At 7 a.m. Tuesday with Alaska’s new marijuana law just hours old, the Alcoholic Beverage Control Board held a teleconference to address one of the big questions raised by the law. How should “in public” be defined? The board adopted an emergency regulation, and at 10:15 a.m. Lt. Gov. Byron Mallot certified the emergency rules.

“In public” now means “a place to which the public or a substantial group of persons has access and includes highways, transportation facilities, schools, places of amusement or business, parks, playgrounds, prisons, and hallways, lobbies, and other portions of apartment houses and hotels not constituting rooms or apartments designed  for actual residence.”

“What’s public?” is one of the questions raised by passage of Ballot Measure 2 in last November’s election. On Feb. 24, the effective date of the measure, personal cultivation, possession and consumption of marijuana became legal. The new law, Alaska Statute 17.38.040, says that “it is unlawful to consume marijuana in public,” with up to a $100 fine for violating that section.

The law also defines consumption as “the act of ingesting, inhaling or otherwise introducing marijuana into the human body.”

The ABC Board found an emergency existed to issue a temporary regulation. The emergency regulation expires June 23 unless made permanent by a law adopted by the state.

Defining “in public” is but the first of many new rules expected to be set over the next nine months as a commercial marijuana industry is born. Last week the Homer News looked at what happened on Feb. 24 with the section of AS 17.38 covering personal consumption. This week we look at what comes next as the ABC Board, the Alaska Legislature and local governments consider how to regulate cultivation, processing and sale of marijuana.

Q: How will commercial marijuana be regulated?

A: The Alaska Legislature can create a Marijuana Control Board to regulate commercial use. If that isn’t formed, commercial marijuana cultivation, processing and sales will be regulated by the Alcoholic Beverage Control Board. Senate Bill 60 was introduced this week to create a Marijuana Control Board, but in the meantime, the ABC Board is moving ahead on the regulation process. 

“This board doesn’t want that time to go to waste,” said Cynthia Franklin, director of the ABC Board.

Q: What will be regulated?

A: Regulations to be adopted include procedures for issuing registration to operate a marijuana establishment, application fees, qualifications, security requirements, labeling requirements to prevent sale to those under 21, health and safety regulations and advertising restrictions.

The new law says up to a $5,000 application fee can be charged for commercial marijuana facilities.

Q: What is the tax on marijuana?

A: The tax is $50 per ounce on top of whatever a business charges. It is an excise tax imposed on the sale or transfer of marijuana from a cultivation facility to a retail marijuana store. According to The Weed Blog, between 28 and 56 joints can be rolled from an ounce of marijuana. If an ounce has 50 joints, that’s a tax of $1 a joint. In comparison, according to the Alaska Department of Revenue, in Alaska the tax rate per tobacco cigarette is 10 cents. Like other retail sales, marijuana also would be subject to local sales taxes.

Q: What can boroughs and cities regulate?

A: Local governments such as the Kenai Peninsula Borough and the city of Homer can prohibit or regulate commercial growing, processing and selling of marijuana, and establish operating, registering and application fees for marijuana establishments.

Q:
Can local governments create their own regulatory authority?

A: Yes. Local governments may add additional rules consistent with the initiative such as zoning restrictions, size of operations and number of retail stores.

Q: What are local governments doing?

A: At Tuesday’s Kenai Peninsula Borough Assembly meeting, the assembly considered an ordinance prohibiting cultivation of marijuana in unincorporated areas of the borough. That ordinance failed (see story, page 1).

In Homer, interim City Manager Marvin Yoder said he’s asked the city attorney to write a memorandum about matters of local regulation the city might have to consider.

“There are several issues the city will have to get involved with,” Yoder said at Monday’s Homer City Council Meeting. He cited zoning as one such issue. Yoder also serves as a member of the ABC Board.

The initiative also allows local governments to step in and regulate commercial marijuana if the state board doesn’t adopt regulations within 15 months of the Feb. 24 enactment date; that is, May 24, 2016.

At the council meeting, Yoder noted that there is an advantage for creating a local regulatory board: Under the new law, if a city creates its own board, half of the registration application fee for commercial establishments goes to the local board. If regulations impose the $5,000 maximum, that could mean $2,500 to the city for each business.

Q: Does Ballot Measure 2 affect the medical marijuana law?

A: No. Alaska’s medical marijuana law does not change. Patients who have a condition like cancer, chronic pain, epilepsy, glaucoma, multiple sclerosis and nausea can still get a medical marijuana card. Medical marijuana patients can possess the same amount of usable and cultivated marijuana now legal for personal use. Caregivers of patients needing marijuana also can register to handle marijuana.

People with medical marijuana cards might be able to possess more marijuana, said Mike Smith, chief executive officer of The Healing Center, an Anchorage medical marijuana doctor’s office with an office also in Colorado. If a doctor prescribes more marijuana than allowed, “You have an affirmative defense why you may be over the plant limit or over the weight limit,” he said.

The ABC Board, however, says people with medical marijuana cards don’t receive any more protection or benefit beyond what the new law allows in general for personal marijuana use.

Since the medical marijuana law treats pot like medicine, it can’t be shared or given away. Alaska also does not have medical marijuana dispensaries so patients wanting marijuana would have to grow it themselves. Under the personal marijuana use with the new law, people could give marijuana to people who might use it for medical purposes.

Q: Is Homer destined to become a pot tourist destination?

A: Karen Zak, the new executive director of the Homer Chamber of Commerce and Visitor Center, said the chamber board of directors has not taken a stand on marijuana, nor was it discussed at the board’s most recent meeting. 

“I assume it will be discussed at the next meeting because then we’ll have more information,” said Zak.

In Colorado, a lot of the boom in marijuana sales happened in tourist areas like Vail and Aspen, said Smith of The Healing Center. Alaska might see a similar trend, he said.

“That’s where it’s going to be a huge windfall for Alaska,” Smith said. “It’s a huge bucket-list draw for people wanting to come to Alaska. They’ll gladly pay a 30-percent tax because they’re tourists.” 

Q: Are there any marijuana retailers organized?

Kachemak Cannabis Consultancy is organizing to help individuals and businesses, according to spokesperson Shane Monroe, who has more than two decades of experience at various levels of the cannabis industry in Alaska and Canada. 

On the individual side, beginning in March, Kachemak Cannabis Consultancy will offer classes providing basic knowledge about the marijuana plant’s life cycle, as well as the cultivation, harvesting and curing process.  

“(The classes) are not about how to build big grow rooms, maximizing yield or finances,” said Monroe. “They’re strictly about cultivation and include discussions about what you can do, what’s within your rights, giving information so people can be sure to stay within the bounds of the law.”

Classes will meet for two or three hours once a week for a period of about three months. The fee will be between $5 and $10 per class. 

“We’re not trying to make money. It’s mostly publicity and public education,” said Monroe.

On the business side, Kachemak Cannabis Consultancy will be available to work with people interested in developing grow operations. Monroe sees this as eventually being the main activity of the organization. 

“As with anything, there’s no reason for consultancy unless there’s enough complexity that there’s more than you can figure out on your own quickly,” he said.

Part of that complexity involves understanding federal tax requirements as they apply to the sale of what the federal government defines as an illegal drug.

Q:
What should people interested in going into the marijuana business do to prepare?

For now, until Alaska’s laws are finalized, Monroe is simply advising people to wait.

“Certainly don’t be in business. There’s no possibility of there being any legal money transactions with cannabis for at least 12 months from Feb. 24 because of nine months of rulemaking and three months of implementation,” said Monroe.

Others also are expressing that same note of caution, according to Monroe.

“The basic sentiment I’m hearing reflected throughout most of the community is that nobody wants to see anybody get busted or in trouble,” he said. “The only advice is to wait and keep yourself informed.”

Q: What about hemp? Is it legal yet?

A: No. Hemp is marijuana with a non or low-THC content grown for agricultural purposes like fiber. THC, or tetrahydrocannabinol, is the active ingredient in cannabis. The new law doesn’t cover hemp as an agriculatural product, Franklin of the ABC Board said. In theory, marijuana could be cultivated and processed for agricultural purposes, but it would still be taxed at the $50 an ounce excise price.

Lindianne Sarno of the Kachemak Bay Cannabis Coalition sees the changing laws as an opportunity to grow hemp. Hemp is grown for its seeds, oil and fiber, products Sarno says have multiple beneficial uses.

“The seeds are really good food and you can get oil from it,” said Sarno. “That’s what I want to do, but we’re all waiting on the legislation. All we can do is say this is our intent, but we don’t have the facts yet about how to get a business started.”

Q: When will commercial marijuana regulations take effect?

A: The ABC Board or the Marijuana Board, if created, has until Nov. 24 to adopt regulations. If adopted, the regulations go to the governor’s office and Department of Law for review. By Feb. 24, 2016, the board must start accepting business applications and act within 90 days. March 26, 2016, is the tentative effective date of regulations, and by May 24, 2016, initial marijuana industry licenses are expected to be awarded.

McKibben Jackinsky can be reached at mckibben.jackinsky@homernews.com. Michael Armstrong can be reached at michael.armstrong@homernews.com.