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How will Alaska pot shops open without licensed growers getting a head start?

  • Author: Scott Woodham
  • Updated: September 28, 2016
  • Published October 16, 2015

As draft regulations reach a more cohesive form, "Territorial Alaskan (old guy)" has a question that involves the timeline regulators have to work with: "I understand that marijuana dispensaries may be able to open their businesses in licensed locations around Alaska next spring. If that's true, how will retail operations find enough inventory if commercial growers are not licensed at least six months in advance of that date?"

First off, there's a slight misconception here. The dates Territorial Alaskan is thinking of next spring are not the date that businesses can open, just when first licenses are likely to be issued. Whether or not a business can open on the day its license is granted is more of a business matter than a regulatory one.

First, a quick run-down on the process. The initiative set a deadline for adopting regulations of "not more than 9 months" after the laws took effect, which was Feb. 24. Nine months after that would be near the end of November (the Marijuana Control Board is planning its last meeting on Nov. 20, four days before the deadline). Then assuming all goes as planned, the adopted regulations go to the lieutenant governor's office, where they'll take at least 30 days, likely a bit more allowing time for review, before taking effect. When the process ends and regulations have taken effect, license applications can be accepted. According to statute, the entire process to allow applications to be accepted must happen by Feb. 24, 2016. Then the state must process those applications within 90 days of receipt, by the end of May 2016.

Assuming the draft regulation process keeps on track through another round of public comment and associated considerations, it looks to me from the outside that the process will result in adopted regulations by the 9-month deadline. But that's just my own impression.

Read more Highly Informed: Seeking answers to Alaska's cannabis questions

Speaking of public comment, it bears mentioning that commenting on the consolidated group of draft regulations is open now and will run until 4:30 p.m. on Nov. 11. At special commenting sessions Oct. 15 and 16, centered in Anchorage but accessible by phone or any open Legislative Information Office around the state, the board will hear verbal public comments, which were not accepted for the first round of commenting on some packets. See the MCB's website for more information and instructions on how to comment.

After the board adopts the regulations it has been working on, the packet goes to the Office of the Lieutenant Governor for various legal reviews and signature, which starts a 30-day countdown to the day the adopted regulations take effect. That stage in the process also involves the Department of Law, the governor's office and even an obscure legislative committee called the Joint Committee for Administrative Regulation Review.

Until all that is done and the adopted regulations have officially become part of state code, the board cannot start the process to license any class of cannabis-related businesses that require one, including growing, selling and testing. In other words, no regulations, no regulated industry.

All of that happens out of the control of the Alcoholic Beverage or Marijuana control boards, and when it finishes, an entirely new but comparatively shorter timeline arises before seeds can grow and stores can eventually open. During that segment of the process, the board will do a bunch of things enabled by the statutes and the new regulatory codes, starting with accepting license applications and within 90 days responding to them.

Sometime after that, the regulations will also allow taxing and regulating the state's first legal sale. But crystal balls can't really see that date yet. Although times vary a great deal, cannabis can grow to maturity in as little as 8 weeks and be packed to sell as quickly as 2 weeks later. The value for consumers would suffer in that case, but it's technically possible. If some business out there decides to go for broke, I guess it could be as soon as early August by the time the first sale happens. But there are any number of business decisions that could foul up that guess.

"Questions about the exact timing of when Alaskans can expect to walk into a retail marijuana store and buy something cannot be answered until the regulations adopted by the board are signed by the Lt. Gov., become effective, license applications are accepted, the board acts on them, and then marijuana is legally grown and tested," said Cynthia Franklin, head of the Alcoholic Beverage Control Board. "Only marijuana and marijuana products grown, produced and tested in licensed facilities can be sold in licensed stores."

Franklin said officials in Alaska are aware of potential timing hassles. "We know that other states ran into problems licensing retail stores before any legally grown product was shelf-ready," she said.

Since home growing has been going on for quite a while, Territorial Alaskan also wondered if home growers might be able to help bridge any supply gap that pops up: "Will legal home grow operations and hobbyists also be allowed to distribute their product to retailers?"

No. Franklin said, "No one will be permitted to start growing marijuana that will be sold in stores without a cultivation license."

Although there has been discussion of creating license types to accommodate small boutique growers or commercial hobby farms, I think that overall stance is unlikely to change. Regulators have been keen on keeping a bright red line between personal-use growing at home and the emerging regulated, for-profit industry.

Given all this, it would make logistical sense for the board to consider and issue licenses according to the order that various businesses appear in the supply chain. But guessing about how any of that process might go is pointless right now. The law may not allow regulators too much leeway for staggering licenses, and the regulations still have to be adopted first.

Alaska Dispatch News reporter Laurel Andrews contributed to this report.

Have a question about marijuana news or culture in Alaska? Send it to cannabis-north@alaskadispatch.com with "Highly Informed" in the subject line.

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