Marijuana board issues first retail, manufacturing licenses

By DJ Summers

Morris news Service – Alaska

Retail stores, cupcakes, caramels, cookies and candies replaced enforcement talks at the Sept. 8 meeting of the Marijuana Control Board.

The meeting marked the first issuance of both manufacturing and retail licenses, moving the industry to the final phases before growers have an outlet for their cannabis. Held up for most of the day by manufacturing license discussions, retail stores breezed through by the end of the meeting.

The following retail licenses have been approved: Frozen Budz in Fairbanks, Enlighten Alaska in Anchorage, Arctic Herbery in Anchorage, Rainforest Farms LLC in Juneau, Raspberry Roots in Anchorage, Herbal Cache in Girdwood, Pakalolo Supply Co. in Fairbanks, Remedy Shoppe in Skagway, The Frost Farms in Anchorage, Herbal Outfitters LLC in Valdez, and Weed Dudes in Sitka.

Apart from the normal objections from the Anchorage municipality, Nick Miller, the board’s newest member, had to recuse himself and switch seats to face his fellow board members for his retail outlet, Alaska Buds LLC in Anchorage. The board approved.

The Frost Farms in Anchorage initially had trouble when it was discovered they had posted a public notice on a single light pole near their Dimond Boulevard location in Anchorage, rather than on a post office bulletin board or similar public area. Regulations specify such notices must be “conspicuous.” Complaints were received that the notice was not actually noticeable. The owners explained that there were no public notice spots available in the area, and the license was approved with the others following a clarification of intent from the board.

Generic vs. Branded Edibles

Most of the day’s conversation revolved around products.

The board took a painstaking look at what each manufacturing facilitiy planned to offer. For every product, the board asked for its type, how much THC it contains, what kind of packing it requires, how many serving sizes, how the consumer will be alerted to serving sizes and how closely the product resembles commercial product appearance.

Edible cannabis products in particular is a major sticking point for states with legalized recreational marijuana. Colorado, Washington and Oregon each have myriad regulations, for example. The goal is to keep edibles and other cannabis derivatives away from children and away from consumers who might confuse a marijuana cookie for a Milano.

“It’s good to discuss these things just so we have a baseline,” said board chairman Peter Mlynarik.

Frozen Budz, a manufacturing facility as well as a retail outlet, went through a half hour’s worth of questioning to determine if its entire product line met regulatory muster. Owner Destiny Neade was asked to explain how products like gummies, brownies, and caramels will be packaged and sold to make them distinct from commercial products.

During one exchange, the board argued with furrowed brows and clasped hands whether or not to allow Neade to make cannabis Rice Krispies.

“These two are more like home products,” said board member Loren Jones. “It’s generally a product that’s produced at home, not generally commercially available. Are we only talking about branded products?”

Harriet Milks, assistant attorney general and the board’s legal counsel, clarified. “The point of this is that there’s not confusion in the market place,” she said. “It’s a call you need to make.”

Brandon Emmet agreed with Jones that “these crispy treats aren’t widely commercially available.”

Peter Mlynarik, Chief of Police in Soldotna and the board’s chair, did have concerns about how Neade would make the serving sizes for the brightly colored crispy treats clear for the consumer.

“My concern on this is it’s brightly colored, it’s attractive,” he said. “When you put these demarcations on these colorful patterns…will it be easy to see?”

Neade affirmed that indeed the crispy treats would be clearly marked with indentations for the legal 5-milligram serving size, and the board voted unanimously to approve the product type.

The board repeated the conversation over peanut brittle. Some manufacturing applications were even cut short so the board could pass a handful of retail licenses.

Justin Roland from manufacturing company Einstein Labs only had 16 of his planned 26 products reviewed. He said the board’s thoroughness impressed him, and he would rather get to retail licenses anyway — without them, he has no place to sell. “I would rather cut my product list down and get retail stores up and actually ready to get my products,” said Roland.

License ownership and management

A hiccup occurred when Top Hat Concentrates came before the board with an application for a manufacturing license. Top Hat Concentrates applied for the license, but notified the board in an email before the meeting that the company itself would be managed by a separate entity, Top Hat LLC.

The owners of both the concentrates company and the LLC happen to be the same, but Franklin said this type of management structure is subject to heavy abuse in the alcohol industry. Though the board grants ownership to the concentration license and must be notified of its ownership changes, the LLC would be beyond its authority. By managing under a separate LLC, Franklin fears the legal accountability of the operation could shift over time and potentially even allow for Outside actors to manage Alaska marijuana businesses — which regulations expressly forbid.

“This is a huge problem, to have someone other than the licensee managing the license,” said Franklin. “The board is setting a precedent in allowing a license to have a different entity managing it. This is a huge turning point. To this point, we have required…that the people behind these entities actually operate these licenses themselves.”

Milks elaborated after a short break. “When the board approves an entity, it’s that entity that’s being licensed,” she said. “Whatever goes on behind the scenes…is quite another matter. It’s something the board will need to address sooner rather than later. What happens…you have groups managing licensed properties and the board doesn’t know what they’re doing. It has very serious public safety implications.”

The board eventually approved the concentration license with a condition. Any entity managing the license must also have a license and be under control of the management of the Marijuana Control Board. The LLC must be under identical ownership of the license being managed.

DJ Summers can be reached at daniel.summers@alaskajournal.com