HB 319-RENEW MARIJUANA LICENSE:BACKGROUND CHECKS  1:05:43 PM CHAIR CLAMAN announced that the first order of business would be HOUSE BILL NO. 319, "An Act relating to criminal background checks for marijuana establishment registrations and renewals; and providing for an effective date." 1:06:18 PM MEGAN HOLLAND, Staff, Representative Andy Josephson, Alaska State Legislature, advised that CSHB 319 changes the fingerprinting requirements for marijuana registration renewal. Under current statute, marijuana registration holders are required to submit a new set of fingerprints on an annual basis, and this legislation changes that requirement from every year to every six years. She explained that the annual requirement is not standard for other industries, although, massage therapy requires that new fingerprints are submitted after the initial registration, and there is active legislation addressing the massage therapy issue. The interest in these proposed changes originated in the Department of Commerce, Community & Economic Development (DCCED) due to its Alaska Public Safety Information System (ASPIN) that provides notice of any changes in the criminal activity of a license or registration holder who had previously provided their fingerprints. Due to the fact that the requirement to turn in a "fresh set" of fingerprint is currently in place and given the fact that a person's fingerprints do not change, and their fingerprints were initially logged into this data base, it is the sponsor's belief that this requirement is unnecessary, she explained. 1:07:58 PM MS. HOLLAND advised that the previous version of this bill, as heard in the House State Affairs Standing Committee, set this requirement to once every three years, which was an idea proposed by the Alcohol and Marijuana Control Board. The House State Affairs Standing Committee decided to amend the three- years to every six-years and it passed with unanimous support. She noted that her research into how this issue is handled in other adult-use legal states found that some states do require that new fingerprints are turned in; however, most states include language that the state may require new fingerprints if there is a demonstrated investigative need. This legislation removes an unnecessary burden to both industry and the state without compromising the public's safety, she offered. 1:09:43 PM REPRESENTATIVE KREISS-TOMKINS asked Director Erika McConnell, Alcohol and Marijuana Control Office, what the fingerprinting policy would look like in order for marijuana license holders to be treated the same as alcohol beverage license holders. 1:10:18 PM ERIKA MCCONNELL, Director, Alcohol & Marijuana Control Office, Department of Commerce, Community & Economic Development (DCCED), advised that AS 04.11.295 is the statute on the alcohol side, and she paraphrased as follows: An applicant for applicant for issuance of a license shall submit fingerprints ... the board may require an applicant for renewal of a license or a conditional contractor's permit under this title to submit fingerprints and pay fees as required by this subsection." 1:10:55 PM REPRESENTATIVE KREISS-TOMKINS asked why the law should not read the same for those in the marijuana industry. MS. MCCONNELL noted that while both substances are regulated substances, marijuana is illegal at the federal level and alcohol is not illegal. She then deferred to Brandon Emmett, Vice Chair, Marijuana Control Board. 1:11:40 PM BRANDON EMMETT, Vice-Chair, Marijuana Control Board, advised that the Marijuana Control Board contemplated this issue during a previous meeting which was centered around the fact that many of the people in the marijuana industry and those who voted to legalize marijuana wanted it regulated like alcohol. Except, he pointed out, there are still issues surrounding the legality of marijuana on the federal level and some of the board members raised concerns. The ideas were that the language reflect what is in alcohol, and that the registration be every five years. The Marijuana Control Board settled on a compromise of every three years which reflected the two sides of the board's opinion. 1:13:39 PM REPRESENTATIVE KREISS-TOMKINS surmised that the process within the alcohol beverage industry is that a person is fingerprinted upon transfer of an alcohol beverage license and the Alcohol Beverage Control Board may ask for new fingerprints, for whatever reason and whatever time, but there is no recurring fingerprinting requirement. MS. MCCONNELL replied that Representative Kreiss-Tomkins was correct. 1:14:30 PM REPRESENTATIVE KREISS-TOMKINS related that he was trying to understand how it would be a compromise when part of the Marijuana Control Board preferred every five years and the other members preferred using the language used for the Alcohol Beverage Control Board, which appears to be an even less restrictive measure. He acknowledged that the legislature had since changed that, and he asked how three years is a compromise and what were the arguments against "doing as is done in alcohol." MR. EMMETT answered that there definitely was not consensus by the board members as to whether the language should stay with the every-year requirement or be essentially open-ended, such as in alcohol, and after some discussion, three years was the compromise. He explained that the body of the Marijuana Control Board is often split on many decisions with robust debate, and it then comes to some sort of a compromise on most of the divisive issues. 1:16:28 PM REPRESENTATIVE KREISS-TOMKINS asked that the department and the board flag this issue, and he remarked that marijuana is now decriminalized and legal. He commented that he would like to hear a compelling reason as to why there should be a recurring fingerprinting requirement as opposed to what happens within the alcohol industry. He asked what the problem a recurring fingerprinting requirement is solving, besides being a lot of hassle for a lot of people. MS. HOLLAND answered that the benefit of a recurring requirement for submitting new fingerprints is that in requesting those fingerprints, it triggers a national background check. Although, she acknowledged, the department has software to track changes in the criminal activity of registration holders on a state level, it does not do so on a national level. In the event a registration holder was involved in criminal activity outside of Alaska, the department would be unaware of that activity, she explained. 1:18:05 PM REPRESENTATIVE KREISS-TOMKINS asked why it is in Alaska's interest to be aware of any potential criminal activity that a marijuana license holder might be complicit in outside of Alaska, and why there is a greater concern on a marijuana license holder than on an alcohol beverage license holder. MS. HOLLAND pointed out that marijuana is still illegal on the federal level, thereby, causing an incentive to be more restrictive on this industry as compared to alcohol. 1:19:04 PM REPRESENTATIVE KREISS-TOMKINS asked, "What gives if someone is complicit in federal illegal activity if they hold a marijuana license nationally." While he realizes that is "sort of bad in general," he asked whether that endangers the legal or decriminalized status of marijuana in Alaska if something does appear on the background check. MS. MCCONNELL referred to the marijuana statute, AS 17.38.010(b), which read as follows: (b) In the interest of the health and public safety of our citizenry, the people of the state of Alaska further find and declare that the production and sale of marijuana should be regulated so that (1) individuals will have to show proof of age before purchasing marijuana; (2) legitimate, taxpaying business people, and not criminal actors, will conduct sales of marijuana; and (3) marijuana sold by regulated businesses will be labeled and subject to additional regulations to ensure that consumers are informed and protected. MS. MCCONNELL explained that later on in the statute, it clearly states that certain criminal acts, certain felonies, and certain misdemeanors are disqualifying situations for people to hold a marijuana license. On the alcohol side, she explained, the board has the discretion to evaluate a criminal act on the part of an applicant or licensee and make a determination whether to allow that person to become a licensee. She reiterated that on the alcohol side it is at the discretion of the board, on the marijuana side there is statutory language directing that certain types of criminal actors are not to be licensees. 1:20:56 PM REPRESENTATIVE EASTMAN asked that someone walk the committee through the process by which the fingerprinting and background checks take place. MS. MCCONNELL responded that part of the application process includes a number of different forms, a set of fingerprints, and a set of fees. Once all of those things are submitted to the Alcohol and Marijuana Control Office, it begins the process. The actual fingerprints are transferred to the Department of Public Safety (DPS) to perform the national criminal background check and it then provides DCCED with a report of the results of that check. 1:21:55 PM REPRESENTATIVE EASTMAN surmised that someone provides the Marijuana Control Board with a copy of fingerprints "they may have obtained somewhere else," submits all of the forms, her office processes them and sends [the fingerprints] to the authorities to perform the national check. CHAIR CLAMAN asked whether Representative Eastman was suggesting that a person could sit in their home and fingerprint themselves, or was he saying that DCCED chooses the third-party vendor. REPRESENTATIVE EASTMAN asked whether DCCED performs the act of fingerprinting at its office, or whether it accepts the fingerprints from another source. MS. MCCONNELL answered that the fingerprinting is performed on the appropriate form by third-party businesses and the list of those third-parties are located on the department's website. 1:23:16 PM CHAIR CLAMAN noted that when a person becomes a member of the Alaska Bar Association (ABA) their fingerprints are taken one time and never again. He commented that the only reason to request the fingerprints here is to trigger the national background check. MS. HOLLAND replied that Chair Claman was correct, the purpose in obtaining the new fingerprints is to trigger the national background check. 1:24:05 PM REPRESENTATIVE EASTMAN asked how the fee relates to the background check, and whether it is simply of the cost for the state to perform that background check. MS. MCCONNELL answered that a $47 fee was set by DPS, and DCCED collects that fee and transfers it to DPS through a Reimbursable Services Agreement (RSA). She then deferred to someone from DPS to explain that particular fee. 1:25:17 PM GARY LEE, Criminal Justice Planner, Division of Statewide Services, Department of Public Safety, answered that the $37 fee is a direct charge to the Federal Bureau of Investigations (FBI) and $10 is a processing fee to digitize the prints and prepare them to send to the FBI. 1:25:48 PM REPRESENTATIVE EASTMAN surmised that a person's Alaska crime would appear [in ASPIN] without performing this additional fingerprinting or background check. In the event someone ran afoul of federal laws with regard to marijuana, would that information be transmitted to the state, or with this additional background check and fingerprinting, "is that what would help us to figure that out?" MR. LEE explained that the Alaska Public Safety Information System (ASPIN) only records state charges, and if it was a federal charge, Alaska would have no visibility of it unless an additional national fingerprint database check was conducted. 1:26:53 PM REPRESENTATIVE KREISS-TOMKINS asked whether the fingerprinting requirements in the State of Alaska require one full-time person or more. He further asked the anticipated administrative burden associated with the marijuana industry and fingerprinting, and whether it has required bringing on additional capacity with this new industry coming online. He requested that Mr. Lee disregard the recurring fingerprints question, he simply would like a sense of the requirements of the operations. MR. LEE answered that the fingerprinting division employs four people and they process all of the cards, and there are more people in the records section that handle the cards as they come in. It is "very broad based," and massage therapists, attorneys, and any number of people go through the process. The number of new or changed applicants through the marijuana industry is insignificant and it has not caused any additional personnel staffing. 1:28:32 PM CHAIR CLAMAN opened public testimony on CSHB 319. 1:28:55 PM PAUL DISDIER, General Manager, Fireweed Factory LLC, offered that Fireweed Factory, LLC is a state licensed cultivating facility and it has a retail store in Juneau. He advised that nine LLC members encompass the Fireweed Factory and it is a burden every year to make sure all of the members have their fingerprints taken, get the paperwork back to him, and then send everything to the state to have its license renewed. The requirement is usually during the summer and last year was the first time "we went through this" with one of its LLC members being in Europe and another member on vacation with their children. This year, he said, he has already notified all of the LLC members to begin the process. In the event this requirement was to be extended to ten years, six years, three years, or whatever, it would certainly be less of a burden than every year. It was his estimation, he offered, that the Fireweed Factory LLC probably had more LLC members than other marijuana entities in this state. Funding for marijuana businesses usually takes place under a group of investors with the same type of problems his company experiences every year. He related, that he would appreciate it if the committee would consider changing it from "three to something." 1:31:00 PM REPRESENTATIVE EASTMAN referred to the applications Mr. Disdier submitted on behalf of himself and others and asked whether any of those applicants had been denied due to something on the background check. MR. DISDIER answered that everyone in his LLC had no previous legal problems and the fingerprinting passed through "just fine." The investors in Fireweed Factory include an attorney and the husband of a doctor, and he opined that the committee will see that those types of people are the types of people investing in this industry. He pointed out that [this process] makes one feel like they are still outlaws in a way, "where you don't trust us, we want to make sure every year that you're not doing any kind of illegal activity." While, he said, he understands the reason for that requirement and he does not want to see any illegal activity coming into this industry, but the committee can trust a lot of the people who have invested in this business. 1:32:44 PM REPRESENTATIVE EASTMAN asked whether he was aware of any other competitors in this industry in Alaska who applied and was turned down due to the background check. MR. DISDIER replied that he has not heard of a single person. 1:33:20 PM JANA WELTZIN, Attorney, Counsel to Hoban Law Group, advised that she represents a good amount of the marijuana industry and "we've done" probably 70 plus applications and nothing has been rejected for purposes of someone not having the correct criminal history. She related that she has companies with up to 20 investors and wrangling up a two-week timeframe in order to obtain fingerprints and perform its renewal applications in the middle of summer is "kinda tough." She offered hope that the House Judiciary Standing Committee passes this piece of legislation because it would help the industry to move more fluidly. In echoing the previous speaker, she concurred with not treating these legitimate businesses so much like criminals wherein they must be checked every 12-months to see if anyone had gotten into any trouble. 1:34:21 PM REPRESENTATIVE KREISS-TOMKINS asked whether she would have an objection if the industry were treated the same as the alcohol industry for the purposes of checking criminality and fingerprint checks. In that regard, the Marijuana Control Board could require checks whenever it preferred, and all transfers would require checks, but no assumed recurring fingerprint requirement. MS. WELTZIN said she would not object other than as to the point of optics because the goal is to not encourage any federal intervention activity in the State of Alaska. In the event the fingerprint requirement was completely deleted, which is not exactly what Representative Kreiss-Tomkins asked, but making it discretionary could give a bit more leverage to the federal government to step in and advised that "you guys" are not being proactive in making sure these licensees do not have felonies. In the event a couple of examples of that actually took place, it would be "really negative on our ability" to keep this industry independent and completely state regulated, she explained. 1:35:41 PM REPRESENTATIVE KREISS-TOMKINS noted that she had made a good point which, in turn, brought into focus previous testimony. He asked her thoughts about making the requirement every ten years. MS. WELTZIN said that every ten years would be fine, and six years is fine, although, a lot could happen every ten years but she guessed she did not have too much of an opinion between six years and ten years. She opined that at the point a person enters into the market, they should have their fingerprints and background checks for the transfer, and that possibly every ten years is a good marker to reevaluate someone's criminal history and remain compliant. Possibly, she suggested, every year the person could attest through a written affidavit that they [had not been involved in criminal activity], and that might be a good way to keep the federal government from interfering with Alaska's market, she mused. 1:36:39 PM REPRESENTATIVE EASTMAN asked whether she would want those involved in the marijuana industry to be more frequently background checked than attorneys, or the same. MS. WELTZIN responded that attorneys "have way more lee-way," sometimes more than they should. They have a fiduciary duty to their clients, they are officers of the court, and attorneys should undergo a background check more often than currently. Attorneys certainly get into more trouble than the marijuana businesses, over all, she opined. CHAIR CLAMAN mused that some of the attorneys get into trouble by joining the legislature. 1:37:34 PM REPRESENTATIVE KOPP asked that, as a legal representative of licensees, are there any disqualifying misdemeanors that can prevent a licensee from being renewed or cause them to lose their license. [MS. WELTZIN asked for a few minutes to research the question.] 1:38:53 PM REPRESENTATIVE KOPP advised that the National Crime Information Center (NCIC) background checks locate felonies and not misdemeanors. Only felonies are uploaded into NCIC unless "we're doing something brand new." In the event there are disqualifying misdemeanors, there is a state-by-state check, but that is "very exhaustive and time intensive" and he asked whether the DPS person could respond. If, in fact, one of the purposes for the background check and finger printing was to identify all disqualifying offenses, he said that he did not think the standard NCIC background check "is doing it." MS. WELTZIN clarified that she thought the question was whether there are any disqualifying misdemeanors in the statute and answered that there are (audio difficulties) subsection (c), misdemeanor crimes involved in a controlled substance, violence against a person, (audio difficulties) or dishonesty (audio difficulties) within five years or (3) has (audio difficulties) two years before sending the application if convicted of a class A misdemeanor. Therefore, she commented, it appears that if the federal background checks do not pick up on these misdemeanors, it would be tracked by the state-by-state checks the previous witness had mentioned. CHAIR CLAMAN asked whether Mr. Lee could confirm that nothing has changed since Representative Kopp was involved in law enforcement. MR. LEE answered that Representative Kopp was basically correct, the national records do indicate if there is a record, that it can point to the state it originated. In order to do a full background check, a person would have to inquire of each state that the federal database reported it has a record of an individual. CHAIR CLAMAN surmised that the federal record would show another state's felony and if there was a misdemeanor in that state, it would not list what the misdemeanor was, it would just reflect the misdemeanor charge and then Alaska would have to follow up with that other state. MR. LEE advised that Chair Claman was correct, but it is through the National Communications System, there is a message transmission to pull up the digitize data records, and a person does not have to actually call that state. 1:41:31 PM REPRESENTATIVE EASTMAN asked whether that follow-up takes place automatically, or whether something else must take place in order to trigger that follow up. Under the state's current process for these licenses, if a person applies for a license in Alaska and 20-years ago they had a misdemeanor on their record in some other state, he asked whether the board would have access to what that misdemeanor was so it could rule that the misdemeanor was not disqualifying. MR. LEE answered that the full background check would inquire of the state the misdemeanor originated in to determine the charge and its disposition. 1:42:33 PM CHAIR CLAMAN, after ascertaining no one wished to testify, closed public testimony on CSHB 319. [HB 319 was held over.]