The Alaska Marijuana Control Board is parsing out what should be its business and what should be left to good business sense.
Aug. 31 began a two-day meeting for the Marijuana Control Board, which is on an aggressive deadline to approve a set of cannabis industry regulations. The board is reviewing the second of three draft regulation sets. Set two concerns retail business operations, including operating requirements, taxes, hours, and prohibited sale practices and items.
Some regulations were loosened, despite pressure to conform to Colorado or Washington laws, in an effort to let businesses govern themselves.
The board unanimously approved amended language that would loosen a required “restricted area” in marijuana retail stores.
Prior to the amendment, the regulations specified an entire section of the store be off limits to customers specifically for storing and dispensing cannabis, ostensibly to keep thieves from stealing it and promoting a “public safety risk.”
Board Director Cynthia Franklin claimed that removing such areas would be unprecedented in states with recreational marijuana legalization.
“If you make Alaska stores look like that, they will be the first marijuana stores to look like that,” said Franklin. Franklin said the intent was to prevent thieves from “putting (cannabis) up their sleeve and walking out with it,” which she said could conceivably contribute to the black market.
Board members elected to keep the “restricted area” definition conformed to a standard set in the security section of the regulations. Board member Mark Springer believed the incentive to keep wares secured is best business practice, and shouldn’t be under the board’s authority, a theme the board would repeat several times during the day.
“The prudent business person is going to make pretty darn sure their investment is protected,” said Springer. “I don’t think we need to hold their hand.”
The board did elect, however, to hold businesses’ hands with product giveaways.
Among the long list of “can’ts” for retail businesses is giving free samples.
Board regulations prohibit marijuana consumption on retail store premises, like liquor stores, and samples would be too close to consumption on premises as well as create a hyper-competitive business climate.
Gifting cannabis, the subject of some public question in the Alaska Dispatch News, is clearly legal between adults, the board said. Gifting from a retail store, however, is out of the question. Like many others, this was modeled on Colorado law.
“It’s my understanding Colorado had it to prevent fire-sale price wars,” said Franklin.
The draft regulations also prohibited selling cannabis below the cost the retailer paid for it, effectively setting a floor for sales. Board member Brandon Emmett said that decision should be left to the business owner’s savvy, not to a legislative board, and that Alaska has an opportunity to expand on its predecessors’ regulations.
“Alaska is its own place,” said Emmett. “Maybe we could stray and make some of our own decisions. In a place where you can’t grow outside marijuana, the profit margin is going to be a lot lower. I don’t know anyone in the industry who plans on selling their marijuana at rock bottom prices.”
They compromised, allowing sale below retail cost but still banning free samples at retail stores.
Also banned from marijuana stores is anything besides marijuana.
The board passed draft regulations that prohibit retail cannabis establishments from selling cigarettes, drinks, snacks, coffee, tea or anything consumable but non-cannabinoid in nature.
The intent, according to Franklin, is threefold: to keep minors from having a reason to enter the premises, regulate on-premise consumption, which would be made difficult by selling snacks alongside cannabis-infused edibles, and prevent “confusion to customers about which things contain marijuana and which things don’t.”
Board chair Bruce Schulte had argued that selling additional items presented no public safety interest and was simply a business option.
“If they think they can make a few extra bucks by selling cigarettes, that’s a commerce issue. I don’t see how that’s a public safety concern,” said Schulte.
An amendment to allow non-marijuana sales failed 2-3, with Schulte and Emmett (the industry representatives on the board) voting in favor and Peter Mlynarik, Loren Jones and Springer voting against. Branded merchandise was on the agenda for the Sept. 1 portion of the meeting.
Certain regulations will go beyond alcohol’s current restrictions.
Persons younger than 21 years of age will not be allowed onto cannabis retail businesses entirely, in contrast to alcohol regulations, which allow minors to accompany guardians into package liquor stores. Customers will be required to show valid ID.
In a previous interview with KTUU on Nov. 3, 2014, Franklin had quoted the alcohol regulation that allows a minor to enter an alcohol package sales store if they’re in the presence of their guardian.
Because of prior accepted draft regulations, a new snag now exists that will require every financial investor of a cannabis business to qualify for and possess a marijuana handler’s permit, similar to an alcohol handler’s permit all bar and liquor store employees are required to have.
Unlike alcohol regulations, which allow a 30-day grace period between hire of a new employee and the employee’s possession of a handler’s license, the marijuana handler’s license is required prior to the licensee receiving the final license.
Marijuana retail stores will be open 21 hours a day, from 8 a.m. to 5 a.m., unless local authorities impose restrictions.
The proposal was for marijuana retail stores to be restricted to hours of operation between 8 a.m. and midnight. State alcohol regulations, however, allow alcohol package stores to operate 21 hours of the day and close from 5 a.m. to 8 a.m., though most local governments restrict these hours.
Again, the board elected to leave the regulations up to business owners’ and the local governments’ sense of safety, and of profit and loss. Staying open till 5 a.m. might be allowed, Schulte and Springer argued, but that doesn’t make it good business sense.
“We’re talking about a retail transaction,” said Schulte. “I can’t image that I would be open at 5 a.m., but if someone comes up with a business model where that works for them, then that’s their prerogative.”
Other members thought the allowance far too liberal, and that alcohol restrictions are a poor model in some cases.
“I wish there were tighter controls on alcohol,” said board member Peter Mlynarik. “Just because alcohol does it doesn’t mean it’s the best for the public.”
“Alcohol leads to boisterous if not violent behavior. Marijuana does not,” responded Schulte. “We’re not talking about the consumption of marijuana, just the purchase. We’re still leaving the door open for local jurisdiction to ratchet down.”
The vote to approve the hours of operation passed 3-2, with Mlynarik and Loren Jones voting against.
DJ Summers is a reporter for the Alaska Journal of Commerce.