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Struggling to get by, Houston declares itself open for cannabusiness

  • Author: Zaz Hollander
  • Updated: September 28, 2016
  • Published April 16, 2016

HOUSTON -- This scrappy town of 2,000 that straddles 22 square miles along the Parks Highway has long been the only place in Southcentral Alaska where buying fireworks is legal.

Now Houston is welcoming the state's nascent marijuana industry in hopes of drumming up some much-needed revenue for a city struggling to stay solvent.

If a voter-initiative ban goes through this fall, Houston could become the only place in the Ireland-sized Matanuska-Susitna Borough where commercial marijuana operations are legal.

A town that's too cash-poor to field a police department is the only one to offer pot entrepreneurs any kind of financial certainty amid the bans in place, or contemplated, throughout the rest of the Mat-Su borough.

Houston city officials say they're expecting sharp reductions in state revenue-sharing dollars as Alaska's budget situation remains dire. Locally, no big box stores are knocking on the door to join the downtown core: a campground, the fire station, the Houston Lodge and Millers Market.

"We're not having businesses come to Houston and say, 'We want to put up a gas station or the next Wal-Mart," said City Council member Jim Johansen, a laboratory technician at Providence Alaska Medical Center. "We can either let the city go, or we can try this. I don't touch the stuff, but I'm for the business side of it."

Cultivation begins

Houston's city clerk says she's heard of four possible marijuana businesses looking to open in the city but hasn't received notification of any applications from the Alaska Alcohol and Marijuana Control Office.

Ron Bass is one of the applicants.

Bass, 33, and his wife Lacey grew up in Houston and say they are getting their cultivation business up and running in time for early June, when the first licenses could get state approval.

The company, Calm N Collective, is based in a 3,500-square-foot cultivation facility along the Parks. Bass said the facility will be surrounded by a fence with someone on-site at all times and video surveillance.

He was diagnosed with multiple sclerosis about five years ago and signed up for Alaska's medical marijuana registry. He said he grows a medical strain high in cannabidiol dubbed "1ndun" that he credits with helping him feel better and shrinking the lesions on his brain.

Calm N Collective plans to offer that strain, plus a range of nonmedical indica and sativa varieties in a rainbow of colors and applications. Down To Earth Garden Supply, a local company, is an investor.

Bass says he wants to do something good for the community, which rejected a ballot question that would have banned commercial marijuana businesses in Houston.

Residents spoke with their vote and Houston's elected officials are listening, he said. "The politicians are backing their people."

Saying no elsewhere

Palmer and Wasilla chose not to allow commercial marijuana operations -- Wasilla by a City Council decision, Palmer by popular vote. The Mat-Su Assembly is considering a moratorium on any commercial operations until October, when voters weigh a ban that would cover the entire borough except for the cities.

Mat-Su has long been Alaska's reputed cannabis capital for its famous marijuana strains, grow-friendly rural neighborhoods and proximity to Anchorage. Now it's drawing attention from scores of potential cannabis entrepreneurs. State license applications for cultivation and dispensaries cluster in Talkeetna, Willow and around the population centers of Palmer and Wasilla. But many business owners and investors are waiting for October before shelling out their investment funds, rather than risk losing them if the ban proposition passes.

That leaves Houston, which dissolved its small police department to save money. Last year, a delay in state revenue sharing prompted the mayor to furlough a half-dozen employees, including firefighters, until the money came through.

Houston is treading water financially, officials say. Houston survives mostly on property taxes plus sales taxes and state revenue sharing.

State revenue sharing is expected to drop by nearly $60,000 from more than $180,000 this fiscal year, according to Sonya Dukes, the city clerk. But it's possible future sales tax revenues by pot purchasers could make up that difference in the coming year alone, Dukes said. "Let's hope so. Sixty thousand, for our budget, is a good cut."

Shaking the moneymaker

The city stands to gain from the new industry in the form of excise or sales taxes, officials say.

Thursday night, the City Council approved a $10 per ounce excise tax on cultivators. Mayor Virgie Thompson said she's heard from several who estimate they'll produce 50 to 80 pounds a month.

The city's proposed budget of just under $1 million for the upcoming fiscal year includes a new estimated revenue source: a little more than $160,000 from excise tax revenues.

The Council also introduced a provision to eliminate marijuana sales from a sales tax provision that exempts single sales over $500, mostly to address vehicle or home sales. Cannabis sales of $500 or more will be taxed at the city's 2 percent rate. The Council will vote on that next month.

There's generally been a surge in commercial interest in Houston in recent months, as evidenced by rezone requests at the planning commission level but also real-estate inquiries.

Roger Purcell, a former city mayor, said his Wasilla company's real estate and legal consulting sides have seen "a huge increase" in people asking about Houston because of the city's atmosphere of political certainty surrounding cannabusiness.

"They're going to spend up to $15 million putting these places in," Purcell said, of the cultivation businesses eyeing Houston. "They want to make sure these facilities will still be there 10 years from now."

Slim mandate

Not everyone in town is a fan of the new industry.

Residents voted last fall on a proposal to not allow commercial operations in Houston. Just under 55 percent of voters opposed a ban -- 150 votes compared to 127. That's not exactly a resounding mandate.

Angela Walker, a 44-year-old single mother, leases the kitchen at the Houston Lodge, which is up for sale. Walker reopened the long-shuttered restaurant over the winter.

At least one marijuana entrepreneur is looking at the building for a possible cultivation facility and dispensary, locals say.

Walker is trying to drum up money for a down payment on the lodge because, she said, she hopes the owner doesn't sell to someone who wants to start a marijuana dispensary. She said she wants to see the lodge maintain its family-friendly atmosphere.

"Basically, this is a facility for the community and the community's not going to be served really well," Walker said. "I don't know, with them selling that in here, (that it would) be a community-based operation."

Recent Council meetings to debate city regulations were forced by sheer numbers to move to the fire station from city hall.

The city's local regulations largely track with state law, though Houston's Council decided this week to not allow marijuana establishments and social clubs in multifamily residential areas. They also will require subdivision or neighborhood covenants be disclosed at the start of the review process.

Any new revenues from the new businesses could pay for parks or roads, officials say.

Johansen said as far as he's concerned, re-establishing Houston's police department should be a priority, given the complaints he hears about crime now.

"With us being the only ones that want to do it … so be it," he said. "This is a huge moneymaking deal and times are changing."

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