The Marijuana Control Board enacted a policy decision April 27 that will hurry along the licensing process that has been slowed since the state started taking applications Feb. 24.
The board voted 4-1 to allow its Executive Director Cynthia Franklin to declare license applications complete before state and federal fingerprint background checks are completed.
Only Loren Jones opposed the policy decision of the five-member board.
Currently, Alcohol and Marijuana Control Office staff will not declare a license application “complete” unless it sends applicant fingerprints to both the Alaska Department of Public Safety and the Federal Bureau of Investigations for criminal background checks. Gov. Bill Walker is expected to sign a bill allowing this authority, though a legislative legal opinion said it wasn’t necessary in the first place.
Without a complete state status, some local governments cannot begin their own local licensing process.
“Complete” status has been an ethereal concept, and has changed in board conversations for months. Board Chair Bruce Schulte said the shifting concept of a complete license needed to be nailed down so both localities and applicants can move forward with their own plans.
“The definition is highly subjective,” Schulte said. “I don’t think we’ve been doing the public a service by changing it every week and every month. We have a choice to make.”
The state has a 90-day window to issue licenses once it has declared them complete.
The completed license status is also necessary for local governments to start their own licensing process, which takes additional time beyond the 90-day period required for the state. By deeming licenses a complete status, the board allows applicants to move into the municipal licensing process.
So far, Franklin said eight licenses of more than 270 statewide applications are currently in a stage where lack of criminal background checks keep them from being declared complete. These licenses will now move into complete status.
Board members voiced concerns that the licensing timeline has strayed far from the original intent expressed in Ballot Measure 2, which voters approved to legalize recreational marijuana in 2014.
To salvage the statutory intent of the 90-day completion-to-issuance deadline — operable licenses by the summer of 2016 — Schulte said the board should make every attempt to hurry the process along.
“Our schedule is blown,” he said. “We’re not going to make the deadline. I think it’s incumbent on this board to do everything we possibly can to remedy that situation.”
The longer the industry takes to be viable, the longer marijuana license applicants have to sit on their respective building leases without an income stream. Brandon Emmett, an industry and public representative, said the board exposes itself to more and more lawsuits for violating statutory intent the longer it takes to issue licenses.
“I think it’s important we continue to process these applications,” said Emmett. “I think we’re going to see the public become increasingly more frustrated the longer and longer this gets drawn out.”
Federal checks
Marijuana license applications were in holding at the state level. Local licenses will require even more time after state licenses are complete, yet again pushing Anchorage’s first legal marijuana sale back.
Ballot Measure 2 set May 24 for the industry’s state license approval deadline, or 90 days after applications opened on Feb. 24. Regulators said June 9 is the new target, but in Anchorage, the process will take additional time. Like most municipalities, Anchorage requires a special land use permit and a local license in addition to the state license.
Franklin was holding state applications until the board can request criminal background checks through the Federal Bureau of Investigation.
The state doesn’t have the authority to request such background checks, however, until the Legislature changes statutory language to allow it.
Senate Bill 165, which revises alcohol laws and also adds the authority to request background checks, passed in the Senate on April 22 and is awaiting transmittal to Walker.
Most in the marijuana industry agree that federal checks are a good idea, but their necessity has been questioned. Regardless of whether statutory language is changed, the Division of Legal and Research Services for the state’s Legislative Affairs Agency said licenses can move forward without it.
A legislative legal opinion requested by Rep. Gabrielle LeDoux, R-Anchorage, says the Marijuana Control Board doesn’t require federal background checks.
“Under current law,” reads the opinion, “there is no fingerprint requirement for registration or licensure as a marijuana establishment nor is there a requirement that the board do an FBI or similar criminal background check.”
Until the board’s April 27 meeting, Franklin had planned to continue holding licenses until Walker signs SB 165.
Under Alaska law, bills don’t take effect until the 90th day after a governor’s signature. Because Franklin would not be able to declare a license complete until then, municipal licenses in Anchorage would not begin until July or August.
Anchorage
For Anchorage and other municipalities, the policy decision will grease the licensing process.
Erika McConnell works in the Anchorage Office of Economic and Community Development as special assistant to director Chris Schutte. Informally, McConnell works as a kind of marijuana whip, making sure the city’s offices work in concert with marijuana.
McConnell said the municipal licensing process will take additional time beyond the state timeline.
“Assuming they (the state) have all their ducks in a row, we’re looking at a process that will take approximately two months,” said McConnell.
McConnell clarified that the municipality doesn’t need the actual state license to start its own process. Rather, it needs proof that the state license application is complete.
The municipality will begin processing “as soon as the governor signs SB 165 and the AMCO can start doing background checks, and we can tell that the application is complete,” she said.
Once it has proof of completion, the application is routed to agency reviewers and community councils, and eventually scheduled for an Assembly hearing.
McConnell said the municipality is trying to work concurrently with the state process regarding cultivation and testing facility licenses. The state has decided to process testing and cultivation applications first, and Anchorage will naturally have these as first entrants to city reviews.
All marijuana products sold in retail stores require testing prior to sale, and all marijuana plants require state tracking from seed to sale. In order for retail establishments to have legal product, these licenses must come out first.
For the rest of the state’s marijuana applicants, this presents a bottleneck. Every cannabis product must be tested by a licensed facility, and only three such licenses have been submitted.
Two are in Anchorage. The other is in the unincorporated Mat-Su Borough, which will vote on a commercial cannabis moratorium on May 3 leading up to an October ballot initiative that would ban commercial marijuana in the borough.
As with the state, city officials have limited capacity to deal with what will be an application flood.
The Alaska Marijuana Control Office has just under a dozen full time license review staff. McConnell said she expects 10-20 testing and cultivation licenses to come into municipal review in a burst once the state renews processing.
As of April 12, hopeful cannabis entrepreneurs have submitted 65 licenses with proposed physical addresses in Anchorage and two in Girdwood.
Anchorage’s license applications don’t veer as heavily in favor of cultivation as the rest of the state. 24 are for standard cultivation facilities, and four for limited cultivation facilities, which have an upward limit of 500 square feet. 29 license applications are for retail stores.
DJ Summers is a reporter for the Alaska Journal of Commerce. He can be reached at daniel.summers@alaskajournal.com.
