Last week Wrangell’s Planning and Zoning Commission approved a conditional use permit for a cannabis retail and cultivation facility.
Happy Cannabis will be a small business just behind the Diamond C Cafe on Front Street. Cafe owner Kelsey Martinsen began the process of applying for the necessary permitting back in March, triggering a months-long process of reevaluating and updating the city’s zoning ordinances to reflect the drug’s newfound legalization, approved by Alaska voters in 2014 and taking effect this year.
The state’s legalization process gave municipalities considerable weight in deciding how and if cannabis-related businesses would be allowed, and Martinsen’s plan for a growing, processing and retail center did not align with Wrangell’s commercial zoning parameters at the time. P&Z members worked with city staff to decide what would and would not work for the town.
They decided licensed operations for commercial retail, cultivation, testing and processing of marijuana would be barred from single or multiple family residential zones, with additional limitations placed on cultivation and processing. All applications for permits in the city would be subject to conditional use, thereby bringing proposals before P&Z and a public hearing.
Martinsen has two applications currently under review by the Marijuana Control Board, for retail and cultivation. Both cost him $12,000 to file. He also intends to apply for a license to manufacture concentrated tetrahydrocannabinol – THC, the psychoactive compound of cannabis – in about four months time, once his stock of plants are more mature.
Elsewhere, an application for limited cultivation has already been completed by Southeast Moog Droog LLC in Petersburg, with a potential retailer beginning the application process. Around the state 65 licenses have been issued and about 32 marijuana-related establishments have begun operation, a number Alcohol and Marijuana Control Office director Cynthia Franklin is expecting to rise shortly.
“Everyone is really shooting to get open by the holidays, particularly the retail stores,” she explained. She predicted between 45 and 50 stores to be open by Christmas, and double the current number by the start of spring. Many of these latest will crop up around the Anchorage area as entrepreneurs navigate the city’s layers of regulation.
“It’s happening, places are opening and making money,” Franklin said.
At the MCB’s meeting last week, it indicated revenue from the drug statewide was up past $750,000 and climbing. As the industry better establishes itself, a share of that will return to the state in the form of taxes. Franklin said her office had recently reaped its first $10,000 in taxes earlier this month.
So far she believes the roll-out of the state’s monitoring program – which tracks plants electronically from “seed to sale” – has been going smoothly. On the regulatory end, AMCO is working to reduce the number of applicants idling on the state’s listing.
“We’re approaching 500 applications in our database. A lot of those people have not taken the steps to move beyond just getting the information in the database,” Franklin noted. Often, applicants have not taken the steps needed to notify the public, obtain certifications of compliance, or pay filing fees. “They’re not real to us. If they haven’t paid us any money we’re not looking at their stuff.”
Letters giving them 90 days to finish up their applications or be booted out of the system are being issued. Despite this culling, a freeze on new hires due to state budgetary cutbacks has contributed to a glut in applications to process during the rollout.
“We are perennially understaffed,” Franklin said. “It comes from the best of intentions, but it has a disproportionate effect on us. We were small to start with.”
The fledgling office had expected to have five additional staff added in the Fiscal Year 2018 budget, but the addition was ultimately turned down. The problem has led to longer turnaround times for processing, and could have wider impacts on the state program.
“The bubble that our licensing team is currently experiencing – where the line is getting longer and longer for them to look at the license because everybody is getting started at the same time – that bubble will move over to enforcement,” Franklin added.
The program began with eight enforcement agents – with five in Anchorage, two in Fairbanks and one posted in Juneau – meant to oversee compliance around the state. One has since retired, and finding a qualified replacement has been difficult. Their job is further complicated by having to work on alcohol licensing oversight in addition to marijuana.
“A good day in our office is when no one cries,” she commented.
Still, AMCO and the MCB continue their task, ironing out policies as the new program proceeds. Six regulation changes have lately been brought up for public comment, three recommended by staff themselves. In one instance, Franklin noted a “Catch 22” situation with the state Department of Environmental Conservation, where cultivators cannot apply to AMCO without its certification – which they can’t obtain without an AMCO license.
Another upcoming hurdle is the impending change of presidential administrations. President-elect Donald Trump has named as his prospective attorney general Alabama Sen. Jeff Sessions, a politician with a long track record of opposition to cannabis. The recent legalization effort on the parts of Alaska and other states are bolstered by the tolerance of the Department of Justice, as per a memorandum issued by U.S. Deputy
Attorney General James Cole in 2013, something which
could be reversed under new leadership.
When visiting Wrangell in February, Franklin explained the Cole memo had outlined eight specific areas where federal legal intervention may occur, but beyond which the department would consent to retailers and distributors so long as they operate within robust state guidelines. The memo serves as a legal benchmark against which AMCO’s policies are measured, and enables transport from licensee to licensee within state boundaries.
Franklin pointed out Alaska’s current regional U.S. attorney, Karen Loeffler, has done a “fantastic job” tailoring the office’s prerogatives to regional issues. With the change in administrations, it seems unlikely Loeffler will be reappointed to the position. “Who she’s replaced with is very important to our state marijuana market,” she explained.
Also of potential concern is the Alaska Legislature, which this upcoming session will have the opportunity to reevaluate and possibly repeal the state’s legalization. However, Franklin considered the possibility there to be remote at this time.
“We’re just going to keep rolling and keep going with this program,” she said.
A link to the current licensees under the AMCO program is available on its site, under the Public Input Questions tab at https://www.commerce.alaska.gov/web/amco/MarijuanaFAQs.aspx.
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