Alcohol & Marijuana Control Office

Marijuana Regulations Public Commentary

Questions & Answers on Draft Set #2

QUESTIONS RECEIVED REGARDING SET #2 PROPOSED
MARIJUANA REGULATIONS WITH ANSWERS

Questions about why regulations are strict:

1) The requirements for licensure seem unduly burdensome to the applicant. Are these similar to other state licensing requirements of other businesses?

2) How is a business supposed to operate with such restrictions?

ANSWER TO 1-2 REGARDING STRICTNESS: AS 17.38.084, passed by the Alaska legislature in HB 123, provides that the board shall establish by regulation the qualifications for licensure, including fees and factors related to the applicants experience, criminal justice history, and financial interests. The proposed regulations establishing requirements for licensure are based on similar requirements in Colorado, Washington, and requirements for liquor licensed establishments in Alaska. In places where more detailed information is required, the justification is that the activities of the establishments to be regulated are conducting activities which are illegal under federal law. Marijuana is still illegal under federal law. The Controlled Substances Act (“CSA”) makes it illegal under federal law to manufacture, distribute, or dispense marijuana.

On August 29, 2013, the U.S. Department of Justice (DOJ) published a memorandum authored by then U.S. Deputy Attorney General James Cole that described a new set of priorities for federal prosecutors operating in states which had legalized the medical or other adult use of marijuana. The memo identified eight general enforcement priorities (the “Cole Priorities”) and expressly focused the DOJ on persons or organizations whose conduct interferes with one or more of those priorities. If a business implicates one or more of these priorities, it is a “significant threat.”

The Cole Priorities. The following enforcement priorities are deemed to be of particular importance to the federal government:

• Preventing the distribution of marijuana to minors;

• Preventing revenue from the sale of marijuana from going to criminal enterprises, gangs, and cartels;

• Preventing the diversion of marijuana from states where it is legal under state law in some form to other states;

• Preventing state-authorized marijuana activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity;

• Preventing violence and the use of firearms in the cultivation and distribution of marijuana;

• Preventing drugged driving and the exacerbation of other adverse public health consequences associated with marijuana use;

• Preventing the growing of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands; and

• Preventing marijuana possession or use on federal property.

The Cole Memo “is intended solely as a guide to the exercise of investigative and prosecutorial discretion” and “does not alter in any way the Department’s authority to enforce federal law, including federal laws relating to marijuana, regardless of state law.” Marijuana is still illegal under federal law and the feds reserve the right to enforce federal law. The memo emphasizes that states allowing for marijuana activities must implement “strong and effective” regulatory systems. The memo states that “A system adequate to that task must not only contain robust controls and procedures on paper; it must also be effective in practice.” The memo goes on to state that “In jurisdictions that have enacted laws legalizing marijuana in some form and that have also implemented strong and effective regulatory and enforcement systems to control the cultivation, distribution, sale and possession of marijuana, conduct in compliance with those laws and regulations is less likely to threaten the federal priorities set forth above.” The memo specifically mentions “implementing effective measures to prevent diversion outside of the regulated system and to other state, prohibiting access to marijuana by minors, and replacing an illicit marijuana trade that funds criminal enterprises with a tightly regulated market in which revenues are tracked and accounted for.” The Cole Memo also says that “If state enforcement efforts are not sufficiently robust to protect against the harms set forth above, the federal government may seek to challenge the regulatory structure itself in addition to continuing to bring individual enforcement actions, including criminal prosecutions, focused on those harms.”

3) What is the purpose for the detailed information required of an applicant by proposed 3 AAC 306.020? Is this the same or similar criteria required of applicants for alcohol related licenses? If more detailed information is required for a marijuana license than an alcohol license, what is the justification for the distinction?

4) We question the need for information about each family member. How could it possibly matter if a son or daughter, or for that matter a father or mother, applied for a license totally separate from the rest of their family? Further, it’s unclear to us what an “affiliate” means as described in this section.

5) 3 AAC 306.020(b)(2) requires disclosure of social security numbers, name, addresses, and phone numbers of not just the applicant, but the applicants’ family members and affiliates. It further states that all persons named in the application that complies with section 2 are considered a licensee for purposes of this chapter. Therefore, this regulation as drafted means that any family member of a marijuana establishment owner, even if they do not receive any benefits from the company and are not owners of the company. What health and safety concern of the public does this protect?

6) Does the disclosure of financial interests regulation support health and public safety?

7) 3 AAC 306.020(b)(2) requires an applicant to disclose partnership agreements for partnerships and operating agreements for limited liability companies; it does not require a corporation’s bylaws be disclosed. What rationale can the Board articulate that justifies requiring a partnership and LLC to disclose publically their internal governing document, which details responsibilities, voting rights, operations details, strategy for expansion and exit for investors, structure, and other extremely sensitive business strategies judgments, to the public and the state but does not require corporations to disclose the same type of governing document?

ANSWER TO 3-7 REGARDING STRICTNESS: Requirements concerning the identification of all interested parties in a license is related to the unique status of this substance. See answer to Questions 1-2 above and specifically those priorities in the Cole memo that require that state regulations clearly address prevention of revenue from the sale of marijuana from going to criminal enterprises, gangs, and cartels and prevention of state-authorized marijuana activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity. The proposed regulations are modeled after the type of financial background investigations that appear to have satisfied the federal priorities in other states and which is contemplated by the Alaska legislature in AS 17.38.084 which mandates disclosure of financial interests.

8) Why would we need owner’s to submit fingerprints again for renewal? The person has submitted those fingerprints previously during the original application process.

ANSWER TO 8 REGARDING STRICTNESS: 3 AAC 306.030(c) provides that the director MAY request fingerprints. This proposes that fingerprints on renewal are a discretionary decision for the director but does not require fingerprints on renewal for all renewal applications.

9) You do not regulate how much beer I can brew or how many six packs I can have in my house so why are you trying to regulate marijuana in my home?

ANSWER TO 9 REGARDING STRICTNESS: The proposed regulations are intended to regulate commercial marijuana establishments as provided by AS 17.38.090. The proposed regulations address how much marijuana can be sold by a retail marijuana store in a single transaction, not how much marijuana an Alaskan can possess in their home.

Questions about the term “license” versus the term “registration”:

1) AS 17.38 authorizes a registration process for marijuana facilities. 3 AAC 306.010 et seq. establishes a licensing process. What is the difference between registration and licensing? Why is licensing being implemented rather than the registration process authorized by AS 17.38?

2) AS 17.38 uses the word “registration” and not “license”. What is the reason for the change?

ANSWER TO 1-2 REGARDING THE TERM LICENSE: AS 17. 38.900(16) was amended by the Alaska legislature to read “registration” means registration or licensure, as determined by regulations. AS 17.38.084, passed by the Alaska legislature in HB 123, provides that the board shall establish by regulation the qualifications for licensure, including fees and factors related to the applicants experience, criminal justice history, and financial interests. Additional language in AS 17.38.084 also refers to licensure.

Questions about interaction between Marijuana and Liquor Licenses

1) The proposed regulations state that marijuana may not be sold in or adjacent to a liquor store. It seems completely arbitrary that liquor may not be sold on the same premises and marijuana, when currently, tobacco (a controlled substance) is allowed to be sold in liquor stores. Could you explain the rationale behind this proposed restriction? It seems that liquor store owners are actually more prepared and experienced to work in this new market than others. Tom Manning is on the marijuana control board and is another liquor store owner. What is his opinion on this?

2) “The board will not issue a marijuana establishment license if the licensed premises will be located immediately adjacent to a liquor license premises.” What is the reason for this? Alcohol and Tobacco are sold on the same premises, what is the issue here?

3) How does (306.010(b)) protect the safety and health of the public? What rationale supports the premise that separating two demerit goods geographically creates a protection for safety and health? How does this separation protect the public health and safety?

ANSWER TO 1-3 REGARDING LICENSE INTERACTIONS: Tom Manning is on the Alcoholic Beverage Control Board. Nothing in the proposed regulations prohibits a person who holds a liquor license from applying for a marijuana license. Alcohol is a regulated substance and has its own set of statutes and regulations in Title 4 that govern its possession, sale, barter, and manufacture. The proposed regulations for marijuana keep alcohol and liquor licensed premises separate in order to avoid creating immediate legal questions regarding how the two sets of statutes and rules will interact. Board members of either the Marijuana Control Board or the Alcoholic Beverage Control Board are ethically restrained from giving opinions on proposed regulations outside of publically noticed board meetings.

4) Is the concern that you don't want people mixing the two or is this a regulation to keep the alcohol industry from having to compete? Or is it something else? We need to know why this is a regulation. We allow alcohol establishments inside of everything from ferries to restaurants, but let's say a restaurant or club that serves alcohol wants to open a cannabis section we can't do that because there is an alcohol license in place?

ANSWER TO 4 REGARDING LICENSE INTERACTIONS: See answer to 1-3. The four types of marijuana establishment licenses created in AS 17.38 do not encompass the type of liquor-licensed premises activities to which you refer. There are no marijuana club licenses in AS 17.38

Questions about the residency requirements:

1) Please reply why Alaska has the regulation disallowing out of state citizens to invest in Marijuana businesses in your state.

ANSWER TO 1 REGARDING RESIDENCY: Please read the answer regarding why regulations are strict at the beginning of the Q & A. AS 17.38.010(d) provides that “nothing in this Act proposes or intends to require any individual or entity to engage in any conduct that violates federal law, or exempt any individual from any requirement of federal law, or pose any obstacle to the enforcement of federal law.” The proposed residency requirement would help assure both Alaskans and the federal government that Alaska’s commercial marijuana industry is intended to be conducted in Alaska and for Alaskans and will not violate the Cole memo priority that the industry not encourage diversion of marijuana outside of the state.

Questions about fees:

1) Why are the fees set at the statutory cap? Why is renewal of a license on an annual basis, rather than a biannual basis as it is with alcohol related licenses? What are the anticipated costs associated with administering the licensing process? What is the justification for the annual, as opposed to biannual license, and the licensing fees being set at the statutory cap?

2) Does the board deem it necessary to start at the cap of $5000? Under AS 17.38.090(a)(2) “A schedule of application, registration and renewal fees, provided, application fees shall not exceed $5000, with this upper limit adjusted annually for inflation, unless the board determines a greater fee is necessary to carry out its responsibilities under this chapter;”

ANSWER TO 1-2 REGARDING FEES: The proposed regulation recognizes that the regulation of marijuana will be expensive. In addition to the cost of personnel to handle the licensing, enforcement, administration, and education regarding commercial marijuana licenses, the state will have to pay for the installation and upkeep of a marijuana inventory tracking system. The Alaska legislature has expressed an expectation that the Marijuana Control Board, like the Alcoholic Beverage Control Board, will be a “receipts funded agency”. This means that general funds to pay for necessary items like the marijuana inventory tracking system will not be available to the board and the costs must be covered by licensing fees. If the licensing fees cannot cover the costs of administration of the regulatory system, the system may fail. Additionally, the statutory cap on the licensing fees is substantially lower than fees charged by other states, already limiting the resources of the agency.

Questions about limitations about what can take place in a marijuana store:

1) 3 AAC 306.310(c)(3)(B)(C) appears to disallow the sale of bottled water, candy bars and similar items one might purchase in an alcohol retail store. Is the purpose of this regulation to curtail marketing of marijuana or is it to limit what is sold in a retail marijuana store? What is the justification for limiting the sale of items such as candy bars and bottled water in a retail marijuana store. Alcohol retail stores have “loss leaders” that are sold below the price of purchase. Is it the intent of the regulations to prohibit “loss leaders” sales? If so what is the justification for this position?

2) “A licensed marijuana retail store may not offer or deliver to a consumer, as a marketing promotion or for any other reason: a consumable product other than marijuana, including cigarettes, tobacco products, alcoholic or non-alcoholic beverages or food, free or for compensation.” NO consumables? No water or coffee?

3) Does this 3 AAC 306.310(c)(3)(C) also exclude marijuana edibles, since it does not have the phrase “marijuana products” which would include edibles? This does not exclude other retail items for sale, such as paraphernalia, clothing or products wholly unrelated to marijuana consumption, such as cups? Does “tobacco products” include e-cigarettes and concentrated liquid nicotine, included to be used in e-cigarettes and vaporizers?

4) What’s the harm in allowing a marijuana retailer from selling other products and why should it be prohibited?

5) Please educate us as to what this means and what is the scope of this marketing prohibition and the scope of the words “or for any other reason.” Does this regulation intend to prohibit the sale of any non-marijuana infused food or beverage? What is the health and safety concern that justifies this prohibition? And can these concerns be addressed in a more narrowly crafted regulation?

ANSWER TO 1-5 REGARDING MARIJUANA STORE LIMITATIONS: The proposed regulation for marketing promotion prohibition addresses consumable products other than marijuana, so it should also say other than any marijuana product. It addresses consumable products, which would not include clothing or cups. “Tobacco products” in the proposed regulation is not defined. The proposed regulation is intended to limit what is sold in a retail marijuana store. It is based on similar regulations in other states. The proposed regulation is intended to limit the attractiveness of a retail marijuana store to minors and persons who want to buy consumable items other than marijuana and marijuana products.

6) The prohibited acts in 3 AAC 306.300(a) include “give” or “offer to give,” intended to apply in the context of a retail operation. However, as worded, it seems to prohibit any person from giving another person (a consumer) any marijuana without a license. Does this negate the regulation that a person can give someone else up to 1 ounce without any other item in the transaction? Or should “give” be more specifically defined here to exclude that personal transaction?

ANSWER TO 6 REGARDING MARIJUANA STORE LIMITATIONS: AS 17.38.020 provides the legal support for gifting of up to an ounce of marijuana between individuals. The proposed regulation controls what may and may not occur on licensed marijuana premises. On a licensed premises under the proposed regulation such gifting is prohibited. Nothing about the proposed regulation affects individual gifting rights off of licensed premises.

7) The regulation 3 AAC 306.310(a)(4) prohibits purchase of marijuana on the internet, and only allows the sale to occur to someone on the licensed premises. Would this also prohibit a “takeout order” option, as can happen with a restaurant for food to go? For example, a person orders and purchases (enters their credit card information) on a website, opts for picking up their order at the store, and travels to the store to receive the product. Does this require every step in the transaction to take place on the licensed premises?

ANSWER TO 7 REGARDING MARIJUANA STORE LIMITATIONS: The proposed regulation specifies that the delivery of the marijuana must take place on the licensed premise. The scenario posed by the question of placing an order in advance is not addressed by the proposed regulation. It would be a matter of interpretation by the board if the regulation was enacted and the activity occurred.

8) Is regulation 3 AAC 306.310(c) intended to be written to prohibit all activity in those 8 hours, or activity specifically related to preparation or consumption of the product?

ANSWER TO 8 REGARDING MARIJUANA STORE LIMITATIONS: The proposed regulations is written to prohibit any retail marijuana store from conducting business on or allowing any person to access the licensed premises during those hours.

9) The regulation requires restricted access to where marijuana is displayed or sold, and requires an escort and an identification badge for visitors. As written, this seems to imply that a customer to a retail establishment must be escorted, that no more than 5 visitors can be on premises, and that they need badges, in order to enter the store and browse display cases or shelves. Is this the intent of the regulation, or is it intended to cover “back room” operations or behind counters?

ANSWER TO 9 REGARDING MARIJUANA STORE LIMITATIONS: The proposed regulation is intended to cover restricted areas designated by the licensee to be for employees only. The provisions for escorted visitors allow for a scenario where a non-employee is touring the non-customer areas of a licensed premises or visiting for other business purposes.

10) Regarding the prohibition of marketing promotion for the purchase of marijuana “At a price below retail store’s acquisition cost”—what is the justification to not allow the free market to control the cost and price of marijuana? What is the health and safety justification for requiring the owner of the retail to store to essentially take the entire loss of that whole sale purchase, then to mitigate the loss by selling the product at a lower price? GNC sells vitamins that are nearing expiration below their wholesale purchase price, should we require GNC to up the retail price and allow the product to expire, subjecting the company to an even larger loss?

ANSWER TO 10 REGARDING MARIJUANA STORE LIMITATIONS: The proposed regulations is written to reduce the possibility of marijuana price wars that amount to giving marijuana away which raises public health and safety implications and which is not permitted in alcohol sales. The remainder of the question is a comment.

11) What is the limit in 3 AAC 306.310(a)(3)?

ANSWER TO 11 REGARDING MARIJUANA STORE LIMITATIONS: Please read the section referred to: 3 AAC 306.335.

Questions about low or no THC marijuana:

1) The intent of the law is to control access to a substance that is active, flower/extract/edible. How does this apply to cannabis items that have literally no THC content? Clones/Seeds/Tissue Cultures. Do these items with virtually no active compounds require same regulation as stated.

ANSWER TO 1 REGARDING LOW THC MARIJUANA: The proposed regulations apply to marijuana as defined in AS 17.38. and as further defined in the regulations themselves. Further definitions are expected to be proposed in Set #3.

Questions about the marijuana tracking system:

1) How does the marijuana inventory tracking system (3 AAC 306.355) apply to a limited cultivation facility only dealing with seeds/clones/tissue cultures.

a. In a breeding program there will be thousands of seeds; would the law require the nearly impossible task of tracking seeds?

b. Tissue cultures, does this apply to cannabis tissue cultures, used for micropropagation techniques?

ANSWER TO 1 REGARDING TRACKING: The proposed regulations regarding the marijuana tracking system are intended to apply to marijuana and marijuana products as defined in AS 17.38 and in the regulations themselves. Further definitions are expected to be proposed in Set #3.

2) The regulation requires that licensees keep their data in a format in which “information can be shared with the board”—does this mean that the system must be compatible to provide raw data output or datasets from a licensee to the board, or that simple reports (such as, an inventory list, monthly transactions, total sales from the past year, or other typical queries) in a PDF or printed format would suffice?

ANSWER TO 2 REGARDING TRACKING: The proposed regulations regarding the marijuana tracking system are general in nature until and unless the regulations are adopted and enacted. The complexity of the tracking system and the answers to the questions posed about details of tracking are not answered by the proposed regulations.

Questions about powers and duties of the board:

1) “The board will impose other conditions or restrictions on a license issued under this chapter when it finds that it is in the interest of the public to do so.” What does this mean exactly? Who decides what the interest of the public is?

ANSWER TO 1 REGARDING BOARD DUTIES: AS 17.38.084 defines the powers and duties of the Marijuana Control Board to control the cultivation, manufacture and sale of marijuana in the state. The imposition of conditions or restrictions on licensure is modeled after similar authority in liquor licensing and other boards in the state. The board must decide the public interest and protect public safety.

2) A licensed marijuana retail store may not sell give, distribute, or deliver, or offer to sell, give, distribute, or deliver, marijuana or any marijuana product “after the expiration date shown on the label…” Who determines the expiration date and how?

ANSWER TO 2 REGARDING BOARD DUTIES: The proposed regulations do specify the answer to this question. It is logical that the producer of the product would assign the expiration date, just as in other product manufacturing areas.

3) Given the potential risk of fire, particularly in production of concentrates and some edibles, will the board also create standards or requirements regarding fire safety?

ANSWER TO 3 REGARDING BOARD DUTIES: AS 17.38.110(b) anticipates local control governing the time, place manner and number of marijuana establishment operations. It is anticipated that Set 3 will contain additional rules relating to compliance with and approval by a local fire department prior to licensing for those licensed marijuana establishments whose activities implicate fire safety. There is a similar requirement in liquor licensing.

4) In what situation would it be appropriate for a board member to directly conduct an inspection? What safety considerations might there be for someone who is not properly trained in performing duties of a peace officer (the designation given under Title 4 for enforcement personnel)? Does the Board have intention to conduct regular inspections, or protocols in place for completing these inspections?

ANSWER TO 4 REGARDING BOARD DUTIES: In liquor licensing, inspections are performed by trained enforcement personnel. It is anticipated that the agency will set up inspections of marijuana licensed premises in a similar fashion. The proposed regulation’s inclusion of a board member as a potential person to inspect marijuana licensed premises is a matter for the board to consider in whether or not to adopt the regulation as written.

Questions about specific license types other than retail marijuana store licenses:

1) There is no reference to a marijuana brokerage license or facility in AS 17.38. As of yet it is not defined in the proposed regulations. groups a brokerage facility in the same category as cultivation. Does the use of the word “or” mean one could have a licenses for cultivation or brokerage but not both? How is marijuana brokerage defined, and how is it authorized by AS 17.38?

2) Is a manufacturing facility providing an extraction service to the public? Or is it providing a product of concentrate to other marijuana establishments? Please specify.

3) I would like to know what a marijuana broker is.

4) I have a question regarding restrictions on the number of licenses held by a licensee. I am working on a business plan for a marijuana establishment. My current plan calls for cultivation and retail sales at the same location. May a licensee hold multiple licenses? May a licensee hold a cultivation AND retail license for the same location?

ANSWER TO 1-4 REGARDING SPECIFIC LICENSE TYPES: The proposed regulations do not contain a definition of the terms in the questions or answers to these questions regarding license types other than retail marijuana store licenses contained in Article 3. It is anticipated that Set #3 will contain additional definitions and the regulations regarding the remaining license types.

Questions about definitions:

1) A licensed marijuana retail store may not allow any person to consume marijuana or any marijuana product on the marijuana store’s licensed premises; Define premise. Is it the entire store or retail area? What about a non-premise break room?

ANSWER TO 1 REGARDING DEFINITIONS: The definition of licensed premises is defined in Set #1 of the proposed regulations, which is also submitted for public comment during this time frame.

2) Why is the word "deliver" strictly defined as on a marijuana establishments premises? Why would delivery to the customer be limited strictly to coming to the establishment?

ANSWER TO 2 REGARDING DEFINITIONS: The proposed regulation mirrors statutes and rules regarding alcohol in Alaska (no delivery with two exceptions for weddings and champagne in a floral basket to a cruise ship) and other states where the rules require persons desiring to purchase marijuana to get themselves to a licensed premises to purchase it there. Circumstances surrounding the sale can be controlled if the sale occurs on the licensed premises.

3) What is the specific definition of “family member” and “affiliate” here? Is this covered elsewhere? I would assume it means immediate family (spouse, parents) but is unclear here without a definition. Does affiliate mean a corporation or other business, or an individual?

ANSWER TO 3 REGARDING DEFINITIONS: The proposed regulation does not contain a definition of the terms in the questions. It is anticipated that Set #3 will contain additional definitions.

4) 3 AAC 306.010(a) uses the term “child-centered facility” and broadly defines this term to include any facility “providing services to children.” What exactly does this mean? Providing services to children can apply to a plethora of facilities. A theater that hosts child drama classes after school or during the summer would fit this definition, even if the theater’s regular business was producing plays marketed to the community as a whole, is this the type of entity the regulations are intending to protect? How about the Alaska Athletic Club? Most Alaska Athletic Club branches have a child care service where members can drop of their children to have their children supervised during their work out, does this count as a day care or child centered facility? Many of these athletic clubs are in industrial or commercially zoned areas – is it really the intent of the regulations to label an athletic club as a sensitive protected area requiring the buffer zone?

ANSWER TO 4 REGARDING DEFINITIONS: The Cole priorities, discussed in the first answer in the Q&A, specifically focus on issues relating to marijuana and minors. The Cole Memo states that the Department of Justice’s interest in preventing the distribution of marijuana to minors “would call for enforcement not just when an individual or entity sells or transfers marijuana to a minor, but also when marijuana trafficking takes place near an area associated with minors, when marijuana or marijuana-infused products are marketed in a manner appealing to minors, or when marijuana is being diverted, directly or indirectly, and purposefully or otherwise, to minors.” In Colorado and Washington, the buffer zone around schools is 1000 feet, and in Washington includes parks, playgrounds, and other places where minors gather. The proposed regulation recognizes that in some communities in Alaska, 1000 feet would prohibit most commercial areas as viable locations for a marijuana establishment, but attempts to meet the federal requirement of rigorous regulation even when reducing the buffer zone by 800 feet by recognizing that schools are not the only areas associated with minors.

Questions about advertising and signage:

1) Why can a marijuana establishment be located within 200ft of a school, church, etc. but the advertising sign for that business may not be located within 1000ft?

2) “A marijuana retail store may not place advertisement for marijuana or a marijuana product on or in a publicly owned or operated property." The Soldotna Sports Center allows consumption of alcohol on premises, ie a beer garden, allows children to attend events on the same premises, but advertisement for marijuana cannot exist on premises?

3) The regulation specifies a certain type of sign to be posted on the licensed premises. Will the ABC Board provide a copy of appropriate signage to licensees?

4) As worded, this regulation seems to prohibit more than one sign per establishment—what about a business in a strip mall, which would have a sign above its own establishment but may also have a publicly-visible sign in the strip mall’s overall signage? Please clarify whether this was the intent, and whether marijuana establishments would be prohibited from including a second sign in such a display in a strip mall. Would this also preclude an establishment in an indoor mall from placing its business name in the mall directory or internal directional signage, even if it is just the business name and its location in the building?

5) How does the state propose a marijuana retail store comply with this provision if it is located within 1000 feet of a sensitive use area? Just not advertise? Is that fair and narrowly tailored? Additionally, if a marijuana establishment advertises in a publication, how can it ensure such a publication isn’t picked up by a reader and then put down again in a dentist’s office that happens to be next to a day care?

6) Are alcohol and Tobacco companies restricted from distributing branded materials?

7) Seems to me I can advertise based on recreational effects but not medicinal effects?

8) How can an illustration become false? Is a logo considered an illustration?

9) If the advertisement is not enticing to children or depicting a person under 21 consuming cannabis, then why would it matter where the placement of such advertisement is?

10) If a cannabis business sold tshirts to customers, would it be considered promotional? If a customer can buy a tshirt, then what is the reasoning for restricting a giveaway? How does this protect the health and safety of consumers? Additionally, let’s say a cannabis business wants to run a charity event such as a running relay for cancer research. Is this considered a game or competition that promotes business? Would that business not be allowed to put their logo on sponsorship material or signage?

11) “A marijuana retail store may not use giveaway coupons, or distribute branded merchandise as promotional materials, or conduct promotional activities such as games or competitions to encourage sale of marijuana or marijuana products.” Why can’t a marijuana retail store distribute branded merchandise as promotional materials?

ANSWER TO 1-11 REGARDING ADVERTISING AND SIGNAGE: Advertising, branding, labeling and marketing or promotion of alcohol and tobacco products are mostly governed by federal regulation. Because marijuana is an illegal substance on the federal level, the federal government will not assist by providing national regulation for this aspect of the industry. Therefore, states must add regulation of these subject areas to the myriad of requirements for state regulation of marijuana necessary to attempt to prevent the federal government from shutting down the states regulatory process and prosecuting the businesses for the cultivation, distribution, sale and possession of marijuana. Colorado and Washington both have restrictions on distributing branded materials and on specific forms of advertising related to marijuana and marijuana products, from which the proposed regulations in these areas were derived. Please read the answer regarding why regulations are strict at the beginning of the Q & A and carefully note the federal wariness of advertising and marketing of marijuana.

Questions requesting further clarifications of proposed regulations in general:

1) “Any visitor to the restricted access area must be escorted at all times by the licensee, an employee, or an agent of the licensee.” Escort within how many feet? 5? 10? Line of vision? Please clarify.

2) “The licensed premises of a marijuana establishment must have continuous video monitoring as provided in 306.725.” Who has ownership rights to video?

3) What are the “consulting services” referenced in subsection (B) that a licensee could provide to another?

ANSWER TO 1-3 REGARDING CLARIFICATIONS: The answer to these questions is not contained in the language of the proposed regulations. Interpretation of regulations that are enacted will be a board function.

4) Identification cards are specified for U.S. states, DC and Canada, and from “a federal or state agency authorized to issue identification cards.” Does this include non-U.S. citizens or foreign nationals, if they have appropriate identification showing their age?

ANSWER TO 4 REGARDING CLARIFICATIONS: Yes.

5) Marijuana waste is, for the purposes of the rest of the regulations, not considered marijuana, correct?

ANSWER TO 5 REGARDING CLARIFICATIONS: No. Marijuana waste is regulated by the proposed regulations.

6) Can we specify a health risk? Alcohol and tobacco name specific risks, e.g. lung cancer, birth defect, etc. Are there even any specific “health risks” associated with 1) casual or 2) chronic use that the board can name aside from those mentioned in a) and b)

7) Without any factual evidence of what excessive consumption is, how can a regulation determine what is excessive to the consumer?

ANSWER TO 6-7 REGARDING CLARIFICATIONS: There is much about marijuana consumption that is unknown due to its longtime status as a controlled substance. The timeline for establishing regulations in AS 17.38 passed by the voters does not permit the board to wait for scientific research to catch up. This is why many of the proposed regulations are based on those in Colorado and Washington; this term, like others, may be subject to the board’s interpretation as it moves forward with these regulations.

8) 3 AAC 306.015(c) needs clarification for the sentence that reads “[t]he board will issue each license for a specific location identified on the license as the licensed premises.” Does this mean that one license can license several different locations? Or is an additional license needed for each location?

ANSWER TO 8 REGARDING CLARIFICATIONS: The language of the proposed regulation is for one license for one location.

9) 3 AAC 306.020(b)(2) requires social security numbers and all other identifying information of family members of the applicant. Where is this information going to be stored? How is the state going to protect this information from falling into the hands of an identity theft? Is the state taking on insurance to protect from damage caused by identity theft to family members whose information is involuntarily disclosed to the state? Is this information going to be accessible by the public? If not, what government entities will be responsible for safe guarding the information? Certainty, it’s no secret the state is in a severe budget crunch, does it have reserved funds to handle litigation and damage claims from leakage of the required private information?

ANSWER TO 9 REGARDING CLARIFICATIONS: The state collects private information for many purposes and complies with existing policies regarding the protection and storage of private information required to be submitted for state purposes.

10) Why do I need a million dollars of insurance?

ANSWER TO 10 REGARDING CLARIFICATIONS: If the proposed regulation were enacted, you would need it because it is a requirement to receive a license. Please read the answer regarding why regulations are strict at the beginning of the Q & A.

11) It is not clear what the mechanism is for proving that the taxes have been paid to the state. Who does the certificate come from? If it is the grower, does the retailer have an obligation to verify this information with the state, etc?

ANSWER TO 11 REGARDING CLARIFICATIONS: The statute regarding the taxing of marijuana is general in nature until and unless the regulations are adopted and enacted, whether by the MCB, by the Department of Revenue, or both. The complexity of the taxing system and the answers to the questions posed about details of taxing are not answered by the proposed regulations.

12) Section 3 AAC 306..715(c) suggests that the MCB office is going to issue an ID card that includes their photo; exactly how will the MCB office do that in Craig, Kake, King Salmon, Cold Bay, etc…?

ANSWER TO 12 REGARDING CLARIFICATIONS: If the proposed regulation were enacted, an application will indicate how to submit a photo. The applicant will provide the photo, not the MCB office.

13) In Section 15 of Article 1 it mentions, "A marijuana establishment must have a right to the possession of a licensed premises at all times, and may not lease a licensed premises to another person for any reason." Will a residential lease agreement between tenant (hopeful cultivation licensee) and land/home-owner satisfy this requirement of the application process?

ANSWER TO 13 REGARDING CLARIFICATIONS: The proposed regulation provides that a marijuana licensee may not lease its licensed premises to another person, thus relinquishing its right of possession to the premises. This regulation is based on a similar restriction on alcohol licensees found in AS 04.11.450(c).

14) Is an individual applying for a cultivation license required to have an Alaska state business license prior to applying for the cultivation license?

ANSWER TO 14 REGARDING CLARIFICATIONS: Yes.

15) What about businesses that utilize a fume hood or similar device? Any type of lab setup or distillation or whatever would require cameras that can see every counter, dish, sink, work station, or whatever to provide a view of everyone’s activities at all times.

ANSWER TO 15 REGARDING CLARIFICATIONS: The proposed regulation, found in 306.725(c), requires video placement that provides an unobstructed view of the regular activity without sight blockage from the type of hoods in the question.

Questions regarding regulations regarding businesses starting before rules were in place:

1) Section 3 AAC 306.010(d)(2) only applies within the first two years of the effective date of this section—why is additional leniency necessary on potential business owners (licensees) who were not complying with current law?

2) In 3 AAC 306.010(d)(2) what is illegal? The state needs to understand it has not provided clear guidance to the public as to what is legal and what is not legal and therefore cannot condemn those who had no clear notice of the state’s interpretation of these grey areas. If the state cannot articulate its position on the status of the law, how can the public be held accountable for acting upon its own interpretation? And what type of license are we referring to? The regulation does not specify that it be a marijuana license, is it referring to a state issued business license?

ANSWER TO 1-2 REGARDING OPERATION PRIOR TO REGULATION ADOPTION: The proposed regulation is intended to provide some consequence with the board in the application for any business that began operating as if it had a marijuana establishment license before those licenses were available. Although the board is not in control of whether or not such a business operating illegally is prosecuted, the proposed regulation gives the board a mechanism to determine whether a business which will not wait for the rules to be in place before beginning to operate is a good candidate to hold a license in a highly regulated industry. Definitions of terms is anticipated to be covered in Article 9, which will be in Set #3 of the proposed regulations.

Questions regarding prohibition of person with felony conviction getting license:

1) The regulations indicate that a national criminal history check will be run for applicants. A previous section indicates that a license will not be issued to someone convicted under state law. Are there federal convictions which may or may not be applicable to the application? Possession of marijuana, while a federal crime, is no longer a violation of state law. Will the board provide guidance as to which types of federal convictions are or are not relevant to whether a person can be issued a license?

ANSWER TO 1 REGARDING FELONY CONVICTIONS: AS 17.38.100(i) prohibits issuing a marijuana establishment license to a person who has been convicted of a felony within the preceding five years or who is currently on probation or parole for that felony. The statute does not distinguish between felony convictions from Alaska or elsewhere.

Questions about marijuana handler permits:

1) The regulation requires a marijuana handler permit holder to have it in their “immediate possession” while on the licensed premises. Has the Board also considered requiring or allowing the licensee to post a list, or a copy of each permit, in a visible place in the establishment?

2) In Chapter 306 Article 7 section 715 it mentions that a marijuana handler permit is required for every employee and agent of the marijuana industry and that a marijuana education course is going to facilitate this. My question for the board is how can I get approval if I were to start a marijuana handler permit education course and is there any associated costs at this time?

3) When will marijuana handler courses/permits be available? These are required prior to licensure too, correct?

4) Is there a marijuana handler permit fee?

ANSWER TO 1-4 REGARDING MARIJUANA HANDLER PERMITS: The proposed regulation provides that the board will approve marijuana handler education courses and that to be approved a course must cover the topics specified in 3 AAC 306.715(b). This requirement is similar to the requirement in Title 4 that employees of liquor licensed establishments have a card certifying that they have completed an alcohol server training course. That card is required to be in the immediate possession of the card holder while on the licensed premises. The proposed regulation does not specify whether the board will charge an organization offering a course a fee for becoming certified by the board, and does not specify the fee for an individual to obtain a permit. Courses will not begin receiving approval by the board unless and until the regulation is enacted in 2016.

QUESTIONS NOT COVERED IN THE PROPOSED REGULATIONS IN SET #2 (not answered)

1) This is regarding required transportation and lab testing of marijuana. Many Alaskan communities are not connected to the road system, like much of Southeast Alaska, including my town Juneau. How will marijuana be transported between towns if it is federally illegal to transport marijuana via airplanes?

2) How will testing be done if marijuana cannot be transported through the postal service or airplanes? Oregon allows marijuana to be transported on airplanes as long as the flights are within the state. Will Alaska do the same thing?

3) How can a cannabis business sell a product to a consumer without explaining the effects? This is a threat to the health and safety of product consumption to consumers.

QUESTIONS THAT ARE ACTUALLY COMMENTS OR RHETORICAL QUESTIONS THAT CANNOT BE ANSWERED BY THE PROPOSED REGULATIONS IN SET #2 (not answered)

1) What is the rationale behind forcing a company to play a guessing, trial and error game with the cultivation of a controlled substance such as marijuana? What harm is there in allowing an experienced commercial cultivator to come up to Alaska and help plan the layout of the grow, point out potential unforeseen safety hazards and create a plan for minimizing those hazards, teach an Alaskan cultivator how to grow without use of chemicals and to minimize the risk of mold and other impurities in the product? Why is the state proposing a regulation that will certainly increase black market participation and ensure criminal actors involvement in the commercial state sanctioned market? By cutting off their ability to be successful in simply reaching the minimum state requirements, the state is providing the perfect opportunity for criminal actors to step in and take advantage of the opportunity to fund these business as the criminal actors will be the only start-up capital an average Alaskan will have access to under the current proposed regulations.

2) Since when did it become the government’s job to curtail what information the public receives about a substance? Since when did the state stop trusting citizens with all the information and allowing them to make an independent informed choice and not one based on only state filtered information and propaganda?

3) What substantial government interest is the board seeking to implement? Does this prohibition on any and all promotional materials directly advance that substantial government interest? Does the blanket prohibition on any and all promotional activities reach no farther than necessary to accomplish the substantial government interest? If any one of these questions cannot be answered affirmatively, and articulate a substantial interest that cannot be met in a less restrictive manner, then this prohibition needs to be removed, as it is unconstitutional.