Seeking route for pot clubs, marijuana board approves nation’s first cafes

The Alaska Marijuana Control Board is giving tourists a place to light up (or chow down) once cannabis sales begin next year.

On Friday, the board voted 3-2 to allow marijuana buyers to consume marijuana products in the business that sells them. Combined with other measures approved Friday, the board’s action effectively makes Alaska the first state in the nation to legalize Amsterdam-style marijuana cafes.

Friday’s vote answers the complaints of Alaskans who contended that the state’s ban on marijuana consumption “in public” leaves visitors (and Alaskans whose rental contracts prohibit smoking) no place to consume marijuana.

Many of the complainants had asked for the board to approve marijuana clubs, private establishments that would allow the consumption of marijuana bought elsewhere.

“We’ve gotten an overwhelming amount of public feedback on this issue,” said board chairman Bruce Schulte. “This is an attempt to address this outstanding problem.”

The problem facing the board was that it lacks the statutory authority to authorize clubs.

“The reason for this is to meet the projected tourist trade,” said board member Mark Springer. “I think it’s going to offer an opportunity for some businesses to be creative in their business planning, especially to go after some of the tourist market.”

The 3-2 vote Friday allows the state to create a “license endorsement,” a special permission granted to license holders, that allows them to set aside a portion of their store where marijuana may be consumed.

The details of the proposal have yet to be worked out, and it may take several months to do so, if past actions are a guide.

“This doesn’t create the entire picture. It is simply a placeholder,” said Cynthia Franklin, director of the marijuana board.

The in-store location would not be considered “in public,” based upon a revision to the definition of “public.” That revision was approved by the board in a separate action and is important because state law prohibits public consumption of marijuana.

Board member Loren Jones, also a member of the City and Borough of Juneau Assembly, said that in Juneau’s case, this measure would allow indoor consumption of edibles, but it wouldn’t allow indoor marijuana smoking, which is prohibited under the CBJ’s antismoking rules.

“If an establishment in my community wanted to allow consumables other than smoking, maybe the community wouldn’t protest,” he said. “But if the applicant wanted to allow a place for persons to smoke their product … then they would be in violation.”

In another vote taken Friday morning, the board allowed marijuana licensees to sell non-marijuana products, including food that does not include psychoactive components.

Washington, Oregon and Colorado, which have begun recreational marijuana sales, do not allow licensees to sell non-marijuana products. The closest comparison to Alaska’s new system are the marijuana cafes that cater to tourists in Amsterdam, which has become a destination for marijuana enthusiasts.

Dosage limits modified

There will be no cap on the potency of marijuana products, the board decided in a 3-2 vote, but there will be a limit on serving sizes.

THC is the most common psychoactive ingredient in marijuana, and state staff had proposed that marijuana products be capped at 76 percent THC. Such a limit would have been similar to the state’s 151-proof limit for alcohol.

That cap was thrown out by the board, which drew applause from the audience after its action.

The board also voted 4-1, with Jones the sole vote against, to limit marijuana transactions to the amount of THC involved. The board said a buyer will be limited to 5,600 milligrams of THC in a single purchase. That purchase might include drinkable, edible or smokable products, and all will be required to be labeled with the total estimated amount of THC within.

The 5,600-milligram figure is equivalent to one ounce of high-grade marijuana flower with 20 percent THC potency. Ballot Measure 2, passed by voters, permits possession of up to 1 ounce of marijuana.

A measure to increase the serving size of edible marijuana products failed 2-3. Board member Peter Mlynarik said edible products need to be considered with care, because “that’s the kind of stuff kids pick up.”

The limit on a single serving remains 5 milligrams of THC, and there is a limit of 50 milligrams (10 servings) on an edible package.

No Outside investment

The board also turned down an amendment that would have allowed outside investors to own up to one quarter of Alaska marijuana businesses. The amendment, offered by Schulte, was offered in response to Alaskans who requested the board allow investors from Outside.

The board had been considering (and later approved) regulations that require all marijuana business partners to be Alaska residents.

Assistant Attorney General Harriet Milks told board members that allowing Outside investment would prevent security problems, since the state can’t reliably conduct criminal background checks on investors.

“When we get fingerprints for marijuana applicants, we cannot get a national criminal check,” she said.

Ballot Measure 2 called for “legitimate, taxpaying business people, and not criminal actors” to run Alaska’s marijuana industry, and under Milks’ analysis, because the state can’t conduct background checks, it can’t allow both Outside investors and stay true to Ballot Measure 2.

The amendment failed 2-3.

The board later voted 3-2 to set the definition of residency as anyone registered to vote in Alaska, which alarmed Franklin. She cautioned that staff of the marijuana control board do not have the ability to verify voter registrations in all 50 states. She and others cautioned that the residency definition could be a loophole for unscruplulous investors.

Possession convictions will nix licenses

In addition to turning down Outside investment, the board also limited the number of Alaskans who can get involved in the industry. Anyone found guilty of “a misdemeanor crime involving controlled substances” cannot apply for a license within five years of the conviction.

The board had already accepted regulations that forbid those with felony convictions from applying for licenses, and on Friday it approved a regulation calling for the suspension or revocation of any license held by someone later convicted of a felony.

The suggestion, brought by Mlynarik, was opposed by Schulte and fellow board member Brandon Emmett.

As Emmett explained, that controlled substance exclusion would prevent anyone convicted of marijuana possession after 2010 from applying for a license.

“Their only crime was being caught with a plant that was then illegal,” he said.

The ban passed, 3-2.

T-shirts, hats and label wear

Marijuana businesses may sell and give away branded merchandise, the board decided in a 3-2 vote.

“If they have a super-cool logo they spent thousands of dollars on, let’s let them put it on a hat,” Schulte said in proposing the move.

Regulations proposed by state staff had prohibited the distribution of branded merchandise to promote business, but board members differed, saying the profusion of marijuana-related clothing is already so prevalent as to make prohibition futile.

“It’s not Joe Camel advertising,” Springer said in response to concerns that branded merchandise is targeted at kids not able to legally buy marijuana.

Jones, one of two voting against the proposal, said nothing prohibited a marijuana business from getting around the restriction by starting a second business specifically to market branded products, and he didn’t see a need for the prohibition to go away.

Testing alternatives

One of the biggest structural issues remaining in Alaska’s marijuana industry is the issue of testing. Under the state’s system, all marijuana is supposed to be tested for fungus, mold or chemical contaminants before sale. Unfortunately for those seeking to open businesses away from the Alaska road system, federal laws prohibit the transportation of marijuana by boat or plane.

In a 3-2 vote, the marijuana board said license applicants can “propose alternative means of testing” when “geographic location and transportation locations” make it impossible to ship marijuana to a testing facility.

Jones and Mlynarik cast the votes against.

What comes next?

At 4:45 p.m., the marijuana board voted unanimously to approve its hundreds of pages of regulations as amended.

“I lament that we missed our adjournment time of 4:20, however, I think we are done with business,” Schulte said.

The approved regulations now go to the Alaska Department of Law for legal vetting and will undergo rounds of review to ensure they are legal. The regulations will then go to the office of the lieutenant governor, who will certify them effective.

Those actions are expected to be complete before mid-February, when Ballot Measure 2 requires the marijuana control board to begin accepting license applications.

The first licenses must be issued in mid-May, and given a 90-day cultivation cycle, the first commercial marijuana stores could be up and running by August.

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