03/08/2024 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic | 
|---|---|
| Start | |
| SB196 | |
| SB234 | |
| Adjourn | 
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 196 | TELECONFERENCED | |
| *+ | SB 234 | TELECONFERENCED | |
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                         March 8, 2024                                                                                          
                           1:36 p.m.                                                                                            
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Jesse Bjorkman, Chair                                                                                                   
Senator Elvi Gray-Jackson (via TEAMS)                                                                                           
Senator Kelly Merrick                                                                                                           
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Click Bishop, Vice Chair                                                                                                
Senator Forrest Dunbar                                                                                                          
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 196                                                                                                             
"An Act relating to drug and alcohol testing by employers."                                                                     
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 234                                                                                                             
"An Act relating to the Marijuana Control Board; and providing                                                                  
for an effective date."                                                                                                         
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 196                                                                                                                  
SHORT TITLE: EMPLOYER DRUG AND ALCOHOL TESTING                                                                                  
SPONSOR(s): LABOR & COMMERCE                                                                                                    
                                                                                                                                
01/18/24       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/18/24       (S)       L&C                                                                                                    
03/08/24       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
BILL: SB 234                                                                                                                  
SHORT TITLE: EXTEND MARIJUANA CONTROL BOARD                                                                                     
SPONSOR(s): LABOR & COMMERCE                                                                                                    
                                                                                                                                
02/15/24       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/15/24       (S)       L&C, FIN                                                                                               
03/08/24       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
LAURA ACHEE, Staff                                                                                                              
Senator Jesse Bjorkman                                                                                                          
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Presented SB 196 on behalf of the Senate                                                                  
Labor and Commerce Standing Committee.                                                                                          
                                                                                                                                
TAIHYA THOMAS, Human Resources Manager                                                                                          
Barrow Utilities and Electric Cooperative, Inc.                                                                                 
Barrow, Alaska                                                                                                                  
POSITION STATEMENT: Testified by invitation on SB 196.                                                                        
                                                                                                                                
ANDY LEMAN, General Counsel                                                                                                     
Alaska Power Association                                                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified by invitation on SB 196.                                                                        
                                                                                                                                
KONRAD JACKSON, Staff                                                                                                           
Senator Jesse Bjorkman                                                                                                          
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Presented SB 234 on behalf of the Senate                                                                  
Labor and Commerce Standing Committee.                                                                                          
                                                                                                                                
KRIS CURTIS, Legislative Auditor                                                                                                
Legislative Audit Division                                                                                                      
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified by invitation on SB 234.                                                                        
                                                                                                                                
JOAN WILSON, Director                                                                                                           
Alcohol and Marijuana Control Office (AMCO)                                                                                     
Department of Commerce, Community                                                                                               
and Economic Development (DCCED)                                                                                                
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified by invitation on SB 234.                                                                        
                                                                                                                                
BRUCE SCHULTE, Chair                                                                                                            
Marijuana Control Board                                                                                                         
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified by invitation on SB 234.                                                                        
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:36:05 PM                                                                                                                    
CHAIR  JESSE  BJORKMAN  called   the  Senate  Labor  and  Commerce                                                            
Standing Committee  meeting to order  at 1:36 p.m. Present  at the                                                              
call to  order were  Senators Gray-Jackson  (via TEAMS),  Merrick,                                                              
and Chair Bjorkman.                                                                                                             
                                                                                                                                
            SB 196-EMPLOYER DRUG AND ALCOHOL TESTING                                                                        
                                                                                                                                
1:36:59 PM                                                                                                                    
CHAIR  BJORKMAN announced  the consideration  of  SENATE BILL  NO.                                                              
196, "An Act relating to drug and alcohol testing by employers."                                                                
                                                                                                                                
1:37:10 PM                                                                                                                    
LAURA  ACHEE,   Staff,  Senator   Jesse  Bjorkman,   Alaska  State                                                              
Legislature,  Juneau, Alaska, presented  SB 196  on behalf  of the                                                              
Senate Labor and  Commerce Standing Committee. She  explained that                                                              
Alaskan  employers  are  protected from  litigation  when  testing                                                              
employees  for drug  and alcohol  use,  provided that  there is  a                                                              
written  policy  in  place  that  meets  state  requirements.  The                                                              
policy  must be  posted  and followed.  She  said that  currently,                                                              
employers are able  to test an employee's urine or  breath for the                                                              
presence  of drugs  or alcohol.  SB  196 would  add "oral  fluids"                                                              
(saliva)  to  the   statute,  thus  allowing  employers   to  test                                                              
employees  saliva  for drugs  or  alcohol  and be  protected  from                                                              
litigation. She  stated that this  change was recommended  because                                                              
saliva  testing is  preferrable over  breath or  urine testing  in                                                              
certain situations.  She explained  that it  does not  require the                                                              
use of a restroom,  as urine collection does.  Additionally, there                                                              
is  greater  confidence as  to  the  authenticity of  the  sample,                                                              
because  sample  collection  can  be  observed.  She  stated  that                                                              
saliva  samples can  show  the presence  of  a  drug more  quickly                                                              
after its  use compared to urine  samples. She noted  that various                                                              
organizations in  a variety of industries have  written letters in                                                              
support of SB 196.                                                                                                              
                                                                                                                                
1:40:09 PM                                                                                                                    
TAIHYA  THOMAS,  Human  Resources Manager,  Barrow  Utilities  and                                                              
Electric   Cooperative,  Inc.,   Barrow,   Alaska,  testified   by                                                              
invitation   on   SB  196.   She   expressed  support   for   this                                                              
legislation.  She explained  that  Barrow  Utilities and  Electric                                                              
Cooperative, Inc.  (BUECI) provides electric, natural  gas, water,                                                              
and  sewer service  in  a place  where service  interruptions  can                                                              
quickly  become  life  or death  situations.  She  emphasized  the                                                              
challenging  jobs  faced by  employees  and stated  that  employee                                                              
safety is of highest  priority. In order to keep  the public safe,                                                              
BUECI  relies  on  pre-hire, random,  and  for-cause  testing  for                                                              
drugs  and  alcohol.  She  said  that  some  of  this  testing  is                                                              
required by  federal commercial  vehicle operator and  natural gas                                                              
pipeline  operator  laws. She  said  that,  in addition  to  this,                                                              
BEUCI  requires certain  safety-sensitive positions  to submit  to                                                              
testing.  She  pointed  out  that   Barrow,  Alaska  is  a  remote                                                              
location  and it  can be  difficult to  access testing  providers.                                                              
She  said that  recently,  BEUCI's  testing provider  closed  down                                                              
unexpectedly,  and  they  were  left  scrambling  to  find  a  new                                                              
testing  provider.  She  said  noted   that  during  the  Covid-19                                                              
pandemic,  BEUCI  struggled to  find  testing providers  who  were                                                              
willing and  able to  travel to their  community. This  left BEUCI                                                              
supervisors with  the task of  collecting, labeling,  and shipping                                                              
urine samples  for testing  - an uncomfortable  job that  they did                                                              
not  sign  up  for.  She stated  that  oral  fluid  testing  would                                                              
provide a better  option for rural employers, because  it does not                                                              
require  the privacy  that urine  collection  requires -  it is  a                                                              
flexible option  that can be  done in the  field or in  an office.                                                              
In addition, because  oral fluids are collected by  the tester, it                                                              
is much more difficult to cheat (unlike with a urine test).                                                                     
                                                                                                                                
1:43:38 PM                                                                                                                    
MS.  THOMAS  reiterated that  BEUCI  is  in  favor of  oral  fluid                                                              
testing.  She said  that  once oral  fluid  testing becomes  fully                                                              
approved  for commercial  driver's  license  (CDL) holders,  BEUCI                                                              
plans  to   meet  with  employees   and  representatives   of  the                                                              
International  Brotherhood of Electrical  Workers (IBEW)  to fully                                                              
switch  to  oral  fluid  testing.  In addition  to  being  a  more                                                              
comfortable  method of  testing, it  will potentially  be a  cost-                                                              
saving switch. She  said that BEUCI's legal council  has indicated                                                              
that BEUCI has  significant legal protection under  Alaska's "safe                                                              
harbor"  drug and  alcohol  testing law.  She  explained the  ways                                                              
BEUCI ensures  compliance with the  safe harbor law  requirements.                                                              
She stated  that oral fluid  testing did  not exist when  the safe                                                              
harbor law  was passed; therefore,  the law does not  include this                                                              
form  of testing.  SB  196 would  expand the  safe  harbor law  to                                                              
include oral fluid testing.                                                                                                     
                                                                                                                                
1:45:51 PM                                                                                                                    
ANDY   LEMAN,   General   Counsel,   Alaska   Power   Association,                                                              
Anchorage,  Alaska, testified  by invitation  on SB  196. He  said                                                              
that the  gist of the issue  had already been discussed  and added                                                              
that he was available for questions.                                                                                            
                                                                                                                                
1:46:40 PM                                                                                                                    
CHAIR BJORKMAN  opened public testimony  on SB 196;  finding none,                                                              
he held public testimony open.                                                                                                  
                                                                                                                                
1:47:14 PM                                                                                                                    
CHAIR BJORKMAN held SB 196 in committee.                                                                                        
                                                                                                                                
1:47:17 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
             SB 234-EXTEND MARIJUANA CONTROL BOARD                                                                          
                                                                                                                                
1:49:38 PM                                                                                                                    
CHAIR   BJORKMAN  reconvened   the  meeting   and  announced   the                                                              
consideration  of SENATE  BILL NO.  234, "An  Act relating  to the                                                              
Marijuana Control Board; and providing for an effective date."                                                                  
                                                                                                                                
1:49:54 PM                                                                                                                    
KONRAD  JACKSON,  Staff,  Senator  Jesse  Bjorkman,  Alaska  State                                                              
Legislature,  Juneau, Alaska, presented  SB 234  on behalf  of the                                                              
Senate Labor  and Commerce Standing  Committee. He said  that this                                                              
legislation  proposes  to  extend   the  Marijuana  Control  Board                                                              
sunset  date  by  3  years.  He   drew  attention  to  the  recent                                                              
legislative  audit,  which noted  three  issues  that  need to  be                                                              
addressed.  He  noted  that  the   legislative  auditor  would  be                                                              
discussing these in  more detail. In addition, he  stated that the                                                              
director of the  Alcohol & Marijuana Control Office  and the chair                                                              
of  the Marijuana  Control  Board  would  also be  testifying.  He                                                              
noted  that the  proposed  three-year extension  is  significantly                                                              
shorter  than the  typical  8-year  extension. He  explained  that                                                              
there are  several reasons  for this,  including changes  with the                                                              
Marijuana Control  Office, Marijuana Control Board,  and Alcohol &                                                              
Marijuana  Control Office  (AMCO),  which  may create  significant                                                              
changes  that   the  legislature  will   want  to  be   aware  of.                                                              
Additionally,  a   three-year  sunset  extension  would   put  the                                                              
Marijuana Control  Board sunset and  audit date in-line  with that                                                              
of the Alcohol & Marijuana control office.                                                                                      
                                                                                                                                
1:52:27 PM                                                                                                                    
KRIS  CURTIS,  Legislative Auditor,  Legislative  Audit  Division,                                                              
Alaska   State   Legislature,   Juneau,   Alaska,   testified   by                                                              
invitation  on  SB 234.  She  presented  report findings  from  "A                                                              
Sunset  Review  of  the Department  of  Commerce,  Community,  and                                                              
Economic Development,  Marijuana  Control Board." She  paraphrased                                                              
from the following report conclusions:                                                                                          
                                                                                                                                
[Original punctuation provided.]                                                                                                
                                                                                                                                
     Overall,   the  audit  concluded   that  the   Marijuana                                                                   
     Control  Board  (MCB  or  board)   served  the  public's                                                                   
     interest  by holding  its  meetings  in compliance  with                                                                   
     state   law,    actively   amending   regulations    and                                                                   
     conducting  investigations   in  a  timely  manner.  The                                                                   
     audit  also  concluded  that  licenses  were  issued  in                                                                   
     accordance  with  statutes   and  regulations;  however,                                                                   
     applications  were  not processed  in  a timely  manner.                                                                   
     Additionally,  Alcohol  and   Marijuana  Control  Office                                                                   
     (AMCO)  staff did  not maintain  adequate  documentation                                                                   
     to show compliance with marijuana handler permit laws.                                                                     
                                                                                                                                
MS. CURTIS  directed attention  to page 9  of the report  and said                                                              
that  exhibit  3 provides  a  summary  of all  regulations  passed                                                              
during the  audit period. She  explained that  for MCB, a  vote by                                                              
the majority  of board members,  with a quorum present,  is needed                                                              
for action. She  noted that licensing actions require  a vote by a                                                              
majority of the  board. She explained that because  MCB is a five-                                                              
member  board, approval  of  licensing  actions requires  a  "yea"                                                              
vote from  three members. Non-licensing  actions require  a quorum                                                              
to be  present and  a "yea"  vote from  two of  the three  members                                                              
present. She  drew attention  to the June  2021 meeting,  when MCB                                                              
passed  a  regulation  increasing  the allowable  THC  levels  for                                                              
edibles with  two "yea" votes  and one  "nay" vote by  the board's                                                              
public  safety  member.  She  noted that  there  were  only  three                                                              
members  present at  this meeting  (the rural  member was  absent,                                                              
and the  [public health]  seat was  vacant).  She stated that  the                                                              
audit questions  whether this  was in  the public's best  interest                                                              
and added that  she would return to this question  when discussing                                                              
the audit's recommendations.                                                                                                    
                                                                                                                                
1:54:20 PM                                                                                                                    
MS. CURTIS  drew attention to exhibit  4 on page 10 of  the report                                                              
and  explained that,  as  of April  2023,  there  were 475  active                                                              
licenses  and just over  6,600 active  marijuana handler  permits.                                                              
Auditors  reviewed 10  new  licenses and  8  renewed licenses  and                                                              
found  that  all  were  issued   in  accordance  with  state  law;                                                              
however, applications  were not  handled in  a timely  manner. She                                                              
directed attention  to page 13, exhibit 6, which  summarizes these                                                              
results. She  noted that, on  average, it takes  approximately one                                                              
year  for  applicants  to  obtain a  new  marijuana  license.  She                                                              
stated that,  given the high  financial investment required  to be                                                              
eligible  for a marijuana  license, this  lengthy processing  time                                                              
represents  a barrier  to entry  into the  marijuana industry.  In                                                              
addition,  the audit  reviewed 25  marijuana  handler permits  for                                                              
compliance  with state  law  and  found that  AMCO  staff did  not                                                              
maintain background  checks. Further, six  of the 25  were missing                                                              
additional   documentation,   which    prevented   auditors   from                                                              
determining  whether  the  permits were  operating  in  accordance                                                              
with statutes and regulations.                                                                                                  
                                                                                                                                
1:55:34 PM                                                                                                                    
MS. CURTIS  directed attention to page  16 and stated that,  as of                                                              
April  2023,  there   were  59  marijuana  cultivators   who  were                                                              
delinquent  in paying  their  marijuana  excise taxes.  She  noted                                                              
that  this  is  a high  number,  representing  over  half  of  the                                                              
marijuana  cultivators. Collectively,  they owed  $3.1 million  in                                                              
delinquent taxes. She  pointed out that marijuana fees  are set at                                                              
a  level  that  exceeds  the  cost  of  regulating  the  industry;                                                              
however,  when   the  program  was  created,   legislative  intent                                                              
directed the board  to establish a fee structure  that would cover                                                              
the  costs of  regulating the  industry while  also recouping  the                                                              
$5.5 million of  state general funds that were  spent to establish                                                              
the program.  She stated that  management reported  an expectation                                                              
that the $5.5 million  debt would be repaid in full  by the end of                                                              
FY24. Directing  attention  to survey questions  and responses  on                                                              
page 33 of the  report, she explained that the survey  went out to                                                              
the 319  licensees and had  a 35 percent  response rate.  She said                                                              
that,  in   general,  respondents   expressed  a  low   degree  of                                                              
satisfaction with  the board. She  pointed out that 37  percent of                                                              
respondents said that  the board was not effective  at serving the                                                              
public's  interest -  a  marked difference  from  the 2017  audit,                                                              
which showed that  licensees were very satisfied  with the board's                                                              
performance.                                                                                                                    
                                                                                                                                
MS. CURTIS  said that the audit  recommends the board  be extended                                                              
for three years.  This recommendation is made in  recognition of a                                                              
report  issued   by  the   Governor's  advisory   task  force   on                                                              
recreational marijuana.  She explained  that this report  may lead                                                              
to significant changes  in MCB and AMCO duties  and processes. She                                                              
noted that  a new  information system  (which would  significantly                                                              
change licensing  and enforcement  processes)  was expected  to be                                                              
implemented  by 2023.  A three-year  extension would  allow for  a                                                              
more  timely evaluation  of these  significant  changes and  would                                                              
align  the MCB sunset  date with  that of  the Alcoholic  Beverage                                                              
Control  Board (ABC).  She stated  that the  audit contains  three                                                              
recommendations.  The first  is that  AMCO establishes  procedures                                                              
to  ensure that  the  marijuana  handler permit  documentation  is                                                              
properly maintained.                                                                                                            
                                                                                                                                
1:58:30 PM                                                                                                                    
MS.  CURTIS discussed  the second  audit  recommendation that  MCB                                                              
and the AMCO  director should continue to implement  a new license                                                              
and enforcement  information system. She explained  that the audit                                                              
showed  that   license  and   enforcement  processes   were  being                                                              
administered  via many  spreadsheets,  which were  prone to  error                                                              
and  inefficient.  The  new  information  system  is  expected  to                                                              
address these  findings.  Finally, the audit  recommends  that the                                                              
legislature  consider requiring  that  MCB  regulation changes  be                                                              
made by a majority  of board members. She reiterated  that certain                                                              
changes related  to THC content  were made without input  from the                                                              
rural and  public health members -  and despite a "nay"  vote from                                                              
the  public safety  board member.  While this  action was  lawful,                                                              
the  audit  questions   whether  it  was  in  the   public's  best                                                              
interest.  She noted that  the Department  of Commerce,  Community                                                              
and  Economic   Development  (DCCED)  commissioner   concurs  with                                                              
recommendations  one  and  two   but  believes  that  requiring  a                                                              
minimum  number  of  three  board  members  would  not  serve  the                                                              
public's interest  in moving forward regulatory projects.  The TCB                                                              
chair  also  concurs with  recommendations  one  and two  but  not                                                              
recommendation   three.   She  stated   that,   with  respect   to                                                              
recommendation three,  the TCB chair  stressed that the  board did                                                              
not fail  to consider public health,  public safety, or  the rural                                                              
board  position   when  approving  the  regulations   to  increase                                                              
allowable  THC  levels.  Further,  the  TCB  chair  believes  that                                                              
requiring  a majority  vote  on  regulation changes  would  likely                                                              
lead to greater delays in reviewing and updating regulations.                                                                   
                                                                                                                                
2:00:29 PM                                                                                                                    
CHAIR BJORKMAN  asked for clarification  that during the  June 21,                                                              
2021  meeting, one  board  member  was absent,  and  one seat  was                                                              
vacant.                                                                                                                         
                                                                                                                                
2:00:47 PM                                                                                                                    
MS. CURTIS replied that this is correct.                                                                                        
                                                                                                                                
2:00:53 PM                                                                                                                    
CHAIR  BJORKMAN  asked if  there  was  agreement that  the  action                                                              
taken by  the board  with regard to  increasing the  allowable THC                                                              
levels for edibles was lawful.                                                                                                  
                                                                                                                                
2:01:07 PM                                                                                                                    
MS. CURTIS  replied yes.  She explained that  all board  actions -                                                              
with  the exception  of  licensing actions  -  require a  majority                                                              
vote with  a quorum present.  This is a  five-member board  with a                                                              
three-person quorum requirement - two "yea" votes are needed.                                                                   
                                                                                                                                
2:01:31 PM                                                                                                                    
CHAIR  BJORKMAN expressed  his understanding  and  asked for  more                                                              
information  regarding  how an  action  may  be "lawful"  and  not                                                              
being in the best interest of the public.                                                                                       
                                                                                                                                
2:01:49 PM                                                                                                                    
MS.  CURTIS  explained that  the  audit  questions whether  it  is                                                              
prudent  to change  regulations  that  may directly  affect  rural                                                              
areas, public  health, and  public safety -  when those  seats are                                                              
absent or  vacant. She  pointed out that,  according to  the board                                                              
chair,  some members  may have  voted  for the  regulations to  be                                                              
posted  for   public  comment.   She  asserted  that   voting  for                                                              
regulation  changes  to  be  posted for  public  comment  is  very                                                              
different  from  voting  for  regulation  changes  to  occur.  She                                                              
opined  that the  concern about  needing  more votes  in order  to                                                              
move regulation  projects forward  is valid and acknowledged  that                                                              
the need  for more  board member input  must be weighed  alongside                                                              
what  will  allow  administrative   responsibilities  to  proceed.                                                              
However, she  pointed out that  licensing actions are  required to                                                              
have a majority  (3 "yea" votes) to pass. She added  that the June                                                              
21, 2021 meeting  was the only meeting that did not  have at least                                                              
4  members  in  attendance.  She noted  that  audit  criteria  are                                                              
included in  the last pages of  the audit and reiterated  that the                                                              
actions  taken  were  not  unlawful.   Rather,  the  audit  brings                                                              
attention to this so that the legislature is aware.                                                                             
                                                                                                                                
2:04:08 PM                                                                                                                    
JOAN  WILSON,  Director,  Alcohol  and  Marijuana  Control  Office                                                              
(AMCO),   Department   of   Commerce,   Community   and   Economic                                                              
Development  (DCCED), Anchorage,  Alaska, testified by  invitation                                                              
on SB  234. She said  that she  took over as  director of  AMCO in                                                              
May of 2022 and  much of the audit period was  prior to this date.                                                              
She said that there  are many positive things to  report about MCB                                                              
and  AMCO -  which are  reflected  in the  audit.  She added  that                                                              
there are  other changes which  support extending the  sunset date                                                              
for three  years, as the audit  recommends. She stated  that there                                                              
are currently  461 operating and  licensed marijuana  licensees in                                                              
Alaska.  This  includes  98  limited   cultivators,  133  standard                                                              
cultivators,    22   concentrate    manufacturers,   40    product                                                              
manufacturers, 176 retail stores, and 2 testing facilities.                                                                     
                                                                                                                                
MS.  WILSON directed  attention to  the audit  survey and  pointed                                                              
out that  while [37  percent] of  respondents  said the board  was                                                              
"ineffective",  approximately  63  percent of  survey  respondents                                                              
found  the  board  "effective" or  "very  effective".  She  opined                                                              
that, while  there is room for  improvement, it is  worth focusing                                                              
on the 63  percent. She responded  to points raised by  Ms. Curtis                                                              
and  said  that  AMCO  is  very   excited  about  changes  to  the                                                              
application review  process. She explained that AMCO  is currently                                                              
reviewing  applications submitted  in early  January 2024  - which                                                              
reflects  a 60-day  application  processing time.  She noted  that                                                              
much  of the  processing time  reflected  in the  audit report  is                                                              
outside   of  AMCO's   control.   She  explained   that  once   an                                                              
application  is complete,  AMCO  waits for  local governments  and                                                              
others  to give  any  reasons why  an  application  should not  be                                                              
approved. Once  all approvals  are in place,  the board  waits for                                                              
the licensee  to indicate  that  they are ready  to move  forward.                                                              
She emphasized  that both she and  the MCB chair are  committed to                                                              
reducing any unnecessary barriers for the industry.                                                                             
                                                                                                                                
MS.  WILSON indicated  that the  new licensing  system, AK  Access                                                              
will  be available  for  marijuana licensees  in  the future.  She                                                              
expressed her  confidence that AMCO  would be able to  address any                                                              
concerns  regarding  marijuana  handler permits.  She  noted  that                                                              
AMCO  had  concerns  about  maintaining  confidential  information                                                              
about applicants,  such as  social security  numbers and  criminal                                                              
history. She opined  that AMCO and MCB have done  an excellent job                                                              
ensuring  that  those who  are  entitled  to a  marijuana  handler                                                              
permit  get one  while  those who  are not  entitled  do not.  She                                                              
expressed support  for maintaining documentation to  back up these                                                              
decisions.                                                                                                                      
                                                                                                                                
2:07:54 PM                                                                                                                    
MS. WILSON  referred to the  final audit recommendation  regarding                                                              
voting  requirements  and  stated  that  MCB  is  very  active  in                                                              
reviewing regulations  3 AAC 306.  She explained that  the statute                                                              
is  skeletal  and added  that  most  of  the regulations  for  the                                                              
marijuana industry  come through  3 AAC 306.  She stated  that the                                                              
board  is very  responsive  to  public  health and  public  safety                                                              
concerns,  consumer needs,  and economic  growth. She stated  that                                                              
while a vote  was taken during  a meeting with only  three members                                                              
in attendance, in  compliance with the law, this was  after a long                                                              
consideration  of  other votes  in  prior meetings.  She  asserted                                                              
that the  board knew where  each member stood  on the issue  - and                                                              
added that if members  thought it was detrimental or  that a voice                                                              
was  not  being heard,  the  vote  would  have been  delayed.  She                                                              
acknowledged  that the  board's  public health  seat is  currently                                                              
vacant and is not  likely to be filled in time  for the April 2024                                                              
meeting. She  noted the board's  small size and shared  her belief                                                              
that  the statute  is working  well.  She shared  her belief  that                                                              
members consider  potential  public health  and safety concerns  -                                                              
even  if they  are  not  filling these  seats  on  the board.  She                                                              
stated that both  she and the commissioner's office  disagree with                                                              
the audit's final recommendation.                                                                                               
                                                                                                                                
2:09:23 PM                                                                                                                    
MS.  WILSON  said that  while  most  boards  extend four  or  five                                                              
years, there  is a benefit to aligning  the audits of  the ABC and                                                              
MCB audits.  She expressed  hope that  MCB would  be able  to show                                                              
its success of AK  Access and license review time.  She added that                                                              
the  board   would  also   be  considering   licensing  fees   and                                                              
acknowledged  that current  fees  were set  at a  rate that  would                                                              
allow  for  the repayment  of  the  $5  million to  the  operating                                                              
budget. She  said that MCB  will be able  to repay in  the current                                                              
fiscal  year. In  addition,  MCB  will be  able  to either  reduce                                                              
licensing  fees or  request additional  AMCO  support. She  shared                                                              
that her  preference would  be the  latter; however, she  responds                                                              
to the board  and the needs  of licensees. She expressed  pride in                                                              
MCB   and  AMCO   and  acknowledged   that  there   is  room   for                                                              
improvement.   She  expressed  appreciation   for  the   oversight                                                              
provided by the legislature.                                                                                                    
                                                                                                                                
2:10:47 PM                                                                                                                    
SENATOR  GRAY-JACKSON asked  if the  budget shortfall  was due  to                                                              
the $3 million in delinquent taxes.                                                                                             
                                                                                                                                
2:10:59 PM                                                                                                                    
MS. WILSON sought clarification of "budget shortfall."                                                                          
                                                                                                                                
2:11:07 PM                                                                                                                    
SENATOR GRAY-JACKSON  clarified  that she  heard Ms. Wilson  refer                                                              
to a budget shortfall.                                                                                                          
                                                                                                                                
2:11:10 PM                                                                                                                    
MS. WILSON clarified  that she was referring to  the audit finding                                                              
that  licensing  fees  were  too  high.  She  explained  that  the                                                              
current licensing  fees were  set at  this level  in order  to pay                                                              
back the  operating budget loan  that allowed for the  creation of                                                              
MCB. She asked  if this clarifies the budget  question and offered                                                              
to also address the question regarding taxes.                                                                                   
                                                                                                                                
2:11:37 PM                                                                                                                    
SENATOR GRAY-JACKSON  replied yes  and asked for  more information                                                              
regarding the $3 million in unpaid taxes.                                                                                       
                                                                                                                                
2:11:53 PM                                                                                                                    
MS. WILSON  referred to the  February 2024 delinquent  taxes list.                                                              
She  said  this   list  shows  19  cultivators  (19   out  of  232                                                              
cultivators)  on the tax  delinquency list.  She added  that three                                                              
on the list  have a significant  amount - over $70 thousand  - and                                                              
the board  has directed  AMCO to  file to  revoke these  licenses.                                                              
She said  that 1-2 are behind  $25-$50 thousand and  the remainder                                                              
owe  less  than $10  thousand.  She  clarified  that of  the  $3.5                                                              
million due  in back  taxes, approximately  $400 thousand  is from                                                              
active licensees. This  is the only group that the  board has some                                                              
ability to  address by  potentially revoking  these licenses.  She                                                              
stated that collecting  back taxes from expired  licenses falls to                                                              
the  Department  of  Revenue  and   added  that  it  can  be  very                                                              
difficult to collect back taxes once licenses expire.                                                                           
                                                                                                                                
2:13:36 PM                                                                                                                    
MS. WILSON  explained  that if a  previous cultivator  is  on back                                                              
taxes list  and applies  for a retail  or a manufacturer  license,                                                              
the board  will consider  the actions  taken  as a cultivator  and                                                              
determine  whether  this should  bar  them  from receiving  a  new                                                              
license in  the industry. She  stated that the board  consistently                                                              
refuses  licenses for  those who  do not pay  taxes. However,  she                                                              
noted  that  this  industry  has  the  highest  tax  rate  at  the                                                              
cultivation  level and there  is currently  legislation  to adjust                                                              
this. She surmised  that changing the tax rate may  help to ensure                                                              
that licensees remain  in good standing with respect  to their tax                                                              
payments.                                                                                                                       
                                                                                                                                
2:15:00 PM                                                                                                                    
SENATOR GRAY-JACKSON said that her questions were answered.                                                                     
                                                                                                                                
2:15:16 PM                                                                                                                    
CHAIR  BJORKMAN  asked  if  the  rural seat  was  vacant  for  the                                                              
entirety of 2021.                                                                                                               
                                                                                                                                
2:15:40 PM                                                                                                                    
MS.  WILSON replied  that the  seat  was held  by three  different                                                              
individuals  in 2021  and said  she could  provide information  on                                                              
the length of the vacancies at a later date.                                                                                    
                                                                                                                                
2:16:15 PM                                                                                                                    
CHAIR  BJORKMAN commented  that it  would be  helpful to know  how                                                              
long the  vacancies lasted.  He asked how  long the  public health                                                              
seat has been vacant.                                                                                                           
                                                                                                                                
2:16:35 PM                                                                                                                    
MS. WILSON  replied that  the public health  seat has  been vacant                                                              
since  February 28,  2024. She noted  that while  there have  been                                                              
attempts to  find members, the search  is still ongoing.  The seat                                                              
will most  likely remain  vacant for the  next board  meeting. She                                                              
added that  this seat  is the most  difficult to  fill due  to the                                                              
requirements for this position.                                                                                                 
                                                                                                                                
2:17:09 PM                                                                                                                    
CHAIR  BJORKMAN asked  if there  are  specific requirements  under                                                              
subhead  of public  health that  present  significant barriers  to                                                              
filling this position.                                                                                                          
                                                                                                                                
2:17:23 PM                                                                                                                    
MS. WILSON  shared an example  of an applicant  who worked  in the                                                              
medical profession,  had experience working with  patients, and an                                                              
understanding  of the public  health risks  - but  did not  hold a                                                              
public   health  position   and   therefore  did   not  meet   the                                                              
requirements   to  fill  this   vacancy.  She  acknowledged   that                                                              
requiring that  the individual  hold a  public health  position in                                                              
state  or  municipal   government  is  within   the  legislature's                                                              
purview; however,  she opined  that a  doctor or pharmacist  would                                                              
have  the  relevant  knowledge and  understanding  of  the  public                                                              
health risks.                                                                                                                   
                                                                                                                                
2:18:21 PM                                                                                                                    
BRUCE  SCHULTE,   Chair,  Marijuana   Control  Board,   Anchorage,                                                              
Alaska,  testified   by  invitation  on  SB  234.   He  said  that                                                              
outstanding  taxes  that  went  unpaid  have been  a  problem  for                                                              
years.  He noted  that there  is a  proposed legislative  solution                                                              
that the board supports.  He stated that in 2019,  the board began                                                              
to work more  diligently to collect  back taxes. This was  done by                                                              
requiring that  licensees be up-to-date  on tax payments  prior to                                                              
license  renewal or  that they  be on  a repayment  plan with  the                                                              
Department of Revenue.  He shared his belief that  this stance was                                                              
welcomed  by those  in  the industry  who  were  paying taxes.  In                                                              
addition, it helped  to keep the tax burden to a  minimum. He said                                                              
that he  is not sure  what avenues are  available to  collect back                                                              
taxes  from   businesses  that   are  now  closed   and  corporate                                                              
structures  make this even  more difficult.  He shared  his belief                                                              
that the  proposed legislation to  change the tax  structure would                                                              
be of great benefit.                                                                                                            
                                                                                                                                
MR. SCHULTE  said that MCB  members shared concerns  regarding the                                                              
timeline  for license  approval.  He added  that  AMCO staff  have                                                              
worked  to shorten  the  timeline as  much  as possible,  although                                                              
some parts  of this process are  out of AMCO's control.  He stated                                                              
that 60  days is  a significant  improvement.  With regard  to the                                                              
audit's  concerns  about  the voting  process,  he  explained  the                                                              
issue being  considered (increasing  THC  levels for edibles)  had                                                              
been  a topic  of discussion  at  several board  meetings and  was                                                              
sent out  for public  comment for  an extended  period. He  stated                                                              
that Alaska's allowable  THC level was notably lower  than that of                                                              
other  states; the  board voted  to bring  Alaska's level  in-line                                                              
with other states.                                                                                                              
                                                                                                                                
2:21:52 PM                                                                                                                    
MR. SCHULTE stated  that the board members work  well together. He                                                              
said that  if members  know that a  particular issue  is important                                                              
to a certain member,  this issue is held until that  member can be                                                              
in attendance.  He added that  several discussions  on significant                                                              
issues were rescheduled.  He stated that it has  been difficult to                                                              
have  all  board  members  present   (and  all  seats  filled)  at                                                              
meetings.  He  noted  that  these   are  volunteer  positions  and                                                              
explained  that one  member  left  the state  on  short notice  to                                                              
pursue  a  degree  while  others   were  not  available  for  some                                                              
meetings  due  to other  responsibilities.  He  expressed  concern                                                              
that requiring  a majority  of "all board  members" rather  than a                                                              
majority of  those present would  create even greater  barriers to                                                              
board  actions. He  shared  examples  of why  members  may not  be                                                              
present at the  meeting and reiterated that he  is concerned about                                                              
this change.                                                                                                                    
                                                                                                                                
2:23:37 PM                                                                                                                    
MR.  SCHULTE   discussed  the  licensing   fees  and   shared  his                                                              
understanding  that  the initial  fee  structure  was intended  to                                                              
match the operating  costs of the AMCO office. He  said that it is                                                              
encouraging  that the  fees may  be reduced  over time  - or  that                                                              
more  services would  be made  available to  licensees. He  shared                                                              
his  belief  that  either reducing  fees  or  increasing  services                                                              
would   be  supported   by  the   industry  and   the  board.   He                                                              
acknowledged the work done by AMCO to streamline the process.                                                                   
                                                                                                                                
2:24:33 PM                                                                                                                    
SENATOR MERRICK  asked if there  would be a benefit  to increasing                                                              
the number of board members.                                                                                                    
                                                                                                                                
2:24:46 PM                                                                                                                    
MR. SCHULTE  answered no. He opined  that the board is  robust and                                                              
has a  broad representation of  viewpoints. He explained  that MCB                                                              
was modeled after ABC.                                                                                                          
                                                                                                                                
2:25:19 PM                                                                                                                    
MS.  WILSON clarified  an earlier  comment  regarding the  board's                                                              
public  health seat  and provided  additional  details about  this                                                              
requirement.  She said  that  the legislature  previously  amended                                                              
ABC  regulations  to  allow  someone who  is  retired  from  these                                                              
professions  to fill this  vacancy and  suggested that  this might                                                              
be something to consider.                                                                                                       
                                                                                                                                
2:26:33 PM                                                                                                                    
CHAIR BJORKMAN  opened public testimony  on SB 234;  finding none,                                                              
he held public testimony open.                                                                                                  
                                                                                                                                
2:27:00 PM                                                                                                                    
CHAIR BJORKMAN held SB 234 in committee.                                                                                        
                                                                                                                                
2:27:30 PM                                                                                                                    
There being no further business to come before the committee,                                                                   
Chair Bjorkman adjourned the Senate Labor and Commerce Standing                                                                 
Committee meeting at 2:27 p.m.                                                                                                  
| Document Name | Date/Time | Subjects | 
|---|---|---|
| SB196 ver A.pdf | 
                    
SL&C       3/8/2024 1:30:00 PM SL&C 3/20/2024 1:30:00 PM  | 
                
                    
SB 196 | 
            
| SB196 Sponsor Statement Version A.pdf | 
                    
SL&C       3/8/2024 1:30:00 PM SL&C 3/20/2024 1:30:00 PM  | 
                
                    
SB 196 | 
            
| SB196 Sectional Analysis Version A.pdf | 
                    
SL&C       3/8/2024 1:30:00 PM SL&C 3/20/2024 1:30:00 PM  | 
                
                    
SB 196 | 
            
| SB196 Fiscal Note-DOLWD-WH 03.02.24.pdf | 
                    
SL&C       3/8/2024 1:30:00 PM SL&C 3/20/2024 1:30:00 PM  | 
                
                    
SB 196 | 
            
| SB196 Supporting Document-Letter-RDC 03.05.24.pdf | 
                    
SL&C       3/8/2024 1:30:00 PM | 
                
                    
SB 196 | 
            
| SB196 Supporting Document-Letter AK Chamber 03.05.24.pdf | 
                    
SL&C       3/8/2024 1:30:00 PM | 
                
                    
SB 196 | 
            
| SB196 Supporting Document-Letter-Alliance 02.16.24.pdf | 
                    
SL&C       3/8/2024 1:30:00 PM | 
                
                    
SB 196 | 
            
| SB196 Supporting Document-Letter-AOGA 03.05.24.pdf | 
                    
SL&C       3/8/2024 1:30:00 PM | 
                
                    
SB 196 | 
            
| SB196 Supporting Document-Letter-APA 02.28.24.pdf | 
                    
SL&C       3/8/2024 1:30:00 PM | 
                
                    
SB 196 | 
            
| SB196 Supporting Document-Letter-ATA 02.23.24.pdf | 
                    
SL&C       3/8/2024 1:30:00 PM | 
                
                    
SB 196 | 
            
| SB234 ver A.pdf | 
                    
SL&C       3/8/2024 1:30:00 PM | 
                
                    
SB 234 | 
            
| SB234 Sponsor Statement.pdf | 
                    
SFIN       4/3/2024 9:00:00 AM SL&C 3/8/2024 1:30:00 PM  | 
                
                    
SB 234 | 
            
| SB234 Supporting Documents-Sunset Audit 0.30.23.pdf | 
                    
SFIN       4/3/2024 9:00:00 AM SL&C 3/8/2024 1:30:00 PM  | 
                
                    
SB 234 | 
            
| SB234 Fiscal Note-DCCED-AMCO 03.01.24.pdf | 
                    
SFIN       4/3/2024 9:00:00 AM SL&C 3/8/2024 1:30:00 PM  | 
                
                    
SB 234 |