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Alaska’s alcohol and marijuana regulatory boards would be scrapped under Dunleavy budget

The Alaska State Capitol on Monday. (James Brooks / ADN)

Alaska Gov. Mike Dunleavy is planning to introduce legislation repealing the state boards that regulate alcohol and marijuana businesses, according to a letter from a commissioner to state employees, and industry groups are pushing back.

A letter from Alaska Department of Commerce, Community and Economic Development commissioner Julie Anderson told employees about the governor’s plans to repeal the boards. The intent, the letter says, “is to transfer the authority and responsibilities of the two boards to the commissioner and remove the marijuana control board and the alcoholic beverage control board.”

The proposed change is one of many in Dunleavy’s plan to dramatically cut the state’s budget to close a $1.6 billion deficit.

Alaska’s control boards for marijuana and alcohol are responsible for licensing, enforcement and inspections of businesses. The boards hold meetings where members of the public can comment on proposals. Alaska has about 1,900 liquor licenses statewide, and there are about 275 marijuana businesses that are fully licensed to operate.

Anderson’s office and Alcohol and Marijuana Control Office director Erika McConnell referred questions about the proposed changes to Dunleavy’s press secretary, Matt Shuckerow. The forthcoming legislation will provide additional insight, he said via email.

Dunleavy “is looking to identify business process realignment to better serve Alaskans and streamline areas of duplication,” Shuckerow said. "That effort included examining boards that serve similar functions and capacities in order to reduce the regulatory burden and expand entrepreneurialism.”

The governor’s fiscal year 2020 budget proposal reduces Alcohol and Marijuana Control Office budget by $48,700, cut entirely from travel, according to documents for the Marijuana Control Board’s meeting this week. Those documents also mention that Dunleavy has indicated his intention to disband the boards.

Board members are not paid a salary but do receive per diem and travel expenses while attending board meetings.

The Alaska Cabaret, Hotel, Restaurant and Retailers Association, known as CHARR, is “vehemently opposed” to the disbanding of the alcohol board, said CHARR president and CEO Sarah Oates.

“We’re concerned with how that could be dangerous for business and the public, having one person making decisions about a highly regulated industry,” Oates said. She noted she hasn’t seen the forthcoming legislation.

As it stands now, each board has five members, appointed by the governor. They represent specific sectors: industry, the public, and also public health and safety. That balance, Oates said, is key. While industry interests are important, she said, so is public health and safety.

“Having one person responsible for such a highly regulated industry just seems irresponsible,” she said.

Repealing the Marijuana Control Board would remove the public’s say in the licensing and regulation process, said board chairman Mark Springer.

Cary Carrigan, executive director of the Alaska Marijuana Industry Association, said, “The Dunleavy administration is trying to destroy the marijuana industry in Alaska.”

Alaskans voted to legalize recreational marijuana in 2014.

In another email, Shuckerow said: “I want to reiterate that Gov. Dunleavy recognizes that recreational marijuana is the law of the land and he has no intention of changing that."

The process for developing rules for that industry is a “bit slow” and the industry knows that, Carrigan said.

“And we get it, but we have worked our way through that to make sure the public is OK with what is going on,” he said.

The administration would also consolidate investigator positions from the commerce department and others — including the state labor department, and the state health department — into the Department of Law, according to Anderson’s letter. Inside the commerce department, there are investigators who work on marijuana and alcohol licenses.

“I’m concerned about them pooling everything together because I’m afraid the people with the expertise necessary won’t be able to focus on the areas we need that investigation,” Carrigan said.

It’s hard to say at this point what the proposal would look like for local governments, said Patrick Flynn, a former chairman of the Anchorage Assembly who invests in businesses that own liquor and marijuana business licenses.

He said it raised questions about who would handle enforcement and who would make the call for whether a business can stay open.

In Anchorage, the local government issues special land-use permits to alcohol businesses but does not have direct control over the fate of a license. Cannabis businesses face stricter regulation, with the city adopting its own licensing framework.

If a city has a robust regulatory framework for marijuana or alcohol, it may be able to manage a major state regulatory change, Flynn said.

“If you don’t, I don’t know,” Flynn said. “Is it now one guy who decides, or woman, if a store is allowed to keep operating?”

For fairness reasons, Anchorage could run into problems if it tried to set up its own alcohol license, Flynn said. He said the state should consider involving local governments in the change to see how it would work.

Both the marijuana board and the alcohol board have overseen emotional community debates in recent years.

Correction: An earlier version of this article misstated Patrick Flynn’s business investments. He invests in businesses that own liquor and marijuana licenses but is not an owner.

James Brooks of the Daily News contributed.

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