable)
Chugiak, Alaska
POSITION STATEMENT: Testified in support of medical marijuana.
PETER (Indecipherable last name)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of marijuana clubs.
LEE HAYWOOD, Owner
Pot Luck Events
Anchorage, Alaska
POSITION STATEMENT: Described Pot Luck Events marijuana club.
ACTION NARRATIVE
1:03:33 PM
CHAIR GABRIELLE LEDOUX called the joint meeting of the House and
Senate Judiciary Standing Committees to order at 1:03 p.m.
Present at the call to order were Senator Costello and Chair
McGuire and Representatives Lynn, Millett, and Chair LeDoux.
Online were Senator Micciche and Representatives Kreiss-Tomkins
and Drummond.
^Implementation and Regulation Status of Alaska Marijuana
Legalization, Ballot Measure 2, and Commercial Marijuana
Industry.
Implementation and Regulation Status of Alaska Marijuana
Legalization, Ballot Measure 2, and Commercial Marijuana
Industry
CHAIR LEDOUX announced that the only order of business would be
an update on the status of the implementation of the marijuana
ballot initiative. She announced the first two witnesses.
1:05:34 PM
CYNTHIA FRANKLIN, Director, Alcoholic Beverage Control Board
(ABC) and Marijuana Control Board (MCB), Anchorage, Alaska, was
asked by Chair LeDoux for an update of the Marijuana Control
Board.
MS. FRANKLIN said she will begin with regulation projects from
2015. The Marijuana Control Board had its first meeting on July
2, 2015, and it met a total of 17 times before the end of 2015.
On November 20, the board adopted nine articles of regulation
that matched those anticipated by the ballot measure. On
February 24, 2016, the newly-named Alcohol and Marijuana Control
Office (AMCO) began accepting electronic applications for all
marijuana license types. At its February 2016 board meeting, the
marijuana control board approved a roll out that called for the
AMCO staff to process cultivation and testing licenses first.
The board decided to look at product manufacturing and retail
store applications beginning at its September meeting. This was
to give licensed cultivation facilities the chance to grow
legal, tested, and tracked marijuana before stores or product
manufacturing facilities were licensed. It is a requirement that
all marijuana in those facilities come out of the tracking
system from licensed facilities, she explained. The board began
approving cultivation and testing facility applications at its
June 9-10 meeting. It approved 28 licenses and met again July 7-
8 and looked at 30 more applications. Most were approved and "a
couple" were tabled. The board met September 7-8 and approved 16
more cultivation licenses, four manufacturing facility licenses,
and 12 retail store licenses, but members will meet this Monday
to look at four more applications that were on their agenda. She
said the board has approved two testing facility licenses, many
cultivation licenses, four product manufacturing licenses, and
12 retail stores-with four more expected on Monday, for a total
of 81 licenses approved by the board, so far. She noted that no
applications have been denied, but the board tabled applications
from Kodiak and the Mat-Su Borough when those local governments
opted out or imposed a moratorium.
1:08:41 PM
MS. FRANKLIN added that those applications were tabled until
after votes in those jurisdictions. She referred to a chart
provided to the committee, and said the numbers change daily in
the electronic database, but there are 42 new applications where
people have just started filling out forms but have not
submitted them. There are 203 applications that are in an
initiated status, which represent applicants who have not paid
to have their paperwork reviewed, but who might already be
advertising and providing local governments with notification.
There are 18 applications under review, which means that AMCO
has accepted payment and is making sure that the application is
in order. There are 11 that are incomplete, where the team has
requested corrections by the applicant. There are 41 that are
deemed complete, which will be on the agenda for the meeting on
October 27-28. There are 18 applications that are delegated by
the board, which means the board has voted to approve them, but
they are waiting other approvals from local governments, the
Department of Environment Conservation (DEC), or the state fire
marshal. Two applications were tabled. There are 25 active
applications, whereby they are approved and AMCO has received
all of the final approvals. They are now allowed to get into the
tracking system and get ready for their preliminary inspection.
She said she checked with the enforcement team, and she believes
that 14 have been inspected and are operating. There were 63
voided applications, nine rescinded, and none that were
transferred, denied, or expired. There are a total of 432
applications in the system. The board has approved multiple
marijuana handler permit education courses, and the enforcement
staff has issued 271 handler permits. The board will meet in
October to approve more licenses, and "we already have 41 in
that bin for them." The board will also meet in December and
next February. She said she is trying to get the schedule
similar to the Alcohol Beverage Control Board schedule, which
meets five times a year.
1:11:48 PM
MS. FRANKLIN said there will be a testing facility operating
three to six weeks from now. The board hired a contractor to
look at the scientific part of the facility, because no one at
AMCO is qualified to assess the testing process. It is a
scientific accrediting facility called A2LA. She explained that
someone from A2LA was flown in and will come back in October to
assess other approved labs. The biggest challenge has been
inadequate staff. The shortage is most apparent in answering
questions from the public, applicants, and local governments. A
series of email boxes have been created to make it easier to
manage the questions, but it is still a challenge.
CHAIR LEDOUX asked if the staff are the same as the staff
working on alcohol.
1:13:24 PM
MS. FRANKLIN said staff are the same, and they are the same as
prior to the ballot measure, but two licensing examiners have
been added. She said AMCO attempted to have all examiners
working on both substances so that there would not be a big line
for marijuana and a short line for alcohol. It hasn't turned out
that way, she said, because there are many alcohol inquiries.
The 10-day statutory deadline for processing alcohol is very
strict, and alcohol permits seem to have gone up exponentially.
CHAIR LEDOUX said one of her concerns is the letters written to
prospective licensees. She read the letter that goes to alcohol
inquiries, and noted that it said, "Our staff is eager to assist
you" and "feel free to call our office with questions or
concerns," and "we are here to assist you in your business
venture." The letter sounds really user friendly, but the new
letter for the marijuana applicants sounds like you don't want
them dropping in. It says if a person has multiple questions, he
or she will be required to schedule an appointment. "It's a real
different tone" for the marijuana applicants. "Is there a
reason-a rationale-for that different tone?"
1:16:38 PM
MS. FRANKLIN said the alcohol instructions were written before
the marijuana initiative passed. She was aware that AMCO would
get a lot of questions, so she looked to other states for
guidance on how to deal with an avalanche of inquiries. The
marijuana instructions were written after the ballot measure,
and the alcohol instructions represents "the way the office used
to be-before we got both substances." She said the office has
not had a chance to update the alcohol instructions, but those
applicants have told her that the office has become much more
stressed and a lot less friendly. It is simply a matter of
[inadequate staffing]. Her predecessor estimated that the office
would need twice the staff if the ballot measure passed, and
that was not done, so there are a limited number of people. She
noted that liquor license applicants have to make appointments
now. Not all appointment slots are full, so AMCO is not turning
people away for appointments. When marijuana applicants come in
for appointments, they have generally expressed that they are
pleasantly surprised that "we're pretty nice," but the job can't
get done with the current number of staff. She said she brought
a chart showing the increase in staff in other states, but AMCO
did not get anywhere near as many. Basically, Alaska is in a
fiscal crisis, and she recognizes that AMCO needs the licensing
receipts to fund new staff. "That was the approach that we
agreed to take. What Alaska is feeling now is the ramifications
of that approach," she explained. The enforcement team has
enough people to inspect but not to do much else, so AMCO has
been unable to run any proactive enforcement programs, like
underage buying, because of the loss of the grant to fund that
effort and because the staff is very busy checking in on all the
licensees-which is a good thing, but other states are doing more
enforcement for both alcohol and marijuana.
1:19:25 PM
MS. FRANKLIN said she was asked if criminal background checks
are required, and they are for both applications except for
handler permits, special event permits, or other permits that
non-licensees apply for on the alcohol side. The ABC board is
required by statute to review applicants with a felony
conviction within the past 10 years, but there is no prohibition
on issuing a license. Those applicants are evaluated on a case-
by-case basis in executive session. Complications of marijuana
applications and enforcing the rules like residency, operating
plans, and metric, require a different process. Alcohol is still
a paper-based application process, and the marijuana process is
all electronic, which demonstrates that applicants have the
means to enter the metric tracking system.
MS. FRANKLIN said the board began issuing licenses based on a
certification filed by each applicant stating that he or she
does not have a disqualifying criminal history. Fingerprint
cards and fees are being collected and will be sent to DPS on
the day that SB 165 becomes effective, which is October 4, 2016.
She said she has been ordered by the board to summarily suspend
any license in which the owner has a disqualifying criminal
history, even though the owner certified that he or she did not.
She expects there will be between 200 and 250 fingerprint cards
to submit to DPS. Many of the licenses are owned by entities
with multiple individuals, and the legislature voted that anyone
with a disqualifying criminal history, no matter their ownership
stake, would be disqualified. She said AMCO has been working
with DPS, which forwarded SB 165 to the FBI, and it was approved
this week. So there will be no delay on the back end once the
act becomes effective; DPS will immediately begin accepting the
fingerprint cards and running them through the same criminal
background check that is used for liquor license applicants.
1:22:45 PM
CHAIR LEDOUX noted that Senator Wielechowski has been online
since the beginning of the meeting, and Representative Saddler
is in the audience. She then asked if there was much delay in
licensing because of the background check legislation.
1:23:21 PM
MS. FRANKLIN said the board did not delay in taking up the
issue. The applications began being filed in the initiated
status on February 24, 2016, which requires a three-week
advertising period before coming forward with the other
documentation. In terms of getting the applications ready, AMCO
set aside the background check issue and powered on through
getting those applications ready for the board, and 30
applications were brought to the board for its June meeting.
There was no May meeting, and she believes there was one
applicant for the April meeting. The delay was not due to the
background checks but was due to the desire to get the board as
many applications as possible in its first meeting and getting
the handler course programs up and running so that everyone who
was at that stage of approval could take handler courses.
1:24:45 PM
CHAIR LEDOUX asked if the board is where it is supposed to be in
issuing licenses.
MS. FRANKLIN said, yes, and added that anytime an electronic
system starts up, there will be glitches. Administrative
services and the IT team in the Department of Commerce,
Community, and Economic Development (DCCED) have prioritized
AMCO's needs over other divisions' needs because of the
deadlines in the ballot measure. The IT team has done a
fantastic job providing an electronic system, but as AMCO staff
worked with it, they "identified these statuses, so that long
list of statuses that you have are places where we identified a
place where an application might rest. We wanted to have a
status, because we have attempted to have as completely a
transparent process as we can." She said there is a lot of
transparency, including a spreadsheet on the website showing the
change in application status, which is updated weekly. There is
another spreadsheet on the website keeping track of local
governments that have opted out or passed marijuana ordinances.
There is a licensing mailbox for anyone involved in the
application process, and there is a mailbox for general comments
and questions. She noted that the board is continuing to refine
the regulations. There are also six regulation projects on the
ABC side, "so we've been busy." She expressed her belief in
keeping everything transparent and noted an extensive
frequently-asked-questions database on AMCO's website, which is
updated every month to six weeks. The website is continually
refined to keep current and to get all of the board agendas and
packets online. All the documents that the board has reviewed
are on the website, and the goal is to keep the process
transparent and understandable. The regulations went out twice
for public comment before they were finalized, and there were
two full days of public hearings in October 2015. "We're
committed to hearing what people have to say."
1:28:04 PM
CHAIR LEDOUX asked Mr. Mlynarik if he had anything to add.
PETER MLYNARIK, Chair, Marijuana Control Board (MCB), Soldotna,
Alaska, reiterated that the staff has been busy. The board gets
the application packets in one lump, usually three to four days
before a meeting. Each license application can be 50 to 100
pages, so the board would like to get them sooner to have more
time to go through them all. But the staff has been busy, and
most of the applications received by the board do not have
errors, so the staff is doing a good job. The regulation project
was time consuming-making regulations from scratch-although
there are templates from other states, but the board had to fit
them to Alaska. Considering [the shortage of] staff and the
newness of the regulations, the process, as a whole, has gone
fairly smoothly. The only denials were for marijuana handler
permit courses, and those were because of a lack of substantial
information. Those are important as they teach people how to
handle marijuana, but there have been quite a few handler
permits provided, he said.
CHAIR LEDOUX asked about the course.
MR. MLYNARIK said that the courses can be online or taught in
classes.
1:30:49 PM
MS. FRANKLIN said regulations specify what must be taught in a
marijuana handler permit course, including information about
marijuana, how to deal with persons impaired, and the rules
about restricted access. Anyone can go in a liquor store in
Alaska, but the sales can only occur for customers 21 and over.
For marijuana, children cannot enter the store. Also, unlike a
liquor store where someone might be able to slip a bottle under
their sleeve and walk out with it, marijuana customers will have
to fill an order and purchase the product before handling the
marijuana. The controls are to assure the federal government
that Alaska has met the stipulations in the Cole memo.
1:32:24 PM
SENATOR MICCICHE said AMCO is underfunded and overworked. He
congratulated Mr. Mlynarik and the board, saying they have
processed an incredible workload in a relatively short time. He
said he supports having this status meeting today, "but we knew
this was not going to happen overnight," and he hoped to take a
moment to appreciate the hard work of the board.
CHAIR LEDOUX agreed and noted that Representative Guttenberg is
now online.
1:34:05 PM
CHAIR MCGUIRE agreed and complimented the director and the
board, noting that they had fewer resources than the alcohol
program has had and perhaps with more complexities. "Imagine
coming in after prohibition and being the first people on line
to begin that process of legally regulating alcohol again-how
overwhelming that would be." She asked if AMCO has created an
overall implementation plan for where things should be, so
everyone can understand where things are now and where the gaps
are, particularly regarding the roles of the legislature, board,
and DCCED. It will help guide all the parties to know "where we
need law clarifications, where we need process improvement,
where we need staff improvement-just an overall implementation
plan." She expressed her concern of patch-working, like the
issue of the social clubs, which is a radical departure from how
Alaska treats alcohol. The goal was to treat marijuana like
alcohol, but is seems like the state will end up with retail
establishments setting aside a social lounge, and that is very
different. She expressed that in each case AMCO is forced to be
reactionary and needing to interpret the Cole memo and
legislative intent, so it might be helpful to have an
implementation plan everybody can look at.
1:36:47 PM
MS. FRANKLIN said there is an implementation plan, but it is not
called that on the website, "so that is a great idea." The plan
is guided by the ballot measure as amended by legislation. But
the idea behind the timing of the ballot measure and all of the
deadlines it contains was to get a marijuana industry up and
operating within two years. At this time, AMCO has all four
types of licenses approved by the board. She expects the first
testing facility to begin operations in a matter of weeks, and
there will be a very rapid roll out of the other license types
once the testing facilities are operating. By February 2017, she
believes there will be stores operating and manufacturers making
products, which have been individually approved by the board,
which is a tremendous amount of work, and there will be testing
facilities and a lot of cultivation facilities growing a lot of
legal marijuana in Alaska. In terms of the social clubs, it is
something that came up from other states and was not unexpected.
She said other states also had issues with unregulated marijuana
businesses, such as delivery companies and retail stores that do
not have licenses.
MS. FRANKLIN said that it is difficult for the public to tell if
an establishment is licensed and regulated. Many of the illegal
establishments are posing as legal. The ballot measure passed in
November 2014, so people feel that there should be stores open
by now. She said her staff is responding to the public by
stating that "we're very close; we're getting there; we're
marching along toward that." The most helpful statute that is
missing would address selling marijuana without a license. In SB
30, regarding misconduct involving marijuana, "we have our team
working on a place in Anchorage right now that is selling liquor
without a license, and that's a very specific offense that we
feel is much more likely to be taken seriously when it comes to
the prosecution decisions than simply defaulting to the
Controlled Substances Act on relying on whatever amount of
marijuana is found in such a place." She said it makes it very
difficult for the enforcement team to address illegal,
unregulated establishments, but this is something that has
happened in Colorado and Washington. Washington outlawed clubs
and Colorado has not, so there are models for both strategies.
Colorado struggles with a lot of gray-area businesses, and a lot
of it has to do with the overlay of its medical marijuana market
on the recreational market.
1:40:19 PM
MS. FRANKLIN said she feels lucky that there is just one set of
rules, and she believes this industry will stand up and demand
that unlicensed, unregulated competitors be shut down.
MR. MLYNARIK added that the goal of the board is that if there
is marijuana, it will be legal and will not come from people who
do not have a license. "I think we're running into, possibly,
the risk of unlicensed people selling marijuana." People are
emboldened in some fashion, and that needs to be addressed
through enforcement and prosecution. Although it is legal, it is
not legal to sell without a license. "I think that we are
starting to see some of that stuff pop up even with people with
signs that aren't licensed." It will need to be addressed if the
commercial marijuana industry is to be successful, he said.
1:41:58 PM
REPRESENTATIVE MILLETT asked about social clubs in Washington
and Colorado and the pros and cons of each strategy. She noted
the attorney general opinion (2016 Op. Alaska Att'y Gen. Aug.
31) stating that social clubs are not legal.
MS. FRANKLIN said the pros of marijuana social clubs are common
sense. If marijuana is legal, it is an issue if there is nowhere
to consume it. She said that was identified early on, and the
board is attempting to address it by creating some form of
consumption area in a licensed, regulated establishment. "In the
meantime, life goes on, and so the social clubs open, and they
claim that they're exempt from the prohibition on consumption in
public, because they're not a public place." She said that is
what the AG opinion touches on, and she will let her address
that. From a licensing and regulatory perspective, marijuana
social clubs provide a continued market for black market
dealers. "If you go to any of the social club websites, they're
not only inviting people to bring their own marijuana in,
they're promising to provide it if you pay the fee to become a
member." She noted they have "strains of the week," products to
try, and none are produced by licensed, regulated cultivators or
manufacturers. If a person was a grower and had a nice little
cabal of customers, and those customers decided to buy legal and
tested marijuana from a store, that person could go into one of
the social clubs and find more customers. That is why bottle
clubs are prohibited on the alcohol side, she explained. The
alcohol industry recognizes the competition from unlicensed,
unregulated places that invite people in to drink.
REPRESENTATIVE MILLETT noted that Alaska allows for personal
use, which is not regulated or licensed, "so when you balance
the fact that folks can grow their own marijuana at home and
consume it, that's an opportunity for social activity, and we
haven't outlawed homegrown beer, and those things are consumed
and done." She wants to find a balance, because people are
allowed to grow their own marijuana or make alcohol, so the
social club aspect, for her, doesn't mean that the marijuana has
to be regulated, "I mean you could bring your home strain or
whatever and then share it there. So your thought process is
just that it's untested, it's not licensed, and it's an
opportunity to undercut a licensed facility?"
MS. FRANKLIN said home growers can have their marijuana tested.
The testing regulations were written in a way to permit that in
recognition that there are some people in Alaska that are very
talented at a small home grow and might be interested in the THC
content and terpene profiles. In terms of getting together in
public to share that, there really is no equivalent on the
alcohol side. People are not permitted to bring homebrew-Alaska
has introduction and removal rules that came about when
prohibition ended with the idea that if there will be a
controlled alcohol industry, all public outlets must be
controlled. That is where the idea comes from, and introducing
one's own strain to a public area where people can pay to come
and consume it is not a regulatory model that has been adopted.
1:47:09 PM
REPRESENTATIVE MILLETT surmised that a social club would be
considered a public place, and that is the basis for the AG
opinion.
CHAIR LEDOUX noted that restaurants can allow people to bring
alcohol.
MS. FRANKLIN answered that only wine is allowed, which is an
exception to the introduction statutes. There are a lot of
places in Title IV where pressure over the years has loosened it
up, and it now allows bringing one's own bottle of wine. She
takes guidance from AS 04.16.090, the bottle club prohibition,
which refers to the exact business model that she has seen in
the social clubs: charging memberships to come in and consume.
The legislature has the ability to allow bottle clubs or social
clubs. This is a fledgling industry, and there should be maximum
protections to ensure its success; otherwise, the black markets
will flourish and people who have made significant investments
might flounder.
1:49:08 PM
CHAIR LEDOUX asked if that is coming from Ms. Franklin or from
the industry. She said she assumes that one reason there are no
bottle clubs is that CHARR [Cabaret, Hotel, Restaurant, and
Retailers Association], bar owners, and other retail
establishments do not want them. "It wasn't because government
said, at the beginning, there is something inherently wrong with
it." She asked if the push to not have social clubs is coming
from the marijuana industry or if Ms. Franklin or Mr. Mlynarik
just decided on their own.
MS. FRANKLIN said the industry does not yet speak with one
voice. The marijuana industry would be licensed establishments,
and the board has only looked at 81 of those so far. "I don't
presume to speak on behalf of the marijuana industry," but she
has had multiple applicants express displeasure with social
clubs and others support them, because marijuana is becoming
more accepted, which is a desire for almost everyone in the new
industry that we be able to talk about marijuana and work on it
as a legal and regulated substance. "I think its evolving."
1:51:18 PM
CHAIR LEDOUX said she was concerned about the definition of
"public location" because a social club would be a crime. Should
the definition of public be defined by a regulation or by the
legislature? "It seemed as if everything was because it's
illegal and thus a crime because it's in the regulations, but
normally crimes are determined by the legislative body, not by
the regulators." She noted that Senator Coghill arrived about 45
minutes ago.
REPRESENTATIVE MILLETT asked if Ms. Franklin tried to work with
the social clubs to put regulations in place so that they could
operate. "Have you been willing to work with the social clubs
and have dialogue with them … so that there could be maybe some
regulations that would allow operations of those, absent the
attorney general's opinion, obviously?"
MS. FRANKLIN said that in June of 2015, she sent letters to six
establishments that appeared to have gotten started early, and
that is all. She has not taken any enforcement action. The board
did not create any crimes through regulations-that is the
legislature's role. It is the ballot measure itself that made
public consumption illegal, and it is only a $100 fine. In part,
social clubs have thrived because there are no crimes that would
shut them down. It would be a matter of writing tickets to their
customers, which is an uncomfortable position for law
enforcement officers, or it would be trying to charge the owner
of the establishment with possession of whatever amount of
marijuana was there when law enforcement goes in. If it was
legalized, there would be language, but there is a gap. Other
than the definition of "public" that came from an established
statute, there is really nothing in the ballot measure or the
legislation that speaks to the legality of these places. The
owner of one social club has come to all of the meetings, "and
we're cordial, but as an attorney, looking at the ballot
measure, I can't see how the people voted for those, and so it
really is a dead spot." She surmised that that is why the
commissioner asked the attorney general for an opinion.
1:55:24 PM
CHAIR LEDOUX handed the gavel to Chair McGuire.
CHAIR MCGUIRE announced the upcoming witnesses. She noted the
last discussion points to the complexity of the issue. There are
philosophical values bumping against each other. Alaskans are
somewhat libertarian, and, since the Ravin decision [Ravin v.
State, 537 P.2d 494 (Alaska 1975)], the state has a right of
privacy that allows individuals to grow and consume their own
marijuana. The initiative provides liberty through regulation.
With the legalization, you will not have "to skulk around in
dark allies and have to buy a substance to consume illegally."
She said some consumers have multiple sclerosis and other
things, but at what point does the regulation quash the liberty?
She said she understands that there should be penalties for the
black market, but there is the irony of creating more criminal
penalties to haunt individual Alaskans. It comes to that core
level of our philosophical values bumping against each other.
She appreciated that Ms. Franklin said perhaps Alaska will get
to the place where we resolve this and we have a nice set of
rules ahead of us in this industry. Regarding Title IV and
alcohol, she was involved in the brew issue, "and I can tell you
it was a war like I've never seen." The idea that everyone in
this industry will ever come together is hopeful but not
realistic. There will be work year after year, because there are
always winners and losers. She noted that the homebrew people
wanted to sell growlers and increase their limits, and the
established dealers did not want the competition.
1:59:36 PM
KEN ALPER, Director, Tax Division, Department of Revenue (DOR),
Juneau, Alaska, initially discussed taxation on marijuana. He
said there are completed regulations that establish a two-tier
system. The initiative referenced [a tax of] $50 per ounce, with
some flexibility for the different parts of the plant. The
division created the second tier of $15 per ounce for the non-
flowering part of the plant, which has a lower concentration of
the active ingredients and warrants a lower tax rate. His
expectation is that those parts would be used by the
concentrates industry to make liquids. The division is aware of
the banking issues, and he said, "We can't fix it for them, but
we could do our best to enable them to pay their taxes." He
stated that the state is building a facility by a parking garage
[in Anchorage] where all taxpayers, not just the marijuana
industry, can make cash deposits. Individuals who are not in
Anchorage will be able to mail their taxes in cash to a secure
post office box at the Anchorage airport.
2:02:26 PM
CHAIR LEDOUX asked if there is much interest in paying taxes in
cash other than from the marijuana industry.
MR. ALPER said it is expected to be used for the marijuana
industry, but "we're taking pains to ensure that it's not
exclusively for that purpose," so a bank will see it as tax
money and not marijuana money.
CHAIR LEDOUX asked about problems with other states depositing
tax money from the marijuana industry. "If I were a bank, I
would be afraid to take it," she said.
MR. ALPER said it is awkward. He does not want to say the state
is laundering marijuana money, but once the state takes it to
the bank, it is just tax money.
BRANDON SPANOS, Deputy Director, Tax Division, Department of
Revenue, Juneau, Alaska, added that other states have not had an
issue with banks taking the money. Banks in Alaska have said
they are willing to take the money once it is "revenue";
however, there is some concern if it is viewed as exclusively
marijuana tax. Oregon will no longer take credit cards on its
website, and Oregon's tax revenue was closed down for credit
card processing, because the website specifically said a credit
card could be used to pay marijuana taxes. There is also a
transportation carrier who wanted no part of transporting the
cash, he explained. The banks have not said they will not take
revenue, but "to ensure that we're on the up-and-up, we're going
to take cash from all tax types." It is seldom, but some of the
alcohol and tobacco taxpayers have paid small amounts in cash,
he said.
2:06:25 PM
CHAIR MCGUIRE summarized that there will be a mechanism for
accepting cash, and local banks will take it because it is not
specific revenue from the marijuana industry.
SENATOR COGHILL asked if the tax division will do spot checks or
annual true-ups for accountability. There is an electronic
reporting mechanism on the marijuana sold or transferred through
a marijuana retail outfit, so does the reporting come from the
retail outlet?
2:08:09 PM
MR. SPANOS said the reporting is through the tax revenue
management system. Revenue Online is an outward-facing website
that taxpayers can log into and report taxes. Marijuana
taxpayers are the cultivators, so when they make a sale to a
processor or retailer, they must report the total ounces of
flowers and other parts of the plant sold. It is a simple form,
and the total tax due is calculated. For spot-checking, the
division will do the same thing it does for other taxpayers,
which is examine and audit those returns. The examination will
rely on that seed-to-sale software that AMCO will be using. All
of the sales are tracked in the software, and both AMCO and the
tax division will have investigators to verify the plants and
the shipments. An investigator can show up, look at a shipment,
weigh it, and verify it, he explained.
SENATOR COGHILL said if it is going from a non-legal industry to
a legal industry, there will be a temptation to not pay taxes,
so it is important to make sure that those who are doing it
right are not troubled any more than need be, so they are
rewarded for doing things correctly. He suggested protection for
the sellers and accountability. "I don't know that I'm totally
satisfied with the answer yet, but I'll listen along the way."
2:10:22 PM
MR. ALPER referenced the division's support for squeezing out
the illegal industry and its goal of doing everything to make
sure the Alaska marijuana industry is focused on the legal and
licensed taxpayer. A bill last session, HB 337, would have given
DOR the power to have tax penalties in addition to criminal
penalties for retailers that did not have a legal grow, which
could be an extra deterrent. It will be a continuing problem,
and one that should be fixed as quickly as possible.
2:12:00 PM
PATRICE WALSH, Chief of Examinations, Division of Banking and
Securities, Department of Commerce, Community and Economic
Development (DCCED), Anchorage, Alaska, said the director is
traveling and could not call in. She explained that banking
institutions are regulated by federal and state laws, and
marijuana is still illegal under federal law; therefore, banks
that deal with the marijuana industry violate federal law. The
U.S. Department of Justice gave guidance in August 2013 for
marijuana enforcement, and it issued the Cole memorandum in
February 2014, which states that it will enforce federal
marijuana laws regardless of state laws. Federal regulators of
banks include the Office of the Comptroller of the Currency
(OCC) and the Federal Deposit Insurance Corporation (FDIC). The
FDIC had a meeting in April 2014, and stated it would support
banks that elected to offer services to marijuana-related
businesses. The transactions would involve funds derived from
activity that violates federal law. Therefore, a bank would be
required to file a suspicious activity report (SAR) with the
Financial Crimes Enforcement Network (FinCEN). FinCEN issued
guidance in 2014 describing three levels of SARs that are
related to the marijuana industry.
MS. WALSH said she was asked about challenges that Alaska
banking institutions encounter regarding marijuana. The Division
of Banking and Securities is not aware of any bank or credit
union in Alaska that is willing to bank marijuana businesses at
this time, as it can put the financial institutions, including
staff and directors, at risk of federal prosecution. Banks and
credit unions are comprised of boards that instruct management
on who to do business with, and they get to choose who they do
business with, so the threat of action against them has
dissuaded them from providing services to marijuana-related
businesses in Alaska. Credit unions have the same challenges as
banks, and their federal regulator is the National Credit Union
Association. She said she was asked what steps are needed to set
up a community bank for the marijuana industry similar to one in
Washington. All banks are subject to federal law, whether they
are national or state-chartered. Additionally, all are required
to get federal insurance, and that requires adherence to federal
law. If the State of Alaska were to open a bank, it would have
to apply for a charter through a federal regulator, and she said
she imagines that it would require legislation and funding-there
has to be different amounts of capital to open a bank. The
division is not familiar with the banks in Washington and how
they offer services to marijuana-based businesses.
2:17:56 PM
MS. WALSH said it is each board's choice to provide services to
marijuana businesses, and there would be "very huge" additional
costs. It is expensive to handle cash, she said, and it would
require the additional SARs reporting. She said the division has
reached out to some banks and credit unions to try and bridge
this gap. In November 2015, the division hosted a webinar with
FinCEN, and it included a lot of financial officers from Alaska
trying to understand the risks. The division also had a seminar
with Director Franklin's group for financial officers to explain
the state's due diligence in issuing licenses to marijuana-
related businesses and the enforcement and regulations for the
industry.
2:19:57 PM
CHAIR MCGUIRE asked what role the division should have. She
noted the Cole memo, the follow-up memo from the Department of
Treasury, and the FDIC board hearing on April 9, and said there
is no outright prohibition for a bank to lend to marijuana
businesses that have been legally licensed. The Cole memo and
others are attempting to get down to the nuances of finding a
way for banks to become more comfortable about this. She said it
seems that the issues for banks are uncertainty, administrative
burdens, and collateral issues with lending where there is real
property-or even chattel that could be subject to seizure. But
it all hinges on the idea that was in the Cole memo saying that
states that have legalized marijuana have an obligation to set
up regulations to provide security, authority, and a clear path
for banks and lending institutions to secure legal lending. It
is interesting, she stated, that that is the missing element. If
Alaska under the leadership of Ms. Walsh and the director were
to propose regulations that would comport with the Cole memo and
were approved by the DOJ at the federal level, banks could then
rely on that and enter into these transactions. She said her
point is if the idea is to eliminate the black market-the
illegal weapons trade, the cash, the human trafficking, et
cetera-then legalizing it is exactly the right way to do that.
If it is legal, why would the state want people running around
paying their taxes with cash in paper bags or from bags hiding
under their mattresses? It seems to be a contradiction. It seems
that the answer is regulations from Ms. Walsh's office.
2:23:42 PM
MS. WALSH said she has not been speaking her opinion; Congress
has not changed the law. There is guidance, but guidance is
guidance. There is still a federal law with violations, so that
is where the issue is. Banks have been given this guidance, but
when it comes down to being prosecuted, there is no protection
from the guidance, so the banks make decisions to be sound for
all of their accountholders. Institutions are not willing to do
something that could throw a prosecution at them with huge fines
that could undermine them. The work needs to be done at the
congressional level, since there are so many states passing laws
[to legalize marijuana]. "I think that's the next step."
CHAIR MCGUIRE said an analogy is waiting for the federal
government to build an icebreaker, and Alaska can only wait so
long. "I am asking a very different direct question, which is:
Do you believe that your department in banking and securities in
the State of Alaska has a role, never mind the opinion that has
been expressed by some banks that they would prefer to have
federal clarity-I think everyone would prefer that-but we also
know that getting federal clarity and action is very difficult,
so we understand that, but my question is: Do you believe that
if you were to promulgate regulations comporting with the Cole
memo-and the Cole memo cries out for it-that would set up a
regulated, legalized pathway for banks to allow marijuana
customers to come into their system, do you think that they
would be more likely to lend?"
2:27:03 PM
MS. WALSH said, "It could offer an assurance to the financial
institutions; however, we're not the only regulator. They have a
federal regulator, and unless they have a state charter, we
don't have any jurisdiction over them." She added that there is
one credit union in Alaska that is a state charter, and it would
not apply to the rest of the credit unions. There are four state
banks that are chartered, and the others are not and would not
be affected. It might help, but there is still the component of
the federal regulator, and if they could get assurance from that
piece of it, they might be able to feel more comfortable.
CHAIR MCGUIRE said, "Godspeed in your work. I encourage you to
keep being proactive on it." She added that there is room in the
Cole memo to think about the state "as we have in the initiative
and in implementation of the licensing itself." Ten years ago
someone could have said that the initiative could not have been
written and the legislature could not have acted. "Someone said
that, I know, but here we are." She said it is an opportunity
for Alaska to be at the forefront of the conversation to see if
it could get some agreement, even if it is just through a
memoranda of understanding.
2:28:45 PM
CHAIR LEDOUX said she does not want to throw cold water over
some forward thinking, but if she were a bank or a credit union
she would not touch this with a ten-foot pole. The penalties for
being wrong are onerous, and she did not realize, at first, the
requirements that banks have. A grocer who knows that every
dollar coming into the store is from drug money has no
obligation to report it to the federal government, but a bank is
not just set up to protect people's money, its role is as an
unpaid helper for law enforcement. "I don't know how that
happened, but it did, and so we're stuck with it." She said
Washington found a way around that, so, somehow, the benefit of
being the banker for the marijuana industry has outweighed the
risk. She asked Ms. Walsh to find out what they did so Alaska
does not need to reinvent the wheel. Senator McGuire is right.
This law tries to legalize things-to bring things in from the
shadow-and then there is a federal rule requiring everything to
be in cash, so the state will probably not get all of its taxes,
because that's the way it works in cash economies. California
must have something for its active medical marijuana industry,
she surmised. The problem applies to the medical marijuana
industry as well, so there has got to be some way. California
has been doing it for 10 years, so someone must have figured it
out. She asked Ms. Walsh to look into it.
MS. WALSH agreed to look into it and report back.
2:32:53 PM
CHAIR MCGUIRE asked if there were more questions.
SENATOR COSTELLO spoke of a bill she introduced and was signed
into law that dealt with equity crowd investing. She said if
there would be problems associated with that legislation. It
allows businesses to raise $1,000,000 with contributions of up
to $10,000 from Alaskans, and the division is promulgating
regulations right now.
2:34:17 PM
MS. WALSH said the division does not see problems at this time
with that "and these other issues," but she will contact her if
problems come up.
SENATOR COSTELLO said she appreciates the opportunity to plug
equity crowd investing. No one in the media has picked this up
so she is writing an op-ed. "This is a way for Alaskans to
invest in Alaska businesses, and I'm sitting here thinking
that's why we created the law." She expressed appreciation for
the division for promulgating the regulations, and it is her
understanding that the division will help businesses create a
business plan to access equity crowd investing, which is like
crowd funding with equity in the company.
2:35:19 PM
SENATOR COGHILL asked about barriers for capital improvement of
a building or buying a building. "Do we look at Alaska Housing
and Finance; do we look at Fannie Mae?"
MS. WALSH said, "At this point, we're hoping that it doesn't go
that far down, but it's up to each bank or credit union." They
are starting to look at where the cutoff should be as far as
third-party associations. Those are things that banks are trying
to decide with their boards. All institutions are taking a very
close look at this.
SENATOR COGHILL said where there is a will, there is a way, and
there will be people who will be putting their thumbs on the
scales, "and you're going to have to deal with that." It could
be through relationships that are at arm's reach, but still
entangled, he stated. Any way the legislature can look at ways
to supply a different avenue is something to consider. Borrowing
for a business plan is one thing, borrowing for a building is
another, and cash flow is another issue. "It sounds like we
don't have a good answer."
2:37:46 PM
MS. WALSH said each institution makes its own policy, and she
knows they are addressing it. As a regulator, the division has
supported the industry and changes with state law, but the
institutions look at their federal regulator. "And we've had a
lot of contact with the federal regulator," which is FDIC for
banks that the state regulates. The division has had numerous
conversations with the FDIC, and if a bank chooses to have
accounts that are marijuana-related, the division supports that
and is working with the federal regulator to try to let that be
okay, "but it's not our decision." The division's job is to make
sure the institution is making sound business decisions to
protect the accountholders but not who to bank with.
2:39:24 PM
CHAIR MCGUIRE said it is like liberty through regulation.
Landlord/tenant laws had a hands-off approach until people
decided to address discrimination. "To a degree we say that we
let these businesses operate the way they do, but there are
points in time in history where we take a step back and try to
identify whether there are gaps; people who aren't being lent to
for reasons that we would like to prevent." It's incumbent on
the government to continue to be proactive and visioning on how
funding is accessed, like startups and new innovations and
ideas. Oregon's governor, Kate Brown, initiated a movement that
led to institutions there that are equity driven-board driven,
and the board mandatorily includes women and men, people of
color, people of different sexual orientations, and they are
motivated by philosophy that they'll adopt. There is room to
consider that there might be gaps.
2:41:12 PM
CHAIR LEDOUX said she understands where Senator McGuire is
coming from, but she would not want to require banks to deal
with these businesses. She said she really wants the marijuana
industry to succeed, but she does not want to tell a private
business that it has to take money from someone that might put
them in violation of federal law and cause them to lose their
charter. That is a dangerous road to go down.
2:42:20 PM
CHAIR MCGUIRE said she is not saying that, but there are always
those intersections in history between what is legal now and
what is legal in the future. There was a time when alcohol was
legal and then it wasn't, but she was not suggesting that banks
be forced to take [marijuana] money, but there could be better
communications with the federal government. She said there could
also be outside-the-box thinking so lending can occur.
SENATOR COGHILL said banks end up at the end of the line.
Racketeering laws were based on drug money and laundering, so it
ends up at the bank's door. They had to look one transaction
beyond and be able to report it. That is one of the problems.
"How do we, as a state, short circuit that, so it's not a
racketeering problem anymore, but it's actually a cash
transaction that's accountable?" It needs to be addressed at the
federal level, but at the state level, the problem is how to
keep a less-legitimate business from laundering cash.
2:44:20 PM
CHAIR MCGUIRE welcomed Jahna Lindemuth and asked if she is the
first female attorney general in Alaska. (She replied that she
is the second.)
JAHNA LINDEMUTH, Attorney General, Department of Law (DOL),
Juneau, Alaska, said she was asked to address how the attorney
general opinion (2016 Op. Alaska Att'y Gen. Aug. 31) came about.
She noted that she has been on the job for only four weeks, but
she will provide her understanding of the opinion. The Marijuana
Control Board identified some confusion in the law regarding
marijuana social clubs, which is not a defined term in the law,
but it is a business that offers marijuana for a fee, whether it
is a membership fee or otherwise.
CHAIR LEDOUX asked if a club is a business that offers marijuana
for a fee or one that offers a place to consume it for a fee.
MS. LINDEMUTH said it could be either, but there is remuneration
for consuming marijuana in the location. There are many entities
operating differently, so the term captures a bunch of different
possible operations.
2:47:05 PM
CHAIR LEDOUX said if they were providing marijuana for a fee
without being licensed, that is illegal and is a big difference
between that and the gray area of providing a venue to consume
the marijuana.
MS. LINDEMUTH said there is a distinction, and that is addressed
in the opinion, but if a business is advertising that there will
be marijuana samples, and it is charging a fee, that can be seen
as distributing marijuana. There would be a financial benefit to
the owner of the building who is advertising that marijuana
samples would be provided. The MCB was not confused, because the
statutes and regulations are very clear, but educating the
public could help with enforcement. Education comes first and
then there is enforcement if folks do not get the message.
2:48:49 PM
CHAIR LEDOUX noted that Ms. Lindemuth said the statute is very
clear. The statute is the initiative, and she does not find it
to be very clear.
MS. LINDEMUTH said it is clear that public consumption is
banned. The initiative legalized consumption and allowed every
person to have one ounce or six plants, which was later changed
to twelve plants. It also says that marijuana will be regulated.
Then it allows four different types of entities to have more
than an ounce: retail marijuana stores, cultivation facilities,
product manufacturing facilities, and testing facilities. Other
entities cannot have more than one ounce or 12 plants.
2:50:59 PM
CHAIR LEDOUX asked about clubs that are not offering free
samples. For example, tourists from cruise ships have no place
to go, because [marijuana] is not allowed on the ship and cannot
be consumed on the street. The tourist would want a place to
consume what has been legally purchased and pay a fee to go into
a club. She asked if the opinion applies to a club that only
offers a place where someone can consume it.
2:52:29 PM
MS. LINDEMUTH said such a place would be a public place, but the
legislature could change that. As written, the club would be a
public place, and "I don't think we can get around that."
REPRESENTATIVE LEDOUX said she is trying to figure out the idea
of a public place. If a club is an athletic club, or a petroleum
club, or any club, and the fees are pretty expensive, then not
everybody could go in. If those places had a room to consume
pot, would they be public?
2:53:51 PM
MS. LINDEMUTH said the opinion describes three ways that a place
is public, and "I think it would fall under any of those three
situations." A business is a public place, and that gets into
whether there is a financial benefit to the club owner-and there
is. Places of amusement are public. The third way addressed in
the opinion are places where a substantial number of people have
access. It would not be a house where people only come in if
they are known and invited, she explained.
REPRESENTATIVE LEDOUX asked if those definitions are from
regulations and not legislative definitions. There are different
definitions for different purposes. She said she believes that
when most people voted on the initiative, they figured that a
public place just meant that a person could not smoke a joint
walking down the street. Public has different definitions for
other laws, such as anti-discrimination, disability, and others,
but then there is "just that old definition" of public being
what most people think of, "and that is, you're outside, you're
someplace that everybody can be, that you can just walk around
in," and she does not think marijuana clubs meet that kind of
public definition, other than through the regulations. She is
troubled that the regulations are making the law rather than the
legislature. Maybe the courts need to decide, she stated.
2:56:39 PM
MS. LINDEMUTH agreed that the definition of public is broad, but
she believes that it is consistent with the statute and with
common law. Even if the regulation did not exist, she believes
it would end up in the same place. The statute has the four
buckets, and unless an entity is one of those buckets, it is not
part of the regulated industry.
REPRESENTATIVE LEDOUX said there is a law that prohibits
urinating in public but does not prohibit using a public
restroom. There are really huge differences in the meaning of
public depending upon the context.
MS. LINDEMUTH said it is hard to imagine that someone would be
in violation of the law if they went into a restroom and
consumed an edible.
REPRESENTATIVE LEDOUX said her point is that the definition of
public does not prohibit urinating in a public restroom.
2:58:03 PM
MS. LINDEMUTH said, "Right, but what we are starting from here
is what you are deeming a club where people can come and be with
other people that they don't know and that there would be
marijuana consumed." Just because there is a membership fee, it
does not change it from a public to a private event. Like
Costco, which requires a membership, is still a public place.
The board room at Alaska Airlines is public even though a
private membership is required, and they serve alcohol and are
regulated by the Alcohol Control Board.
2:58:50 PM
CHAIR MCGUIRE spoke of SB 30 that meant to clarify this by
defining "public" as Chair LeDoux does. It made people think
about it in several ways: "We thought about in terms of alcohol,
we thought about it in terms of smoking, and we thought about
this practical point of what reasonable people think." Also, the
Alaska Constitution's rights of privacy have provided the right
to consume marijuana. There are uncovered issues, like a weed
fairy that comes in and provides the weed for most people.
"We've just sort of ignored it, but the reality is that there
are many Alaskans that have consumed marijuana for medicinal or
recreational purposes under the assumption of the Noy [Noy v.
State, 83 P.3d 538, 544-45 (Alaska Ct. App. 2003)] and Ravin
decisions. This area needs to be clarified in statute, and there
needs to be a robust record of it. We want to welcome tourists,
she said, and we want them to be safe, and then we say they can
buy marijuana and then we say: "I have no idea where you're
going to consume it." Alaskans with children may not want to
consume marijuana at home. She said she knows many families who
choose to consume alcohol only away, so a group of parents may
want to consume marijuana legally in a social situation not in
the presence of their children. "Gosh, now we're saying you're
subject to, perhaps, criminal penalties." She does not think
that was the goal of the initiative, but the legislature has not
given Ms. Lindemuth much latitude. The regulations are based on
unclear parts of the initiative.
3:01:36 PM
MS. LINDEMUTH said the legislature is welcome to address this by
adding a fifth element, which would be like a bar for marijuana,
but the regulations have tried to address this by allowing a
place for consumption at a retail store. By regulation, stores
can allow public consumption.
REPRESENTATIVE MILLETT asked for a definition of a private club.
MS. LINDEMUTH said that is outside the scope, because that is
not how the statute and regulation is written. There is private
consumption that allows the possession of one ounce of marijuana
and 12 plants at home. The legislature could add that concept to
the statute.
REPRESENTATIVE MILLETT said, "So let's just talk about a private
club that's not marijuana-based." If someone wanted a private
club in a commercial building where people were charged to enter
in order to basket-weave, how would he or she make it private?
"So for you, there's no private club definition in statute?"
3:03:46 PM
MS. LINDEMUTH said the concept of charging a fee makes it a
business and brings it into the public realm. If you are
charging a fee, you are acting as a business, and for this
discussion, it would be a public place.
REPRESENTATIVE LEDOUX asked about the Moose or Elks who charge
dues, and they are private, but they are still subject to public
accommodation laws when it comes to discrimination, and yet they
certainly are private clubs. If the Elks decided to set up a
room in its private club to allow the consumption of marijuana,
could you bust them?
3:05:22 PM
MS. LINDEMUTH said that if the Elks want to serve alcohol, they
have to be licensed. It is the same concept. There is nothing
set up to have marijuana consumption outside of the constructs
provided. It is a regulated industry, and the legislature can
change it, but that has not been done so far.
REPRESENTATIVE LEDOUX asked about the Elks not selling marijuana
but providing a room where marijuana can be consumed. Could you
bust those people? Arrest them? Cite them?
3:06:38 PM
MS. LINDEMUTH said, "We were seeing venues that were advertising
marijuana to bring folks into the venue in order to consume
marijuana." That was the primary purpose, so it may be outside
of the [AG] opinion if there is a group of people unbeknownst to
the Elks that are sitting there enjoying themselves. That is
more of a gray area. If the legislature is interested in
allowing that kind of activity, it is best for everyone to
address it by statute so that it is clear.
CHAIR MCGUIRE said it is interesting. Some places have a
cordoned off area for tobacco. If a person is consuming edibles
in the public, "where does that John Stewart Mill thing happen
where your liberty is bumping up against someone else's, because
there isn't an exchange of smoke?" By the way, she said, this
hearing is not about smoking. Marijuana is also a substance that
alters a person's mind, like alcohol. Then there is the privacy
right, and it is the only substance that doesn't come under the
Commerce Clause-it comes under a compelling First Amendment
right. That makes it even odder. The only way to move forward
with clarity is for the legislature to address it. There are so
many mixed messages, but the point of the hearing brings out
that for liberty, "you regulate to get it, but be careful what
you ask for, because sometimes you end up regulating yourself
into a place that is very un-Alaskan" and antithetical to the
Alaska way of life. She knows no one that wants to bust
veterans, for example, who might be consuming marijuana
peacefully with fellow people who served in the war.
SENATOR COGHILL noted the conundrum of public safety and dealing
with impairment, and because of federal highway funds, Alaska
has huge regulations on CDLs [commercial driver licenses]. He
said he is not sure that Alaska has any clue how to deal with
impairment. He asked if the AG's office has looked at that.
Transportation is going to be a big problem-"put it in the air,
it's a problem." Is it a problem on state highways? The
legislature needs to figure that out, but the public safety
element is impairment, and he asked if that is being looked at.
3:11:14 PM
MS. LINDEMUTH said she has only been in her position for a month
and she is not aware if the office has been looking at that. In
her private practice experience she knows that air cargo and
transportation companies have to comply with the federal law and
still have drug testing. There may be certain Alaskans that
cannot partake in marijuana consumption due to their jobs.
SENATOR COGHILL said with regard to public consumption, there is
a nexus with public safety that is "a big deal to us." The same
with alcohol, which can be tested rapidly and successfully, but
he does not know about testing for other impairments. No-doze
and Benadryl can be tested, but there is no way of knowing about
marijuana. Legislators must start thinking about it, and it goes
right to the question of these public consumption clubs.
CHAIR MCGUIRE said the Department of Law has always been a very
useful resource for complex issues like this. She suggested that
the department work more with the national attorney general
group, and she expects that there is a coalition among all the
states that are dealing with this. She said it would be helpful
to have Ms. Lindemuth's leadership and advice.
3:14:03 PM
SENATOR COGHILL noted the disparity in one ounce of concentrate
and one ounce of leaves. He said he keeps bringing this question
up with regard to penalties. [The law] just says "an ounce." An
ounce of hashish or concentrate is very different from an ounce
of leafy substances. He wants to have a way to meter the
toxicity. It is a huge problem. There is the toxicity and the
value problem. "And the banks are going to run into this, and
that is if you start selling an ounce on cash, and one ounce
divided by a hundred is worth a thousand dollars, and one ounce
divided by two is worth a hundred dollars, how do you figure
that out? That is a key problem that he keeps bringing up, he
said, and he is bringing it up for Ms. Lindemuth's perusal.
3:16:13 PM
MS. LINDEMUTH said there will be work to bring consistency to
criminal law, and that will probably be a part of that.
REPRESENTATIVE MILLETT said this is a concern with heroin and
fentanyl and other drugs that are hitting the street.
CHAIR MCGUIRE asked for questions from members and then passed
the gavel to Chair LeDoux.
3:17:43 PM
JANA WELTZIN, Owner/Operator, JDW, LLC, Anchorage, Alaska, said
her law firm represents a good amount of companies in Alaska, as
well as marijuana companies in Arizona, Washington, and Oregon.
CHAIR LEDOUX asked about her experience in navigating this
process in Alaska-the bad and the good.
MS. WELTZIN said there was a rocky start. Industry has been
engaged in the rule-making process, and throughout it she has
often reminded people that "we really, actually have some pretty
good rules in front of us so far." There are a couple of things
that did not make too much sense, and more are still getting
fleshed out, she said. The biggest issue is the government
departments not talking to each other and giving conflicting
advice. The delay is understandable. When people asked why
Oregon is ready and not Alaska, she tells them it is because
Oregon already had a medical system, but it has been two years,
and some of her clients have been paying rent for a really long
time. For the application process, people were not allowed to
use intent letters to secure a premises. They actually had to
have a lease, and for a landlord to make that kind of investment
and agree to that, a lot of companies have been paying rent for
12 months or more. She said that the staff at AMCO are so
amazing, and she would like more investment to relieve their
burden. "I don't want to see where we get in this industry where
there's not enough people there to catch things that fall
through the cracks, and we get violations of regulations, which
would give people a little bit of ammo to kind of shut down the
whole industry." Consistency in treating applications is
important, and that is hard to achieve when staff are
overworked, she opined.
CHAIR LEDOUX asked why a person needs a lease to get a license.
Is that because of a statute, and is it the same for alcohol?
MS. WELTZIN answered that she thinks it is an interpretation of
regulation, which requires that licenses be tied to a premises,
and a document called POP, or proof of possession, shows that.
3:22:35 PM
MS. WELTZIN said that Arizona allows using letters of intent by
"engaging in a nonbinding document with the landowner and the
licensee and saying, hey, if we pass through all this
application process and we get to the point where we actually
are awarded a license, you, landlord, are saying to me as a
licensee, I can use your building." She said that is what she is
used to in Arizona, but that form is not allowed here, so "we
had to use an actual lease." She said she can see both sides,
because a letter of intent does not ensure that the property
will be available, but that is more of a burden on the licensee,
"because we're already paying our fee regardless." She added
that "we" had to engage in all these leases, so there has been a
lot of people paying a lot of money, but if that gets changed,
they will be asking why they spent $150,000 for rent if that is
no longer required.
CHAIR LEDOUX said she understands those people will be mad, but
that might not be a good reason for a change. "Just because
we've done something in the past which might not have been a
great idea, we should probably shouldn't be continuing it." She
will ask the executive director to come back and comment on
that. She asked if that is the most significant problem
encountered.
3:24:35 PM
MS. WELTZIN said this process is new to everybody. One of her
clients called yesterday and said the state fire marshal has no
clue what needs to be done to make a manufacturing facility fire
proof. "They have no idea what they're going to require," she
said, "and we're two years into this." She said she does not
understand how that can be. There are building plans in and the
only hold up is the fire marshal not knowing the requirements.
It is a bit unacceptable. She expressed appreciation for Chair
LeDoux pushing the FBI background check, or else "we really
wouldn't have an industry." She said that was a big heart-attack
moment for everyone. Another issue is getting kicked back and
forth between DEC and DHSS [Department of Health and Social
Services]. When she started doing the retail application, DEC
was stamping her food permit things, and all of a sudden it
switched to DHSS-so it was one hand not talking to the other
hand. She added that the interpretation of regulations leaves a
little bit to be desired, but it will come in time. A lot will
come from just fleshing this out and seeing it actually happen.
The biggest contention is onsite consumption. The board
recognized it, and there is no other industry where there will
be a product sold to consumers, yet there will not be a legal
place to consume it "except for the place where your children
are at." That is just bad policy and bad business.
CHAIR LEDOUX asked if part of the regulations allow a license
for onsite consumption kind of like a bar.
MS. WELTZIN said the last Marijuana Control Board meeting in
September was supposed to address that issue and create some
regulations, but it got kicked down the road until October. It
is very hard to plan for that as there is an incredible
ventilation system for allowing smoking. Anchorage has a smoking
ban, so for non-private clubs it is not as much as an issue, but
for everywhere else, the ventilation needs to be researched.
"We've got to really start researching where and how these types
are going to be established and what the fire marshal code's
going to be." Regulations are not really how-to documents.
CHAIR LEDOUX asked how the legislature could make the process
easier.
MS. WELTZIN said, "We are willing to bend over, but please don't
break out backs." It is incredible how much, in Anchorage alone,
that Title 21 is such an investment. Just to build out 8,000
square feet of cultivation is about $250,000 to get Title 21
compliant, not including lights. There are warehouses that
cannot be used because of the parking requirements. She said she
left Alaska and came back and was shocked at the building code
and zoning ordinances.
3:29:41 PM
MS. WELTZIN noted that in November, Denver will vote on public
consumption, and a yes vote will support public consumption in
certain clubs, lounges, and bars. The definition of public used
in the AG opinion is from the Colorado statute, "but there is an
exemption in the Colorado law, and right now it says that onsite
consumption has to comply with the indoor Clean Air Act, which
makes it kind of impossible to comply with." That is why private
social clubs pop up and require day memberships. She said she
does not think that is a great model, and if Alaska wants
something that is unregulated and cannot be controlled, it
should "continue this path and continue doing private, because I
guarantee you there's ways to make them, a club like Pot Luck,
private-have somebody sponsor membership-don't make your
Facebook public." There are ways they can figure that out, so
"why don't we just create a license type that we can actually
regulate and implement and tax?" Maybe it will just be public
consumption venues with no marijuana sales or free marijuana
samples. "Wouldn't that cure everybody's issues?" She noted that
it is not the business model of Brown Jug to consume on the
premises. She said she is in favor of the retail onsite
consumption idea, "but if we don't want to kick the door open,
maybe something like a venue consumption-only place is an idea
to consider." That might not be popular for everybody, but it
should be discussed.
REPRESENTATIVE MILLETT said the legislature has addressed that
through brew houses with tastings. A person can go to the Alaska
Brewing Company and try its new tap and four other samples. "So
we do allow it in a small regulated way." When it comes to
having families and elderly people in their homes, "I don't
think most people want to go home." She said she has two
grandkids and she sure does not want marijuana in her house. The
public wants this, and she believes that was the intent of the
voter initiative. "Unless I go and talk to all 720,000 residents
of Alaska, I won't know, but I think we can go-the pendulum can
swing so far that we discourage this new environment or we can
go so far that we don't have a regulated environment." She said
there has to be a balance in the middle, and the fear of the
people who voted against the initiative was that there would be
a country gone wild with pot smokers on every corner. That fear
has diminished greatly, and we are seeing that the process is
very complicated, but the more difficult Alaska makes it, the
more it is set up for failure. There are brilliant people in the
state, and if they were brought to the table to talk about what
a social club and its regulations would look like, there will be
much better legislation. She said she has seen it in the
legislature, where she is not an expert but she knows who the
experts are in the community, "and we could have a really
balanced economy where it is safe and people don't feel
threatened that are non-potsmokers." Everyone just wants to know
what the rules are, "and I think we've been very vague and maybe
a little bit backwards in our two years of trying to develop
these." She said Alaska does not need to reinvent the wheel.
3:36:36 PM
CHAIR LEDOUX said Seattle or Washington outlawed social clubs.
"Let me tell you folks, you go to downtown Seattle and, I mean,
that place stinks right now." People are smoking on the streets,
which is exactly what the public does not want, and there is
only a minimal fine and no enforcement. She said she would
rather have people in clubs where the smoke is not wafting into
the streets. Smelling the smoke is what is offensive to people.
MS. WELTZIN agreed, and asked how to maximize the ability to cut
down on people who drive when impaired. There are retail
establishments-42 in Anchorage alone-and if they had onsite
consumption, along with the bars, it is a lot for enforcement.
"Wouldn't it be nice if we just had three or four venues where
people consume and then if the cops want to catch people for
DUIs they know where they're at, instead of having 42, plus all
the bars?" It's a lot for the enforcement division and the
police who are tackling a lot of issues. Tourism is the second
largest industry in Alaska, and do we really want to alienate
these people by telling them to smoke in their rental cars or
risk hotel violations?
CHAIR LEDOUX said that a place like Anchorage, which is anti-
smoking, would likely trump any onsite consumption.
MS. WELTZIN said that is true for a public venue, but there are
cigar clubs in Anchorage. A very private club-a truly private
club-that model has to be defined and narrowed. She does not
want it to be abused, and there is the issue of a slippery
slope. For a true private club there could be smoking, but a
publicly licensed venue that anyone over 21 can come in, there
would be no smoking allowed, but people could consume edibles.
3:39:39 PM
MS. WELTZIN said she sent contact information for banking
institutions in the Lower 48 that work with cannabis companies
to [the committee aide]. She noted that Ms. Lindemuth said a
person cannot have over an ounce, but the statute allows any
product grown on a person's premises can stay there. "I want to
make sure that we're not putting the message out there or the
misunderstanding that medical-or any person-that grows in their
home cannot keep that in their home, whatever they do grow. You
can have over an ounce."
CHAIR LEDOUX referred to the concept of having an ounce, which
was in the initiative. She asked if it made any sense that a
person can also have all that their 12 plants can grow.
MS. WELTZIN said it does. Anything grown at home can be kept at
home, and she raised a question about security concerns, but
then said that there is probably enough weed around that people
are not breaking down doors to steal it. But does a person
running around town really need to have more than an ounce? The
more important issue the legislature could weigh in on is that
an ounce of a flower is so different from an ounce of
concentrate. "If we're going to talk limits, we need to be
consistent, and that is probably something that should be
fleshed out."
CHAIR LEDOUX asked Cynthia Franklin to discuss the lease
requirements.
3:42:16 PM
MS. FRANKLIN said, "When the regulations were written-these are
premises-based licenses-we have to know that the applicant has
the right to possess the premises, because they are expected to
be in complete control of everything that happens on the
premises of the marijuana that comes on, the security measures."
Both marijuana and alcohol require leases. Applications are sent
to the board within 90 days of when the application is
determined to be complete. There are often a lot of issues with
the application, and her office tries very hard to work with
applicants to bring quality applications to the board. The board
is trying to set up an entire industry in a very short amount of
time, and it could not get through the applications in the two
days at the last meeting. To give the board applications that
members need to evaluate, there has to be application standards
or the board would have to wade through all associated
documents. There is not time with a volunteer board; that is
what the staff are paid to do. "So, we're looking for a lease on
both sides." It may be different in Arizona, but there are a lot
things that are different in the other states. "This is our
book. It's 127 pages, 9 articles of regulation." The Colorado
regulations are almost 800 pages.
MS. FRANKLIN noted that they did their best to get a minimum
regulatory scheme in place, but there are Range 13 employees
examining these applications, and they have to have something to
look for. If all applicants have something different documenting
that they will have a place in the future, then it is not clear
what to tell the board about the person's control of that
property. "We are looking for leases, but, of course, the
legislature has the power to tell us anything that we're doing
wrong in the process." All of the information about the
application process went out for public comment twice, and there
were some concerns about the cost of having a lease, but,
frankly, a lot of this is just working in a regulated industry.
"They asked for a regulated industry, and they're getting a
regulated industry, and some of the applicants aren't used to
working in a regulated industry-they want everything to be
private; they want not to provide the things that we're looking
for to bring the board a decent application." She said they are
doing their best.
CHAIR LEDOUX said she is not suggested that she is not doing her
best. She mentioned taking an option where an applicant who did
not get a license would not have to pay for the lease. If
something fell through, and a license is contingent on having a
particular place, then the license is not valid. "What's the
purpose of making them pay rent for all this time? I just don't
understand that."
3:48:17 PM
MS. FRANKLIN said, "We are simply requiring a lease before the
application is complete. We don't have any specific rules about
how long they have to pay rent before the application is
complete." She said she has seen some contingent leases, so
people are dealing with this the same way they are dealing with
other regulated industries. They are finding ways to work with
those private parties and their landlords. She does not believe
that all of the applicants have the same issues that Ms. Weltzin
presented. She has only heard about it from a few people. It is
a very broad brush, and Ms. Weltzin has brought it up as an
issue because it is different in Arizona, but it is the way that
it is done here. Before the application is complete, applicants
have to show possession of the proposed premises, but they are
not required to have a lease for a certain number of months.
CHAIR LEDOUX asked how long after the application is complete.
MS. FRANKLIN said, "Until the next board meeting."
CHAIR LEDOUX noted that there are board meetings once a quarter.
MS. FRANKLIN said there will ultimately be five meetings a year,
but this year there will be seven to get more licenses in front
of the board.
CHAIR LEDOUX noted that people can sell their alcohol licenses.
MS. FRANKLIN said alcohol licenses can be transferred by
location or ownership. Regarding marijuana, licenses can be
transferred to another owner but not to another location. For
alcohol, licenses are population-limited, and only a certain
number are available, but an unlimited number of marijuana
licenses can be issued to anyone who applies and qualifies, so
if marijuana licensees lose their locations, they can apply with
another location. Alcohol licenses are limited, and, by statute,
licensees who lose their locations have to surrender the license
within ten days unless they have taken some other action. They
are both premises-based licenses that are very tied to place,
and losing a location means the license would be lost with
either substance. The license is laid on the location, not on
the person, "so you can't pick a license up and carry it around
town and set it down somewhere else, because the local
government has complete control over the zoning and controlling
where these places go." The state cannot issue a license to use
anywhere. The local government has to know where the operation
will be before the license is issued. That is why regulations
require proof of control over the premises, she reiterated.
CHAIR LEDOUX said she cannot see why an applicant cannot just
show the lease when the license is issued and why an applicant
should have to pay for even one month of rent prior to that.
MS. FRANKLIN said they are just looking for a document to meet
the regulations.
3:51:20 PM
REPRESENTATIVE MILLETT asked Ms. Franklin why she is regulating
the municipality's code and not requiring the applicant to
determine compliance. "If you're licensing as many as you want,
I don't understand why there is even a requirement to show where
you are going to be at one certain time." Alcohol is a
population-based license, and marijuana is unlimited, "so why
are you even requiring to have any documentation of where you're
going to be?" She asked why AMCO would even care if they had a
lease or a building, because that would be up to the
municipality. From her understanding, the law is based on
municipality structure not on something that AMCO regulates,
monitors, or even enforces.
MS. FRANKLIN explained that the ballot measure says local
government has control over the time, place, manner, and number
of marijuana licenses issued. The local government can determine
that even though the state would issue unlimited licenses within
its city boundaries. "But our regulations require that we tell
them where this place is going to be so they can determine
whether it's in the correct zoning environment, and they have a
right of protest to the issuance of the state license." The
local control is wrapped up in knowing certain things about the
license before the local government weighs in. If the question
is why can't the local government do all of that, she noted that
the ballot measure provided that if state regulations were not
written in the time provided, the local government would have
the responsibility to create all of the rules around this. She
said there was quite a bit of resistance from local governments
at the prospect of the state missing the deadlines and then
being responsible for creating the rules. The way alcohol
regulations and statutes work is that it is a shared regulatory
burden between the city and the state. "When we read the ballot
measure we saw something that looked exactly the same to us … in
terms of local control and local option, and we heard from the
cities they didn't want to make all the rules."
3:54:19 PM
MS. FRANKLIN said the cities wanted marijuana regulation to be
like alcohol, where the state would get information, like where
it will be, who is getting it, what the financial interests are,
and all of that. After receiving the information, the cities can
make a decision on whether they want to protest the issuance of
the license. She said that appears to be what the ballot measure
contemplated, and that is what the board wrote.
REPRESENTATIVE MILLETT said that she sees a disparity because of
the limited number of alcohol licenses. "It's hard for me to
equate that the balance is there." The marijuana initiative had
an unlimited amount of licenses. She said she understands the
notification, but maybe that should be the responsibility in
that once the license is issued is to note where the location
is. "The ease of that would be simpler than to go through this
process of burden. I mean we're creating barriers now, because
we've required them to lease the space for now up to two years."
3:56:54 PM
MS. FRANKLIN said she does not believe that anybody has leased a
space for two years before getting their license. It hasn't been
two years since the act became effective, and if anyone has
leased a place for two years, it is their choice and not
anything that the state made them do. It is a piece of the
application. The limitations did not come out of the statute, it
came from the regulations, because the only place in the statute
that mentions the number of licenses issued is in the section
giving local government control over the time, place, manner,
and number. She added that the population-limited license
creates a lot of issues, and when she speaks with her
counterparts in other states, they say that they would have
preferred to let the free market determine the number of
licenses. "So we see it as an improvement, but not a replacement
for the premises-based licensed system." That is what the board
passed, and staff are just trying to make it happen.
REPRESENTATIVE MILLETT said she is just trying to think about
the success of a new operation, and we might not like it but it
seems just a little bit cumbersome to have that responsibility
to lease a place, especially when someone has a warehouse.
CHAIR LEDOUX asked if Ms. Franklin would think of a way to make
it less cumbersome for people who are renting, so they do not
need to spend a bunch of money before they get their licenses.
MS. FRANKLIN turned to the consumption endorsement. That
language was created and put out for public comment. There were
more comments opposed to the project than for it. The board
changed it and put it back out between July and September, and
of the 42 comments from the public, 40 were opposed to the
public consumption endorsement, and there were many questions of
why the board was not responding to the people who were opposed
to the project. At the September meeting, one board member
expressed a desire to spend more time looking at the endorsement
in light of the AG opinion, which had just come out. The board
voted to move it to October. She said that the project is still
alive, but most of the commenters were opposed to creating an
area for public consumption.
CHAIR LEDOUX said that is interesting. That multiplies the
problem of not having a place to consume.
3:59:14 PM
BRUCE SCHULTE, Former Chair, Marijuana Control Board, Anchorage,
introduced himself.
CHAIR LEDOUX noted that Mr. Schulte was the chair of the MCB for
a year, and she asked if he recommends any steps the board or
the legislature should undertake.
MR. SCHULTE praised the AMCO staff, particularly Sarah Oates and
her licensing team and James Hoelscher and his enforcement
group. The process is pretty much on schedule, and the key
target dates of adopting regulations and accepting applications
were on schedule. A lot got done in a short time, but a voter
initiative is an imperfect way of developing law, he said.
4:01:26 PM
MR. SCHULTE added that any delays have been reasonable, except
the debacle on FBI background checks. It was resolved in SB 165,
but "had we waited for that bill to become effective-to get FBI
background checks-nobody would be growing anything at all until
December or January." That would have been catastrophic, so it
is crucial that the board intervened to override the director,
and it got things back on track. At that time, some people had
been sitting on real estate for many months, and the prospect
that their application would be shelved for five more months
pending the background check was financially devastating to
several of them. One business was on the hook for $22,000 a
month, so, fortunately, that was a bullet dodged.
CHAIR LEDOUX asked if this was in contravention of the director.
MR. SCHULTE said the board had not weighed in on it. He said he
and the public were informed from a radio interview with the
director that all the applications were going to be held until
there was an FBI background check. There was considerable debate
about whether that was required. "Ultimately, I asked the
question at our board meeting in April: Is there actually a
statutory or regulatory requirement for these national criminal
background checks?" The answer was no, so the board voted to
process the applications. "I don't want to get too much down in
the weeds, but that was hugely important, because no
applications were to be deemed complete until that point." Only
complete applications get forwarded to the local government, and
until then, the 60-day protest does not begin, and then the
local government's process begins. He gave the example of an
Anchorage application deemed complete on October 5, it would go
the municipality, which would have 60 days to protest and go
through its secondary licensing process.
4:04:58 PM
MR. SCHULTE said the process is evolving, and the folks in the
trenches have done a great job. Once the board approves an
application and it goes to the local government and gets
processed, there is a final step before the license is issued.
The AMCO staff visit the premises and say, "Okay, what you put
in place is what you committed to do, here's your license." That
should be the day positive control of the property would be in
question. "If you shell up and they're not at the address that
they had in their application, they simply don't get a license.
To me that is such a simple way of handling it. I don't even
know why it's a point of discussion."
MR. SCHULTE said there are five members on the board defined by
the legislature, and, "we didn't always have the same
perspective, in fact, sometimes we were very much at odds." Very
few votes were five to zero, he said. That was healthy, and the
board makeup represented how the public voted on the initiated.
It only passed by 53 percent, and so where the public was
slightly in favor of it, the board members were slightly in
favor of regulating marijuana in favor of the industry. The
deliberations were broad and constructive, and he said he is
pretty happy with the regulations, but they can be made better.
The board has wrestled with statute, regulations, and policies.
4:07:16 PM
MR. SCHULTE said much of today's discussion has been about
policies that are not under the direct control of the board. He
recommended that those policies be codified, and then let the
board adopt some and have an opportunity to discuss them with
public comments. Some of these issues could better be resolved
in the open with public testimony. Regarding marijuana clubs, he
said he is not an advocate or an opponent. He said he called a
club that opened in Anchorage and encouraged them shut down,
because he did not want to see that distraction, and it
continues to be so. At the board's first meeting in July last
year after the director wrote cease-and-desist letters, it voted
to make recommendations to the legislature, and one was to
clarify clubs. "Tell us, do we have authority over these or
not?" There were discussions, and based on legal advice, the
board took the position that it did not have authority over
clubs, either to regulate or ban them. That was where the onsite
consumption idea came from. The public was asking for that,
including elected officials from Juneau and Fairbanks. They were
asking to make provisions for a place to consume marijuana, he
said. Legal counsel told the board that the definition of a
retail store could be expanded to include onsite consumption.
MR. SCHULTE said staff proposed draft regulations in April, and
they have been getting moved down the road over the last several
meetings. The committee was told earlier that after those cease-
and-desist letters were issued, there was no further action
taken against these clubs, but that is not entirely true. He
said an alcohol licensee that is in the same building as a club
in Anchorage was told they could not have an alcohol event
permit unless the club was evicted. That's significant and
concerning. It appeared to be contrary to the board's stated
position that it had no authority over clubs. Also, there was no
due process-the club was not even consulted on the matter. He
said that is not the way to regulate, and a regulatory board
should not be in the business of interpreting or enforcing
statute, unless it is written down. He said he was concerned and
asked for a meeting with the director. "I pointed out to her
that (a) this is contrary to the board's stated position, (b) it
looks like coercion." The media was starting to ask him
questions, he said, and he declined to comment, because the
board chair should not be getting into that kind of dispute with
the executive director, but it is an important discussion. The
director told him he had no right to talk to her about it and
stormed out of the room. Since then, a group conducting training
for the marijuana handler's course wanted to hold the course at
that marijuana club, and they were told the board might revoke
their authority to conduct such classes if they held it there.
4:12:19 PM
MR. SCHULTE said at least one other event was told that they
could not have a permit if Pot Luck Events was associated with
it. Since the judiciary committee was told that no further
actions were taken, "I thought it was incumbent on me to clarify
that." He noted that he is not necessarily advocating for
marijuana clubs, but a regulatory body should not make the
determination. It is the purview of the courts and the
legislature with public input, and one of his requests is that
the legislature weigh in on it. "I think the manner in which it
was handled was inappropriate," he said. Senator McGuire had the
same reaction as he did on the balance between personal
liberties and government control. "I had that same struggle
myself. It's a difficult one." One justification for going after
these clubs is because they are nests of illegal activity. Maybe
they are. He said he has been to them, and maybe they are. The
black market is alive and well whether or not it is at these
clubs. "I really can't say; but, again, I think that we are a
state and a country of laws, and the folks that are involved
with this, they deserve due process." Prior to the AG opinion,
it was just an individual's interpretation of law. The opinion
is helpful, but as a matter of public policy, it is the role of
the legislature or the courts to decide if clubs are legal, if
they should be regulated, and what the operating parameters
should be.
4:14:57 PM
MR. SCHULTE said he has a "wish list," and it begins with the
AMCO staff, and a "later wish" is that the legislature authorize
more resources, because "a few people probably want to stab me
half way through this discussion." He said it would be helpful
if the AMCO office documented its process, which is very
complicated, and "none of us have ever done this before." The
staff has been doing a fantastic job of wading through it and
creating something that did not exist. The process should be
documented and made available for review. He said he would like
AMCO staff to work with local governments. Anchorage has a
complex licensing process, so it would be great to develop a
supplemental process. That way, applicants could see what they
need to do in parallel-and what needs to be done first. People
could look at the website and see: "What am I getting myself
into?" The board, itself, should move some of the staff policies
over to regulations so they can go through public deliberations,
including things like the lease requirement. He noted that an
applicant asked if a building could have restrooms down the hall
shared with another business. There was a big question about it,
because there was discontiguous space. Somebody who has
applications for cultivation, processing, and retail in the same
building, might be asked to have different restrooms for each
one, as well as separate data rooms and offices. No other
business would be required to have duplicated resources like
that. He said he introduced that regulations project "shortly
before I was booted from the board." He said he hopes that it
will see the light of day. He added that the regulations were
developed quickly, and he is pretty happy where they ended up,
given the time frame, but he would like the board to refine them
and remove unnecessary impediments. It is not a matter of public
safety, it should be in favor of commerce, because the board is
housed under the commerce department.
4:18:16 PM
MR. SCHULTE said he would like the legislature to recalibrate
the criminal statutes, which began with the second version of SB
30. "It was awesome; it was going in a great direction," he
opined. Existing criminal statutes are at odds with the
initiative. He also suggested de-scheduling marijuana. He does
not have a dog in the fight, but he would like the legislature
to settle the issue of clubs. At the last meeting of the MCB, a
member said the board now had pause over the whole question of
onsite consumption because of the AG opinion. "So, we're very
much at an impasse here." There is no place for onsite
consumption, and the tourists are going to show up in six or
seven months, and it would be great to have a solution by then,
but that might be optimistic. He would like the legislature to
adjust the law to exclude certain, licensed businesses from the
definition of public consumption. "That would kind of get this
out of the ditch we're in if the law simply said: Unless
operated under a state license, the following is illegal. Then
we make provisions for creating a state license, and we're all
off the hook."
4:20:14 PM
MR. SCHULTE suggested changing the tax from $50 per ounce to a
percentage per ounce. The wholesale price of cannabis is
fluctuating tremendously. With prices high, the state may be
losing out on revenue at $50 an ounce, and later, if the price
drops, then [cultivators] might be struggling to compete or to
survive or to compete with the black market, and the $50 tax
might be an unsustainable portion of the price. He said he is
not suggesting it right now, because "I will get publically
skewered from doing that." He said the legislature should
consider expanding [AS] 17.38 to allow the MCB to create new
license types. There are only six licenses available under the
four general categories, and for alcohol there are 22 or more,
including event and catering permits. He said Alaska is not
quite ready for that, but it will be helpful for the legislature
to see how "this thing" plays out next year. Once there is a
comfort level that the industry can operate responsibly, it will
be an appropriate direction to go and would simplify a lot of
these discussions.
4:21:36 PM
MR. SCHULTE suggested that the legislature authorize funds to
AMCO. "They really are overtaxed. I get it." He said there are
staff working long hours and probably not being properly
compensated. He added that he greatly appreciated HB 123 as it
was a fantastic way to go in the financial context. "When we can
demonstrate the revenue from this industry, I would like to see
a separate MCB created apart from alcohol with a separate
director and a separate staff." The two are very different.
Alcohol is primarily people renewing and moving licenses-there
are a few new ones, but not as many. Marijuana is all new, and
it is a huge task to balance those two.
4:23:00 PM
REPRESENTATIVE MILLETT thanked Mr. Schulte for his work on all
of the legislation and being willing to serve on the board. He
did an excellent job and is sorely missed. Mr. Schulte has
shepherded the legislature through a really interesting time
through the initiative process and pointing out some of the road
blocks. He has been very valuable to the judiciary committee.
4:23:43 PM
CHAIR MCGUIRE said, "Thank you, Bruce, as my constituent." It
will be years from now until people really understand what he
did to be a voice of the people of Alaska. It is a great risk to
step out, particularly considering his political affiliation,
knowing there was a great desire to smoke, yet there were not
any identifiable pathways, especially for those who were already
using medical marijuana. She said she will continue to talk with
Mr. Schulte a lot, and she thinks his suggestions today were
fantastic. The one she loves the most, besides [increasing]
resources, is that the board should put its policies into
regulation. It is important for all boards to remember, because
members could go into autopilot looking for expediency and lose
sight of the "line of power that is supposed to come down." She
said the legislators sit before the voters who can throw them
out or reelect them. The public has to have some way to comment
and understand what is happening at the board level.
4:25:35 PM
CHAIR LEDOUX seconded that. It is a great idea. No one should
ever be able to say, "Well, that's the policy." It always needs
to be a transparent and vetted process. Mr. Schulte has been an
invaluable resource over the last couple of years. If there has
ever been any question about anything relating to the cannabis
industry, Mr. Schulte has been available almost 24/7. She could
text him at midnight or so, she stated, and ask him what was
going on. She expressed regret that he will not be on the board.
MR. SCHULTE said he looks forward to working with all of the
members in the future, because he is not going anywhere.
4:26:48 PM
CHAIR MCGUIRE said she has to leave, but she reminded public
witnesses to be respectful in their testimony. She said that
stating an affiliation is for the public record, not for "a
power control." The hearing is confined to marijuana regulations
and not about Alaska's fiscal crisis or smoking or vaping.
4:27:50 PM
CHAIR LEDOUX opened the hearing to public testimony, limiting
each to one minute.
4:29:00 PM
RHONDA MARCY, Wasilla, said she has an initiated application and
has served on the Mat-Su Marijuana Advisory Committee. There are
things about the whole process that she has not been able to
address. Her business model is "wellness from a plant-based
whole health approach." Under existing law, there is no way to
juice or use raw cannabis. It has to be cut, dried, and made
into a smokable form. She said she supports clubs and having a
place to go. She has been to Pot Luck and has not seen illegal
activity, although the club provides the "bud-of-the-week," but
"you don't buy it; it's provided if you'd like it as part of
being in the membership." It is important to have places that
are safe. She suggested looking at tradeshows, because "we don't
have any way to take your product and go to cannabis classics
that they've had or the Hemp and Cannabis Fair." She suggested
rules so that people can lawfully bring something to a
tradeshow, like the seniors are having a wine tasting, and
"we're shut down from having that." At this point, there is not
even social areas for people who live here. She said she can
invite people to her house, but the problem is that her wellness
center is on her property, and she does not want to come into
conflict with the state. She noted that she has not had the
opportunity to address that with the director. One little issue
she has with the ballot measure, she said, is zoning without
going through the zoning process. The initiative process has
bypassed that. There is action in the Valley right now to try
and get the courts to address that "so that we can move our
Valley businesses forward, because we've been shut out of a
process that's letting everybody get ahead of us while we sit
and address this." She said she thought Mr. Schulte was doing a
great job, and she is upset that the current chairman is working
on an initiative to stop [marijuana use] on the Kenai Peninsula.
"They claim that that's no conflict with law enforcement; I
disagree with that." They get federal forfeiture money if they
are behind keeping cannabis illegal, she stated.
4:32:58 PM
SAMANTHA LAUDERT-RODGERS, Chugiak, said she worked hard on the
"yes" campaign, and many did so expecting that cannabis would be
available for the medical marijuana community. "Many of us
struggle on a daily basis with invisible illnesses, and it's the
one thing that actually can help us and can help so many people
in Alaska-and save lives." She said things are taking too long,
which is divisive. Businesses that wanted to give back to
Anchorage or elsewhere are falling apart. She has seen
divisiveness, and with 81 approved licenses, Alaska will not
have stores open within two years of the initiative. She wants
things to move faster because other issues need focus.
4:34:33 PM
MARTIN CHRISTENSEN, Anchorage, said he has been a business
person in Alaska for the last 14 years and is an involved and
supportive member of Pot Luck, but he is representing himself.
People do not have a good history of assimilating new ideas,
including the belief that the world was flat. In 1693 we were
still burning each other in the Salem witch trials. In 1940 it
was understood that by traveling faster than 50 miles per hour,
blood would boil. Less than 100 years ago it was assumed that
cannabis would cause "reefer madness." Everyone now knows that
all of these things are not quite true. After the passage of
Proposition 2, his friend, Theresa Collins, opened Pot Luck
Events. She saw a need for a place where like-minded adults
could get together, and the idea behind it was to just be an
event facility, like the Dena'ina Center. Since then it has
drastically changed, and "we've become more of a place where
people can come who can't smoke at home and still socialize. We
see new friendships blossom across generations and culture gaps.
We've witnessed marriage proposals and hosted wedding
receptions." His daughter's birth was celebrated at the club.
The club answers the need that the community presented. He and
others are just asking for the same thing that is given to the
alcohol community. He said he can go to the Dena'ina Center and
have a beer and watch a show, but he cannot do that anywhere
else. The alcohol community can throw the Beer and Barleywine
Festival without cops kicking in the door. "That's really what
we want," he said. He noted that he is a professional tax
person, and from that standpoint on the federal level, a private
club either operates as a nonprofit or it operates like a
business and is taxed like a business. The phrase, significant
public access, was created more recently to protect private
clubs but prohibit discrimination. That is where the law came
from, and he is saddened to see it used to prohibit people from
getting together.
4:38:15 PM
MARGE STONEKING, Executive Director, American Lung Association,
Anchorage, said there is general consensus on having the
legislature decide on onsite consumption or licensure. As the
legislature does that, she would like to weigh in from the
health perspective. The American Lung Association takes no
position on the legalization of marijuana, and all comments
submitted publicly have been in regard to second-hand exposure.
When any plant product is aerosolized or combusted for
inhalation, there will be secondary health effects. There will
be pollution. When it is indoors, others are at risk. There are
not nearly as many studies on second-hand marijuana exposure,
but the smoke from it contains fine particulate matter that can
be breathed deep into the lungs and can cause asthma attacks,
increase respiratory infections, and exacerbate problems like
COPD [Chronic Obstructive Pulmonary Disease] and bronchitis. She
wants people to be aware of the second-hand smoke effects, which
cannot be filtrated or ventilated away. The American Society for
Heating, Refrigeration, and Air Conditioning Engineers has
included marijuana smoke in its position on ventilation-that
there is no ventilation system that can clean the air. Onsite
consumption poses a potential risk to workers in that venue and
adjacent businesses, and many Alaska businesses are in strip
malls.
4:42:19 PM
EUGENE CARL HABERMAN, Matanuska-Susitna Valley, noted that he
has sat in on many meetings. The more complicated an issue is,
the more notice and opportunities for public comments should be
made available. He said the one-minute limit does not provide a
reasonable opportunity for the public to be heard and is in
violation of state law. An extensive amount of time was allowed
for invited witnesses, but when it comes to the public, they get
one minute, and written comment is the only other option. He
asked, "Where is the quorum?" There are only two members of the
Joint Judiciary Committee present, and everyone else is gone.
There might be one or two members online, but he cannot verify
that, so this is not a legitimate meeting, and it is not
respectful to the public. He has attended every meeting of the
borough marijuana committee, and he has been to the assembly
marijuana committee meetings. "I had substantial information
that I would have like to have been verbally on the record, but
seeing this tragedy of a meeting, the way you conducted it, the
chair is now present, that has not allowed for me to really
focus on really what I want to say." He had to focus on how
wrongly the meeting has been conducted regarding connecting with
the people. When done appropriately, the public may not be happy
with the decision, but people will be more comfortable with it,
and most importantly, they will be more supportive.
4:45:11 PM
CHAIR LEDOUX explained that the quorum requirement is for taking
action, and this meeting is simply to update the legislature on
the marijuana control board.
MR. HABERMAN said that at the beginning of the meeting Chair
LeDoux stated that there was a quorum.
4:45:57 PM
JOSHUA TOBIN, Anchorage, said he is also not that happy that
many members have left. The state took two years, and that is a
long time. He was told that people would have licenses in
February, so he rented his building in December. "I'll have
spent $50,000 just for what reason, I don't know." Regarding
banking, he said that everybody in this state has read that they
cannot do business with banks, and his address is posted online
at the AMCO website as well as the address to "my grow. So now
they know that I can't use banks and they know where I am. That
doesn't help a whole lot," he stated. In Anchorage, once a
person finishes the state's application process, the same
process has to be done again. "You have a community meeting for
the state's process; you have to have another one for Anchorage.
You have to wait 60 days; you have to wait another 60 days for
Anchorage." He is not sure how that helps anybody. Also, he
would bet large amounts of money that he has not run into a city
official who has read any of the regulations. When he meets with
them, they discuss things in the first paragraphs. In a meeting
last week smell was discussed. "People were discussing the smell
of weed two years ago-this is ridiculous." It would be handy if
they could get up to date. He stated that the AMCO is really
understaffed. "It's brutal." He said he heard that Cynthia
Franklin has not done anything about the people acting without a
license, but she sent APD out to Wasilla to arrest Rocky Burns,
and he faces "a hundred-something years right now." "Over on
Gambel, right now, I saw it this morning, they're selling weed
over there. They busted them. They're still open." Regarding pot
bars, he personally laughs about this. "You can go ahead and
make laws against it. That's fine. People are going to
congregate and do whatever they want like they've done for 100
years. You can either get on board and pass laws making this
possible, or we'll continue to have this situation where people
break the law." He said the cannabis community has proven that
they will do that.
4:49:23 PM
MAGGIE MULDONADO, Anchorage, said she moved to Alaska about five
months ago, and Pot Luck has provided her with a safe place to
go and meet people. She did not know anybody, and the [people
at] Pot Luck have taken care of her, made her feel like family,
and have been wonderful. "I would just like to leave today with
a more positive note," she said.
4:50:15 PM
DON HART, Wasilla, said Proposition 2 created a personal
property right and was codified in AS 17.38. The problem with AS
17.38.210(a)(2), regarding local option, is that when the
personal property right was created in the constitution, the
local municipalities stand in the shoes of the legislature,
because they authorize that mandatory statute, "so they, in
turn, are exercising government powers in a takings action
through the ordinance or through initiative process is a takings
action that violates these people's personal property rights
created by Prop. 2." The language, "or through the initiative
process," is unconstitutional, because the Alaska Supreme Court
has decided in three cases that the initiative cannot be used
for a zoning process. It is illegal and unconstitutional, he
said, and it violates several mandatory Alaska statutes. Alaska
was divided up into large zones and large boroughs to reduce the
smallest amount of government and to avoid double taxation. In
dividing up the boroughs, six different statutes were created to
say exactly what had to be done. The borough has to create a
planning and zoning commission to use an area-wide plan to
determine how the land is to be used. Those statutes mandate the
borough to do all of the zoning, and initiative does not do
that. It is not submitted to the planning commission, and it
does not determine the proper land use. That is why the Alaska
Supreme Court has said it is unconstitutional. The Joint
Judiciary Committee would probably be interested in knowing that
the legislature itself could delete "or through the initiative
process", and it would not affect the rest of AS 17.38. It would
remove the unconstitutional aspect of allowing and enticing
people to enter the initiative process, like is being done in
the Kenai Peninsula Borough.
4:54:11 PM
TIMOTHY HALE, Butte, Alaska, said the onsite endorsement is up
to the legislature to either make legal or illegal, which is the
consensus of people he has talked to. Intoxicated driving can be
an issue with cannabis. He said the body metabolizes the
cannabinoids twice. The first is the one that is psychoactive,
and the second is from what is stored in fat cells and that
metabolite is not psychoactive. It is pretty easy to determine
the difference with a blood test, and that needs to be taken
into consideration regarding impaired driving.
4:56:15 PM
JOHN RANDALL, Anchorage, said he is retired and has been
regularly going to the Pot Luck Events Club for about 18 months.
There has never been any commerce there. It used to be that
folks that were growing crops or promoting their strain would
bring some to the club and give it to people, but it was never
in exchange for money and never had anything to do with going
into the club and paying the cover charge. It is a private club
as far as he can tell, because a membership is required. People
no longer bring samples, because it is not allowed now under
their licenses, "So it's a bring-your-own-bud kind of a club. I
bring something I grew or that I have, and I share it, and
that's the extent of what goes on there." He never asks if
anyone wants to buy his marijuana, and no one asks him to buy
it, it is just a safe place to consume without fear.
4:58:21 PM
HEATHER THOMAS, Anchorage, said she is 22, and it is important
that her generation has a safe place to be social that is not
alcohol-centered. She does not like to drink, and our society
seems focused on alcohol. She likes having Pot Luck and thinks
it is a healthy and safe place for people coming into adulthood.
4:59:10 PM
UNIDENTIFIED SPEAKER, Chugiak, said he was not planning on
testifying but when he heard the AG opinion, it occurred to him
that if all clubs are public, then every exotic club is probably
violating public nudity laws. (Chair LeDoux said that was an
interesting point.) As a long-time cancer patient and survivor,
it is important that we do try to add something for medical
needs. He said he has worked with many medical people, and being
left out is a travesty.
5:00:10 PM
PETER BARNES, Anchorage, said he has been a member of Pot Luck
since it was open, and he has never seen one fight there. "I'm a
recovering alcoholic; I used to drink in almost every bar in
this town 20-odd years ago. I saw a fight in every one of them."
He said he got pulled over and went through treatment numerous
times, and after finding cannabis, he has been a successful
member of society ever since. He said he owns a business and a
home and he is happily married. Regarding impaired driving, he
said to look at the numbers of DUI stops leaving Pot Luck since
it opened. "I don't think there's any." He added that, "We are
just sharing our products in there; nobody's selling anything."
The owners are not selling anything-they're just not. "We pride
ourselves in following that rule; we really, really do, and we
condemn those that try to violate it." He voted for cannabis to
be legal when he was 19, and now he is in his 60s. This is way
past due. He said he has medical needs that cannabis helps,
including PTSD. He is a former Marine, and private clubs like
Pot Luck need to be allowed, he concluded.
5:02:27 PM
LEE HAYWOOD, Owner, Pot Luck Events, Anchorage, said he has
upwards of 6,000 applications and membership forms, which shows
the need for Pot Luck Events. "We" are fighting a lot of battles
in a lot of different directions, and [the owners of] Pot Luck
Events just wanted to provide a place where people could come,
share their cannabis, "talk about what this is," start breaking
down some of the social stigmas, educate people on the history
of cannabis, and introduce people to different types of strands.
"We provide more than just walking in off the street and come
smoking with us." He said that in over 18 months of operations,
there has not been one call to "the muni." There have not been
any disruptions, and the club regulates itself. "We regulate
those people that need cannabis from a medical standpoint and
provide them a place to be able to link up with other folks that
are willing to share that cannabis." He said there have been
numerous businesses that have come into Pot Luck with the idea
of getting into this industry. He said Pot Luck tries to provide
a place for the black market to translate over into the green
market and give them some business acumen behind those ideas
that they may have.
MR. HAYWOOD said Pot Luck provides a place to be political. Ages
range from 21 to 87 for members, and there is social and
economic diversity. A person can sit down in any circle and have
a conversation. There is the typical stoner next to someone with
an advanced law degree, and they are having a dialogue. "We
build a sense of community, and that's what we've been about
from the beginning." He said he used to work for the state as a
justice officer, and he is retired military. "We are
professionals and we're trying to promulgate this responsibly."
He added that the Pot Luck wants to be regulated or maybe not,
depending on what the legislature decides, but it does not make
any money by selling marijuana. It does not happen there and it
is frowned upon, he explained. There are people who come in
looking to buy it, but that's not what Pot Luck is about.
Regarding comments about being a public place, he said there are
no windows and everyone has to sign a membership form. He said
the company is willing to restructure based on the AG opinion in
order to stay legal. The founder, Theresa Collins, is now
battling stage 4 cancer. The stresses of this are enormous:
trying to build relationships and a sense of community and
talking to politicians and then trying to conduct your day-to-
day life, like mowing the lawn, for example. In this industry,
it has been said that one cannabis year is worth about seven
years of anyone else's life. The boxes he brought today of
membership forms represent to him stories of people. There have
been many times he wanted to throw the towel in, thinking that
the risk is not worth the reward. He said Pot Luck owners always
wanted to serve as the practicum for the city and state on "how
this can be introduced socially." They have invited the
director, legislators, mayor, and assembly members to come and
see what they do. Some have taken them up and are members of the
club. "We need this in order to move forward. We've needed this
because we've had no infrastructure prior to (unclear)." The
groups have to come together and talk at the 420 headquarters.
5:07:15 PM
REPRESENTATIVE MILLETT thanked Mr. Haywood for giving her a tour
of Pot Luck and explaining what it was all about. She said she
has encouraged all other legislators to visit before passing
judgement on any of the social clubs, because Mr. Haywood really
opened her eyes with the conversations and the things that she
saw. "I think everybody before they pass laws or pass judgement
on something, they should go down and see what it's all about."
That is part of the due diligence that she has as a policy
maker, which is to fully understand what she is legislating. She
said she is not the normal person, but Mr. Haywood welcomed her
with open arms and explained how things worked. She said she
appreciates his openness and willingness to work with all walks
of life and make the case and help legislators understand what
the concept is and what the idea was. She said she really did
not know what a social club was until talking to Mr. Haywood.
MR. HAYWOOD said the concept is to build a community and the
industry.
5:08:28 PM
There being no further business to come before the committee,
Chair LeDoux adjourned the Joint Judiciary Committee meeting at
5:08 p.m.