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By Dan Rudy 

Regulatory czar explains pot rules to Wrangell

 


With a lot to learn about the state’s new marijuana regulations, residents met at the Nolan Center on Tuesday to hear what some of these entail from Cynthia Franklin, director of the Alcohol & Marijuana Control Office (AMCO).

Because of a travel freeze at the state level, the city covered the costs for Franklin to come down.

“I figured it would be good to have the person who knows the most to come down and explain it,” explained City Clerk Kim Lane, who invited her.

Wrangell’s council had not formally formed a committee to approach the new legislation, and Lane’s office had already been receiving some interest from locals in opening cannabis-related commercial establishments.

Delivering a PowerPoint presentation, Franklin explained her office is a part of the Department of Commerce. Where pot is concerned, AMCO follows the dictates of the Marijuana Control Board (MCB), which is itself made up of five volunteers selected to represent the interests of public safety, health, rural residents, the industry and the general public. AMCO currently has 15 members on staff, including administrators and eight enforcement officials.

Establishing regulations was initiated by the Alcoholic Beverage Control Board in April 2015, before the separate MCB was established in July. Early in the process, Franklin was of the mind that marijuana regulation should have its own board, separate from that overseeing alcohol. The ABC Board already had enough on its plate with other issues, and the task of developing an industry from scratch needed considerable attention.

“The Department of Law set us kind of a lofty goal,” Franklin recounted, taking the language of Proposition 2 passed by voters in 2014 and turning into code. After a lengthy process that included multiple public comment periods resulting in numerous amendments, the board adopted its marijuana regulations package last November.

The new regulations added to Alaska’s Title 17 were divided up into nine articles, roughly covering licensing, fees, operations, enforcement and local options. No criminal enforcement was included in these sections, with marijuana instead remaining an illegal, controlled substance under Title 11. Initial moves by the Legislature to address the discrepancy were abandoned, and the drug remains a “carve-out legality.”

When preparing regulations for the new industry, members of the AMCO and MCB looked to other states’ experiences in drafting laws of their own. Washington and Colorado both passed ballot measures legalizing cannabis in 2012, and have since taken on different approaches to the drug’s regulation.

Among the practices Franklin liked was the way retail was handled. Visiting a dispensary in Colorado, she found identification was checked at the front and stock was kept out of reach from customers. The shop had a modern, modular feel Franklin said reminded her of “an Apple Store.” Patrons were given handheld scanners to log purchases, bringing these to the back counter, where staff filled orders. Because of limitations marijuana businesses face with banking, all transactions were cash-only.

Stores in Colorado and Washington have both found innovative retailing ideas to comfortably comply with tight regulations, though both states have had to adapt to the unfamiliar product. Transaction limitations for out-of-state visitors were established in both states to combat “smurfing,” where people from a neighboring state would purchase what they could before recrossing the border to resell. Franklin noted Alaska would not have the same problems there due to its geography.

In adopting its regulations, Alaska has attempted to avoid some of its sister states’ setbacks, as well. For example, Franklin pointed out the state will not restrict the number of licenses available for pot-related businesses, deferring instead to the wishes of local governments. Applications must be noticed and after being received by the MCB are returned to local governments for review. These have a right to protest or approve a license within 60 days of receipt, and their decisions are in turn reviewed by the MCB before final action.

Part of the reasoning behind this is to forego problems faced by the ABCB, where the secondary market value of limited liquor licenses has made it unnecessarily difficult to regulate businesses.

“What it means is tremendous pressure is on the board not to let anybody lose their license,” Franklin said.

However, the local government’s right to protest an application for a marijuana-related license might make it more difficult for would-be entrepreneurs and growers. In most cases, Franklin said the MCB will uphold the protest unless it’s deemed to be capricious, but especially in zoning issues.

“The protest is a boulder,” she admitted. Franklin added that the best way to avoid this is for prospective business owners to work more closely with their local councils and neighbors.

A concern from higher up the authoritative chain is the federal government’s attitude to pot, which is still considered a controlled substance. In particular, residents at the meeting wondered whether it would be illegal for an island community like Wrangell to bring in or send out marijuana-based products when surrounded by federally-managed waters and skies.

“Yes,” Franklin replied, “But so is growing! Everything about this is illegal federally, so how can we do it?”

A memorandum issued by U.S. Deputy Attorney General James Cole in 2013 laid out the current administration’s policy regarding recreational marijuana legalization. Franklin explained the Cole memo outlined eight problem areas where federal legal intervention may occur, but which otherwise gave its consent for retailers and distributors to operate within robust state guidelines. The memo serves as a benchmark against which state AMCO actions are measured, and allows for transport from licensee to licensee within state boundaries.

While there are no guarantees the Postal Service or Coast Guard may not take action, for example, she said the guidelines outlined in the memo were issued by the U.S. Attorney’s Office, which handles federal cases.

“Ultimately in the end they have to find a prosecutor,” Franklin concluded. “That’s about all we can do. It’s risky business.”

On Feb. 24 the MCB began receiving initial applications, of which it now has 113. The board has not begun to assess these yet as fees have not been paid. The first completed applications are expected to be sent round to local governments later this month, and by May 23 the state’s seed-to-sale inventory tracking software is expected to be implemented.

By June the first licenses are expected to be approved for cultivation facilities and testing facilities, both of which in essence need to be established before licensed retailers can begin acquiring product. But by September or October of this year, Franklin predicted the first retailers should be opening shop in Alaska.

“At first it’s going to seem like they’re everywhere,” she said. But the market can be expected to self-adjust, and as the novelty wears off and other states start following suit Franklin expressed confidence marijuana will become more normal. In the meantime, the state would be treading carefully to ensure the transition is a smooth one.

“The great news is this is not a race,” she said of the pace.

Further facts, board updates and a full copy of the adopted regulations can be found at AMCO’s site, http://www.commerce.alaska.gov/web/amco/.

 

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