HB 123-ESTABLISH MARIJUANA CONTROL BOARD  3:17:17 PM CHAIR OLSON announced that the first order of business would be HOUSE BILL NO. 123, "An Act establishing the Marijuana Control Board; relating to the powers and duties of the Marijuana Control Board; relating to the appointment, removal, and duties of the director of the Marijuana Control Board; relating to the Alcoholic Beverage Control Board; and providing for an effective date." 3:18:30 PM MICAELA FOWLER, Legislative Liaison, Department of Commerce, Community & Economic Development (DCCED), on behalf of the administration, stated that HB 123 would establish a Marijuana Control Board (MCB) that would be parallel to the Alcoholic Beverage Control Board (ABC Board) served by the same agency staff and executive director. She said that Section 1 covers the appointment and removal of the director, ensuring that both the ABC Board and MCB have authority over the director. There has been some discussion on what would happen if one board voted to remove a director, since the appointee is appointed by the Governor, but cannot be removed by the governor except under extenuating circumstances. 3:19:47 PM CHAIR OLSON suggested that the Alaska Public Office Commission (APOC) was an example of another board with similar provisions. 3:19:52 PM MS. FOWLER offered that the proposed director for the Marijuana Control Board (MCB) might be addressed in a committee substitute since the issue of the director has not yet been determined. She provided a section-by-section analysis of the bill. Section 2 would establish the Marijuana Control Board (MCB) with designated seats not in the Alcoholic Beverage Control Board (ABC Board), but the Title 4 [AS 04, Alcoholic Beverages] rewrite has the same reflections of seats, including adding seats for public safety and public health representatives. She pointed out that currently the ABC Board has a rural seat, but not a public health or public safety representative, which is important especially in relation to marijuana since it is not a substance the state currently regulates, nor does the state have the same federal guidelines as it does with regulation of alcohol since marijuana is still considered illegal under federal law. Section 3 would establish the terms of office, including powers, duties of the board, and enforcement powers. She said the Alcoholic Beverage Control Board (ABC Board) is a quasi-judicial agency, and while that language is not included in this version of the bill, it is the department's intent that the Marijuana Control Board (MCB) would also be a quasi-judicial agency and the enforcement staff in the Alcoholic Beverage Control Board (ABC Board) will have enforcement and peace officer responsibilities. MS. FOWLER related that Section 4 would amend the initiative language to refer to the Marijuana Control Board (MCB). Section 6 would add the Marijuana Control Board (MCB) to the list of boards served by the DCCED. Section 8 would provide transition language. 3:21:50 PM REPRESENTATIVE COLVER referred to page 3 of HB 123 to board member representation and asked for further clarification on the number of designated seats. MS. FOWLER answered that the board would be comprised of six members, including representatives of the general public, public safety, public health, rural, and up to two members with industry experience, and the executive director, who is also included even though the executive director would not be a voting member of the board. Thus it would be a five-member board with the sixth member being the executive director. CHAIR OLSON offered that to qualify for the last two seats the industry member would either be subject to felonies or not living in Alaska, so finding the appropriate language for industry membership is something the committee is working through. 3:23:15 PM REPRESENTATIVE COLVER related his understanding that the Marijuana Control Board (MCB) would be a six-member board with an ex-officio member. MS. FOWLER replied that it would be five members and the executive director, who is not considered an ex-officio member. She explained that the board composition was a hard fought compromise that came from the Title 4 revisions, since it was felt that the executive director has a fair amount of power in the ABC Board structure. The ABC Board meets five times a year, but the work is carried out by the executive director the remaining time, so for that reason, the Title 4 group believed that the background of the executive director should be taken into consideration when determining the other seats on the board. 3:24:19 PM REPRESENTATIVE COLVER asked whether the positions could be designated as rural and public health and also tighten up the remaining interests. He suggested that besides the designated seat, only one seat is designated for a public member. CHAIR OLSON anticipated that a proposed committee substitute will be forthcoming and it will address board composition more fully. 3:25:19 PM REPRESENTATIVE LEDOUX asked to discuss the fiscal note. She wondered if the Marijuana Control Board (MCB) wasn't created, but it was left to the Alcoholic Beverage Control Board (ABC Board), whether the ABC Board incur most of the expenses. She assumed that the ABC Board would likely need additional staff. MS. FOWLER stated that the bill initially had a zero fiscal note and the Department of Commerce, Community & Economic Development asked for funding in its base budget request. Whether the function falls to the Alcoholic Beverage Control Board (ABC Board) or to the Marijuana Control Board (MCB), the department will need additional staff to implement the program. She agreed the department will need the additional staff members and the same costs will be incurred, regardless of the board structure. 3:26:50 PM REPRESENTATIVE LEDOUX asked whether the costs would be identical or if additional costs will be incurred. MS. FOWLER answered that it would be a "wash." 3:27:10 PM REPRESENTATIVE COLVER asked how the fee structure will offset the costs and whether it would be by regulation or statute. MS. FOWLER answered that it would be done by regulation. 3:27:41 PM REPRESENTATIVE KITO related his understanding that the Title 4 rewrite will be introduced as a bill. He asked whether changes to the board composition for the Marijuana Control Board (MCB) will be necessary to conform to any changes the legislature may make to the Alcoholic Beverage Control Board (ABC Board) composition. MS. FOWLER answered that nothing requires the two boards to match, although the Department of Commerce, Community & Economic Development (DCCED) does see some benefit to the boards matching, but it would not necessarily mean revisiting the Marijuana Control Board (MCB) composition. She agreed that the department anticipates that a Title 4 rewrite will come before the legislature. 3:28:49 PM CHAIR OLSON asked to reopen public testimony on HB 123. 3:29:26 PM WES SCHACHT, Member, Kachemak Cannabis Coalition, offered his support for a separate board. Even though the substances are somewhat related, they are different in numerous ways, he said. 3:30:48 PM The committee took an at-ease from 3:30 p.m. to 3:32 p.m. 3:32:04 PM MIKE TONGA wondered why the legislature was putting together a [board]. He said he recently watched the [Senate] Finance Committee take up several amendments that related to "recreational stores." His community would be required to "opt in" to have a recreational store. He expressed concern that the first stores would not come on line until July 2016, but it would come up at the earliest in the August primary election. Given the 90 days it would take to certify an election, a store could not open until mid-November. CHAIR OLSON pointed out that he is testifying on a different bill and the bill before the committee today will set up a framework for the Marijuana Control Board (MCB), which does not have anything to do with the bill that was taken up by the Senate Finance Committee. He suggested that Mr. Tonga submit his comments in writing. 3:34:21 PM CHAIR OLSON, after first determining no one wished to testify, closed public testimony on HB 123. [HB 123 was held over.] 3:34:26 PM The committee took an at-ease from 3:34 p.m. to 3:35 p.m.