Legislature(2015 - 2016)BELTZ 105 (TSBldg)
01/21/2016 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| Presentation by the Division of Corporations, Business and Professional Licensing: Efforts to Reduce the Operating Deficits of Professional Licensing Boards | |
| Marijuana Control Board Update | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
January 21, 2016
1:30 p.m.
MEMBERS PRESENT
Senator Mia Costello, Chair
Senator Cathy Giessel, Vice Chair
Senator Kevin Meyer
Senator Gary Stevens
MEMBERS ABSENT
Senator Johnny Ellis
COMMITTEE CALENDAR
DIVISION OF CORPORATIONS BUSINESS AND PROFESSIONAL LICENSING
PRESENTATION ON PROGRAM DEFICITS
HEARD
MARIJUANA CONTROL BOARD UPDATE
HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
JANEY HOVENDEN, Director
Division of Corporations, Business and Professional Licensing
Department of Commerce, Community and Economic Development
Juneau, Alaska
POSITION STATEMENT: Delivered a presentation outlining the
efforts to reduce the operating deficits of the division's
professional licensing boards.
CYNTHIA FRANKLIN, Director
Alcoholic Beverage Control (ABC) Board and
Marijuana Control Board
Department of Commerce, Community and Economic Development
Anchorage, Alaska
POSITION STATEMENT: Delivered an update on the Marijuana Control
Board regulations.
ACTION NARRATIVE
1:30:06 PM
CHAIR MIA COSTELLO called the Senate Labor and Commerce Standing
Committee meeting to order at 1:30 p.m. Present at the call to
order were Senators Giessel Stevens, and Chair Costello.
^Presentation by the Division of Corporations, Business and
Professional Licensing: Efforts to Reduce the Operating Deficits
of Professional Licensing Boards
Presentation by the Division of Corporations, Business and
Professional Licensing: Efforts to Reduce the Operating Deficits
of Professional Licensing Boards
CHAIR COSTELLO announced that the first order of business would
be a presentation by Janey Hovenden, the director of the
Division of Corporations Business and Professional Licensing.
1:32:15 PM
SENATOR MEYER joined the committee.
1:32:34 PM
JANEY HOVENDEN, Director, Division of Corporations, Business and
Professional Licensing, Department of Commerce, Community and
Economic Development (DCCED), said her presentation outlines the
efforts and progress made to reduce the operating deficits of
the professional licensing boards.
1:33:08 PM
At Ease
1:33:50 PM
CHAIR COSTELLO reconvened the meeting.
MS. HOVENDEN reported that the division administers about 69,000
active business licenses, 60,000 registered corporations, and
72,000 professional licenses. There are a total of 43
occupational licensing programs, 21 of which are managed by a
board or commission and 22 managed by the division.
She stated that the division worked with Legislative Budget and
Audit to design and implement a new fee analysis tool. As a
result, programs are monitored or reviewed more frequently,
communication has been strengthened with boards and commissions,
and professional licensing ended FY15 in a surplus position for
the second year in a row.
Ongoing challenges continue to be fee spikes created by
unanticipated investigations or appeals of board decisions.
Also, the majority of revenue is collected every other year,
which forces programs to operate in deficit unless large fees
increases are implemented
MS. HOVENDEN displayed the interactive fee analysis tool for the
Big Game Commercial Services Board to illustrate how it works.
She explained the tool as follows:
The first pink column depicts what is the bottom line
if fees stay the same. The green column shows what
happens if the board makes recommended adjustments to
the fees and then the blue column reflects the fees as
proposed by the division. Those estimated revenues are
carried below into a separate section to compare the
bottom lines to any proposed changes.
1:36:55 PM
CHAIR COSTELLO asked what the process is to implement a proposed
fee change.
SENATOR STEVENS commented that the chart is very difficult to
read.
CHAIR COSTELLO agreed and promised that improvements would be
forthcoming. She restated her question and also asked how often
proposed fee changes are actually adopted.
MS. HOVENDEN explained that the boards are able to use the
interactive tool to see how adjustments affect their bottom
line, but the division sets the fees. The division presents the
proposed fees to the boards and asks for comment. The division
takes the comments into consideration, makes adjustments as it
sees fit and then sends the regulations to the licensees for
review and a 30-day public comment period. After that, the
division reviews the comments and sets the fees.
CHAIR COSTELLO asked how long it takes and what it costs to
implement a new regulation.
MS. HOVENDEN replied the average cost for a regulation project
is $2,500 and it takes up to 90 days to complete.
SENATOR STEVENS asked if license applicants are required to take
a test.
MS. HOVENDEN answered yes.
SENATOR STEVENS asked if all the tests are administered in a
central location. "Does somebody from Kodiak who wants to be an
assistant bear guide have to fly to Anchorage to take the test?"
MS. HOVENDEN said she didn't know.
SENATOR STEVENS commented on the expense to fly from Kodiak to
Anchorage to take a test for a professional license, the
inconvenience of delayed test results, and the potential added
expense of another trip if the applicant doesn't pass the test
the first time. He questioned why applicants couldn't take the
test online from their home community since the test in
Anchorage is administered online.
MS. HOVENDEN agreed it was a good suggestion and potential cost-
saving measure. She acknowledged that most cities do have
testing centers.
SENATOR STEVENS asked for a report back on whether it would be
feasible for tests to be administered and monitored in testing
centers in more communities than just Anchorage.
SENATOR GIESSEL agreed it would be a cost savings for citizens,
but suggested it was an issue the board itself should decide.
1:43:25 PM
MS. HOVENDEN directed attention to the bottom of the fee
analysis tool and pointed out that is where the calculating
takes place. It also adds a 2 percent CPI increase to the
estimated expenditures for future bienniums. She continued to
explain that because these are receipt supported services, any
deficit or surplus is carried over from year-to-year.
She reiterated that because the tool is interactive, board
members can look at how fee adjustments impact the bottom line
for the immediate renewal cycle and up to three future biennium
cycles.
CHAIR COSTELLO asked how it happened that the Board of Massage
Therapists was created last year and is already operating at a
$70,000 deficit.
MS. HOVENDEN explained that fees could not be receipted until
the program started on July 1, 2015 even though there were
startup expenses. She expressed hope that the revenue this year
would cover not only the deficit but also the expenses in the
next licensing year.
CHAIR COSTELLO asked if the division oversees all licensing
programs or just the ones that are managed by the division.
MS. HOVENDEN clarified that the division oversees the licensing
programs for both those that are managed by their boards and
commissions as well as those that are managed by the division.
SENATOR STEVENS asked what the rationale is for charging
nonresidents more for a license than residents.
MS. HOVENDEN replied she didn't know the rationale, but the fees
are regulated by the board and it says out-of-state licensees
are charged double the instate fee.
SENATOR STEVENS asked Senator Giessel if it made sense to her
and she indicated it did.
MS. HOVENDEN advised that increasing the fees must strike a
balance between getting the program out of deficit and a level
that does not price people out of the occupation or profession.
1:47:22 PM
MS. HOVENDEN assured the members that the division has worked
with licensees and boards to adjust fees to comply with the
statutory requirement. She displayed a bar graph showing that
from FY14 to the first quarter of 2016 the number of programs
operating in deficit has decreased from 16 to 13 and the
programs that are operating in surplus has increased from 21 to
27. The final graph depicts all programs operating out of
deficit by 2020 if projected fees and the revenue and cost
estimates stay the same.
CHAIR COSTELLO asked if there is a common theme among the boards
and commissions that are running at a deficit.
MS. HOVENDEN replied the reasons are varied but a driving factor
is the number of licensees in the program because the costs are
spread among them. A small program that has one costly
investigation could put the program in a deficit very quickly.
Another reason is that fees aren't adjusted soon enough.
1:49:30 PM
MS. HOVENDEN offered the following concluding comments.
The bottom line is with the help of the new fee
analysis tool and a better partnership with the
boards, we are making great progress on program
deficits and we have a much better handle on each
program's current and projected long-term health.
CHAIR COSTELLO asked if the boards have access to expertise
within the state to analyze their fees or if the new interactive
tool is the only analysis. She observed that costs of future
investigations could be estimated from past data.
MS. HOVENDEN discussed the positive reception of the new
interactive fee analysis tool. She reiterated that the
calculations at the end of the form are the estimated expenses
based on the past, including investigations and appeals.
CHAIR COSTELLO asked how much the new tool costs, who manages
it, and if the boards are paying for it.
MS. HOVENDEN explained that the division developed and manages
the tool so there is no cost.
SENATOR GIESSEL commented that this tool will probably be very
helpful. She pointed out that the Big Game Commercial Services
Board is a small program that had high adjudication costs and is
carrying a large deficit. She also pointed out the deficits of
the State Medical Board for the past three bienniums.
1:54:07 PM
At Ease
1:55:56 PM
CHAIR COSTELLO reconvened the meeting.
SENATOR GIESSEL directed attention to the biennium totals on
page 8 of the October 2015 Professional Licensing Report to the
Legislature.
MS. HOVENDEN pointed out that at the end of FY2015 the AKSAS
Carryforward Balance Program Share for the Big Game Commercial
Services Board shows a deficit of $1.1 million
SENATOR GIESSEL asked if it's still the case that boards accrue
the costs of investigations and appeals, but settlement costs go
into the general fund.
MS. HOVENDEN confirmed that is correct.
SENATOR GIESSEL recalled a bill that was introduced 8-10 years
ago to allow a board to keep any settlement money, but it didn't
pass. She asked if that has been discussed.
MS. HOVENDEN confirmed it's been an ongoing discussion and
consternation that fines do not help defray the cost of the
investigations.
SENATOR COSTELLO thanked Ms. Hovenden and asked her to provide
the requested follow up information.
1:59:52 PM
At Ease
^Marijuana Control Board Update
Marijuana Control Board Update
2:02:17 PM
CHAIR COSTELLO reconvened the meeting and welcomed Ms. Franklin
to give an update on the new regulations for marijuana.
CYNTHIA FRANKLIN, Director, Alcoholic Beverage Control (ABC)
Board, and Marijuana Control Board (MCB), Department of
Commerce, Community and Economic Development (DCCED), Anchorage,
Alaska, informed the committee that the director and staff of
the Alcohol and Marijuana Control Office (AMCO) serve both the
Alcohol and Marijuana Boards. The five-member Marijuana Control
Board consists of seats from public safety, public health, rural
resident, industry, and industry or general public. The
transition statute in House Bill 123 that created the board
provided that the first appointments would have two members of
industry on the board.
The director oversees three divisions in the AMCO office:
administrative, records and licensing, and enforcement. The
Administrative Division has an administrative officer, an
administrative assistant, and an office assistant. The Records
and Licensing Division has four regulation business examiners
and a supervisor in Anchorage. The Enforcement Division consists
of a supervisor, one investigator each in Juneau and Fairbanks,
and four investigators in Anchorage. The Fairbanks position is
under recruitment and is not subject to the hiring freeze
because it is designated as public safety.
2:05:01 PM
She displayed the staff functions and duties for both substances
and highlighted the need to fill an education position. She
related that when the ABC Board was moved into DCCED, the idea
was to add an education component, but it has been challenging
to find someone from the three divisions to do that work. The
questions have always been steady but with the addition of
marijuana the office is flooded. With the extra substance to
regulate, the need to have a specific person who knows enough to
answer a broad spectrum of questions and can travel to
communities when requested is pressing. To date she has done the
traveling but there are issues with having the director be the
only educator for the entire agency. She relayed that the
education position that is in the budget is funded by DGS funds
received from the alcohol component.
SENATOR STEVENS asked if the board helps cities develop
regulations.
2:07:21 PM
MS. FRANKLIN confirmed that the office tries to accommodate
those requests. AMCO has also been working with the Division of
Community and Regional Affairs (DCRA) to involve government
specialists to help local governments.
She explained that from February 24, 2015 to November 24, 2015,
three sets of marijuana regulations were released for public
comment. For each release, the board met three times to review
the comments. The regulations were merged into nine articles and
again released for written public comment in October. The board
also heard two days of verbal public comment in October. She
displayed a visual to illustrate how many times the board met
from July 2 in Fairbanks to December 1 in Anchorage.
The 9 articles of regulation are: Article 1 - Licensing & Fees;
Article 2 - Local Option Rules; Article 3 - Retail Marijuana
Stores; Article 4 - Marijuana Cultivation Facilities; Article 5
- Marijuana Product Manufacturing Facilities; Article 6 -
Marijuana Testing Facilities; Article 7 - General Operating
Requirement; Article 8 - Enforcement; and Article 9 - General
Provisions.
Articles 3, 4, 5, and 6 represent the marijuana establishment
license types that were created in the ballot measure. Articles
1, 7, and 9 apply to all license types. Article 2 is local
option, and Article 8 is enforcement. There are no criminal
penalties in Article 8, but the enforcement officers are
authorized to enforce criminal laws from marijuana. Those
charges would be filed under Title 11.
She said the procedures in Articles 1 and 7 are very similar to
the process for alcohol licensing. Basically, the application
passes back and forth between the state board and the local
government to weigh in. There's some notification and
advertising just like in alcohol where the applicant is
notifying the public that they want to start a marijuana
business. Once the agency deems the application to be complete,
the local government is formally notified that they have an
applicant. That local government then has 60 days to protest the
application if they don't want the board to issue the license.
She explained that the marijuana inventory tracking system is
the software system that ascertains that the marijuana and
marijuana products sold in retail stores were grown and produced
in licensed facilities. This system runs throughout all 9
articles.
2:13:50 PM
SENATOR STEVENS asked if this is only about Alaskan grown and
produced products.
MS. FRANKLIN confirmed it is an instate industry.
She continued to explain that the licensing provisions also
include detailed requirements for food safety, testing,
security, and transportation. Following a lot of public comment,
and the board decided that the licenses should be open only to
Alaska residents. Also, the legislature added a requirement
prohibiting licensure of anyone with a felony conviction within
five years preceding application. "But we missed a spot," she
said. That is enabling legislation to allow to board to ask the
FBI to run the out-of-state criminal history checks. She
emphasized that the enabling legislation is needed prior to
February 24 when applications are received. "If someone just
moved here and they qualify for a PFD and they qualify to apply
for a license, but they had a felony conviction in another
state, we won't know it."
CHAIR COSTELLO asked if the administration has prepared a bill.
MS. FRANKLIN replied it is her understanding that a bill is in
the works. Responding to a question about timing, she explained
the legislation is needed before licenses are issued, hopefully
before the end of the session.
2:16:49 PM
At Ease
2:17:58 PM
CHAIR COSTELLO reconvened the meeting.
MS. FRANKLIN reviewed the standard and limited cultivation
facility licenses, noting that the idea of a broker license fell
away in the process. The standard cultivation facility has no
canopy limit, which means the licensee can grow as much
marijuana as they can afford. This license type has no sales to
consumers, no consumption on premises, and the annual license
fee is $5,000. The limited cultivation facility has a 500 feet
canopy limit, a $1,000 annual license fee, and it has all the
rest of the rules of standard licensing.
2:20:35 PM
She displayed a picture of a retail store in Colorado and
explained that the consumer presents their license to security
at the door and is given a hand scanner. It is used to indicate
the products the consumer wants to purchase. The marijuana is
kept in a restricted access area and an employee gets the
products for the customer. Information about the products are
available on the scanner. She noted that Colorado has different
purchase limits for instate and nonresident but Alaska doesn't
need those restrictions. "We're not going to have anybody
driving into the state to buy marijuana and then driving out."
Alaska has a one ounce transaction limit, because the ballot
measure says a person can possess up to one ounce in public.
SENATOR STEVENS asked if there are any concerns related to the
Canada Alaska boundary.
MS. FRANKLIN said it is still illegal to take marijuana across
state lines and Canada has Mounties at the border.
2:24:24 PM
Retail store highlights from the regulations include that a
marijuana handler's permit is required; inventory must be kept
in a restricted area; marijuana must be packaged and labeled to
reflect testing and security requirements; and the packaging
must be childproof. On the question of consumption on the
premises, the board decided that if there was going to be public
consumption it would be better to have it in a regulated and
licensed premises where the board could build rules around the
consumption. A placeholder was put in the regulations and a new
regulation project was started for a marijuana retail store
consumption endorsement. Someone who has met all the
requirements for a retail store could apply for a consumption
endorsement as long as their local government allows consumption
on premises. "That is a project that is just getting going. We
have yet to have draft language approved by the board or put it
out for public comment so it will rock along behind all the rest
of the regulations," she said.
2:28:42 PM
SENATOR MEYER asked if the same rules apply to serving or
selling to minors as they do for alcohol.
MS. FRANKLIN answered yes, those rules are in the regulations.
She reviewed the Article 5 rules about product manufacturing and
edibles. The serving size is 5 mg with a maximum of 10 servings
per package. The board must approve all edible products prior to
production. Adulterated products, products that look like non-
marijuana products, and products that are especially appealing
to kids are prohibited. She noted that Dr. Jay Butler, the
state's chief medical officer, has said that "there is some
research to indicate that in some people who are not used to
eating marijuana in an edible form, 10-30 milligrams might be an
intoxicating dose."
The board set Alaska's serving and package limit lower than
other states with the novice user and tourists in mind.
The board looked at novice use and tourists when it set lower
serving and package limits than other states. She noted the
public education campaign in Colorado called Start Low, Go Slow
that suggests that 5 mg is an appropriate starting point for the
novice.
2:33:00 PM
Turning to extracts, she said it's important to realize that
marijuana extract can be added to any edible and people can be
quite creative adding it to things like soda, ice cream or
smoked salmon.
MS. FRANKLIN informed the committee that concentrates are also
being made that can be smoked. Wax and Shatter products have a
very high concentration of THC, ranging from 72-95 percent. They
are smoked and therefore are not subject to edible serving size
rules. Smoking these products is sometimes called dabbing and is
also referred to as butane hash oil or BHO. She clarified that
if a manufacturer in Alaska does make their products with
solvents, part of the testing requirements are to assure that
the solvent is no longer in the product when it is sold to the
consumer. She described the dabbing process and pointed out that
it will have a bigger effect than smoking a joint. She noted
that one young man described it as the triple black diamond of
marijuana. She emphasized that the education component needs to
help people understand what they're buying when they purchase a
concentrate.
2:38:32 PM
Article 6 addresses the testing requirements and facilities. All
marijuana and marijuana products must be tested for THC potency
and microbial testing for contaminants. Additional testing is
required for products that are produced by solvent extraction to
ensure that there is no residual solvent in the product that is
sold. The test results are required to be on the label. If a
testing facility is asked to perform additional tests, those
results must be reported. Alaska rules require the grower to
report if they use pesticides and any testing must be revealed
on the label.
2:40:01 PM
SENATOR STEVENS asked who pays for the test.
MS. FRANKLIN replied the testing facilities are licensed and the
licensee pays for the tests.
Articles 1 and 2 address the local control and local option
regulations. Article 1 contains local control provisions
including a protest tool and deferral of the board to local
governments on zoning. Local governments also have the ability
to limit time, place, manner and number of marijuana
establishments.
Article 2 provides the local option rules for communities to opt
out. This is a similar menu to the rules for alcohol found in
Title 4. However, a community may opt out either through
ordinance or election, which is different than alcohol.
Importantly, nothing in the opting out allows a local government
to prohibit personal possession of marijuana.
MS. FRANKLIN said there is no limit on the number of licenses
allowed at the state level. This is intended to avoid
speculation in licenses and the secondary market value of those
licenses. Conforming to the ballot measure, a local government
has the authority to limit the time, place, manner, and number
of marijuana establishments.
2:45:00 PM
MS. FRANKLIN stated that nothing in these rules is intended to
affect medical marijuana cardholders (AS 17.37). She reminded
the members that there is no difference between medical
marijuana and non-medical marijuana.
She explained that new strains of marijuana are being grown that
are cultivated to maximize the effects of cannabidiol (CBD)
versus tetrahydrocannabinol (THC). CBD is the aspect of the
plant that has most of the positive medicinal effects, whereas
THC is the psychoactive ingredient. This makes regulation more
complicated, she said.
SENATOR STEVENS questioned the reason for medical marijuana
cards.
MS. FRANKLIN explained that they are necessary because the
criminal statutes haven't been changed. Also, the ballot measure
said nothing in the Act is intended to change AS 17.37.
2:52:25 PM
MS. FRANKLIN reviewed the Marijuana Control Board (MCB) 2016
Timeline. She noted that the board has not approved the timeline
so it may change. In January and February she said she expected
the adopted regulations to be approved by the Lt. Governor and
in effect 30 days from his signature. On February 11 the board
will meet to approve application forms and begin the process of
drafting regulations for consumption endorsement. February 24 is
the statutory deadline to begin accepting applications.
She said AMCO has been doing a lot of work in preparation for
the applications, including an outstanding job of building a
database for electronic applications. This is designed for an
applicant to demonstrate that they have the tools to enter the
market. The first completed applications are expected in March.
In April AMCO will review applications for completion and send
them to local governments, and the board will meet in Anchorage.
On May 23 the RFP for seed-to-seed software implementation will
be finalized. The board will have a meeting in June to approve
the first licenses.
July through December AMCO will continue to process license
applications and meet three times in July, October, and
December.
2:55:23 PM
MS. FRANKLIN reviewed the following pressing need: support for
the educator position due to the number of requests for
information. Currently, other positions are filling the role of
educator. The cost of the position could be covered by the
licensing fees. The educator would work on activities related to
both alcohol and marijuana and would develop video training.
SENATOR MEYER asked whether the legalization of marijuana would
help with the Spice problem in Anchorage.
MS. FRANKLIN said she didn't know. She believed that those who
use Spice already have access to marijuana. She pointed out that
Spice is a very different drug and provides a very different
experience than marijuana, so those users are perhaps looking
for a different type of high. She opined that having access to
retail stores that sell marijuana will improve access to those
who want marijuana and may have a small effect on decreasing
Spice use.
SENATOR STEVENS asked if people are incarcerated that wouldn't
be there under the new rules.
MS. FRANKLIN related that the correction facilities rosters were
checked in November and there were only four individuals
imprisoned at the time due to marijuana charges. These were for
large marijuana grows. It's reasonable to feel confident that
not a lot of resources are being spent on marijuana. That being
said, there must be serious consequences for those who choose to
break the law, she said.
CHAIR COSTELLO thanked Ms. Franklin and the board for their hard
work.
3:00:37 PM
There being no further business to come before the committee,
Chair Costello adjourned the meeting at 3:00 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 2016.01.21 Marijuana Control Board Overview.pdf |
SL&C 1/21/2016 1:30:00 PM |
|
| 2015.12.01 MCB Adopted Regulations.pdf |
SL&C 1/21/2016 1:30:00 PM |
|
| 2013.08.29 U.S. DOJ Controlled Substances Act Memo.pdf |
SL&C 1/21/2016 1:30:00 PM |
|
| Alaska Ballot Measure 2 - Initiative Text.pdf |
SL&C 1/21/2016 1:30:00 PM |
|
| 2015.10.30 FY15 DCCED Professional Licensing Revenue & Expenditure Report.pdf |
SL&C 1/21/2016 1:30:00 PM |
|
| 2016.01.19 - Sen. L&C - REVISED - Div. CBPL Presentation.pdf |
SL&C 1/21/2016 1:30:00 PM |