The dozens or hundreds of new marijuana businesses in Alaska this year will be climbing a mountain.<\/p>\n
There\u2019s one big difference between summiting Denali and opening the doors of an Alaska pot shop: There is no guide for starting a marijuana business in Alaska. <\/p>\n
Unlike every other state that has legalized recreational marijuana, Alaska is starting from scratch, with no medicinal dispensaries to show the way.<\/p>\n
In the next year, dozens \u2014 if not hundreds \u2014 of businesses across Alaska will struggle forward to take advantage of a new industry. Two and a half months before the application period opens for marijuana licenses, there are nearly three dozen active businesses registered with names that include marijuana or cannabis. There are dozens more with names that include \u201cweed\u201d or \u201cgreen.\u201d <\/p>\n
At stake for these businesses is a share of a new industry expected to be worth more than $100 million. State tax revenue alone is estimated to be between $5.1 million and $19.2 million.<\/p>\n
Between these startups and their revenue is a mountain of regulation. At the beginning of this month, the Marijuana Control Board signed 133 pages of new regulations, but those haven\u2019t been finalized, and a series of other state agencies including the Department of Environmental Conservation, Department of Labor, even the Division of Weights and Measures, are just getting started.<\/p>\n
\nSizing up the terrain<\/strong><\/p>\n In 2014, when Alaskans approved the sale of recreational marijuana, they did so with a ballot measure that promised to \u201cregulate marijuana like alcohol.\u201d Cindy Franklin is the state\u2019s director of the Alcoholic Beverage Control Board, and now she\u2019s also the director of the Marijuana Control Board.<\/p>\n \u201cThis is a complex process,\u201d she said of starting up a marijuana business, but it\u2019s not entirely dissimilar from alcohol, which has been operating under fairly constant rules in Alaska since 1980.<\/p>\n \u201cWhile it\u2019s complex, it\u2019s not impossible. It happens every day,\u201d she said.<\/p>\n Bleeding Heart Brewery in Palmer is the state\u2019s newest brewery \u2014 so new that its license is still pending in front of the alcohol board.<\/p>\n \u201cWe are intentionally a nano, niche brewery,\u201d said one of its founders, Zach Lanphier, \u201cbut we still have to jump through all the hoops.\u201d<\/p>\n For Bleeding Heart, those hoops have meant more than a year of paperwork and waiting. The biggest wait, 205 days, came from the federal government\u2019s tax licensing board. <\/p>\n \u201cIt took us 205 days for us to finally be approved to give them money \u2014 not to brew, not to sell alcohol, just to give them money,\u201d Lanphier said.<\/p>\n Other permits \u2014 state and local \u2014 needed months more.<\/p>\n Marijuana businesses aren\u2019t regulated by the federal government, which still considers them illegal. That leaves only state and local authorities, but \u201conly\u201d conceals the size of the work to be done.<\/p>\n \u201cWhoever wants to open a dispensary, have more money than you would expect you\u2019d need,\u201d Lanphier advised, \u201cand double your timeline.\u201d<\/p>\n What route to take?<\/strong><\/p>\n To date, the state of Alaska has not released any guidance for new marijuana businesses. While the experience of alcohol businesses provides some guidance, some in the state are pointing Alaskans Outside. Krystyna Markiewicz, an expert with the Alaska Department of Labor, suggests examining the business readiness guidebook created by Oregon. (http:\/\/www.oregon.gov\/olcc\/marijuana\/Documents\/BusinessReadinessGuide_RecreationalMarijuana.pdf)<\/p>\n \u201cThey are really good,\u201d she said. \u201cWhen we start assisting employers … we would probably put something like this together.\u201d<\/p>\n The first step in Oregon\u2019s checklist \u2014 and a first step recommended by Alaska officials \u2014 is to simply check whether marijuana sales are legal in your town or area. Alaska\u2019s marijuana regulations allow communities to opt out of retail sales, and even though those regulations haven\u2019t been fully implemented, some towns have already voted to ban retail sales \u2014 Palmer, for one.<\/p>\n There are four types of marijuana license \u2014 retail sales, manufacturing (as in edibles), growing, and testing \u2014 and towns may forbid any or all types of marijuana business.<\/p>\n The Marijuana Control Board has been informally keeping track of towns that have imposed bans, Franklin said, but there\u2019s not yet an official list. For now, staying legal is up to future business owners.<\/p>\n Financing the opportunity<\/strong><\/p>\n Unlike alcohol-related businesses, which can raise money from Outside \u2014 Bleeding Heart Brewery used a Kickstarter campaign \u2014 Alaska\u2019s marijuana businesses are limited to Alaska backers. According to state statute, every business partner in an Alaska marijuana business must be a state resident eligible for a Permanent Fund Dividend.<\/p>\n Because of federal restrictions, banks won\u2019t loan marijuana businesses money, and federal small-business loan programs are closed as well. That means backing has to come from individual Alaskans in handshake deals. <\/p>\n Any new business needs a name and a business license, which means a trip to the Alaska Department of Commerce and a $50 fee. According to the database of licensed Alaska businesses, dozens of marijuana entrepreneurs have already taken this step.<\/p>\n Limited Liability Corporations, commonly referred to as LLCs, are frequently used to organize financial backers behind a business. LLCs also must be registered with the state, and the Department of Commerce database already lists an ample slate of LLCs organized to promote marijuana oils, tourism and retail sales. <\/p>\n Local limits<\/strong><\/p>\n Once a prospective business has its financial footing set, it needs to start looking at its physical footprint.<\/p>\n Even within towns that allow retail marijuana, there will be restrictions on where it can take place. The state says all marijuana businesses have to be 500 feet from schools and churches. Towns can add their own restrictions. Juneau, for example, has already passed a zoning ordinance covering the marijuana industry. That ordinance restricts cultivation and sales to different areas of the city, limiting the real estate available to entrepreneurs.<\/p>\n \u201cYour big issues with the municipality are land use and zoning and the community council,\u201d Franklin said.<\/p>\n Chrissy McNally is in front of the marijuana issue for the City and Borough of Juneau\u2019s Community Development Department and said that if a business needs help, the office has an easy tool to figure out the correct zone for a business and whether a particular lot falls within a buffer zone.<\/p>\n Once a marijuana business has picked a spot and double-checked to make sure the land is zoned appropriately, it\u2019s likely to need a permit from a planning commission or a similar local agency. <\/p>\n \u201cI know at some point they\u2019ll have to get a conditional use permit,\u201d said Dennis Watson, a member of Juneau\u2019s marijuana task force and a planning and zoning commissioner, at the final meeting of the task force in December.<\/p>\n To get a head start, McNally recommends what\u2019s called a pre-application conference. She held the first one for a Juneau marijuana business in the first week of the new year.<\/p>\n During that conference, a business comes in with a proposal and site plan and sits down with different city departments to explain what to expect. <\/p>\n \u201cIt doesn\u2019t have to be a full application, but you should have a pretty good idea of what you want to do,\u201d she said.<\/p>\n At that meeting, McNally will also lay out a timeline.<\/p>\n \u201cI would say at a minimum \u2026 two months\u201d to get a conditional use permit, she said, adding that specific cases will vary.<\/p>\n Once a business has its conditional use permit, it can get a building permit for any renovations that have to be done to open a new store, lab, growing facility or manufacturing facility. It usually takes one to two weeks to get that permit, McNally said, and inspectors \u2014 including the fire marshal and building inspectors \u2014 will need to sign off on the work to ensure the building is safe to use. <\/p>\n Even before construction, if a business has its local permits in hand, it can start to seek two other permission slips, this time from the state.<\/p>\n State control<\/strong><\/p>\n Much of the attention on the marijuana issue has been focused on the permits to be issued by the state\u2019s Marijuana Control Board. That board actually comes into the process fairly late from the perspective of a business.<\/p>\n Before applying to the state board, the first step is to advertise. Like businesses that deal in alcohol, marijuana businesses are required to state their intentions. That means posting a copy of the application \u2014 completed but not submitted \u2014 at the business location and on a public notice board.<\/p>\n The new business is also required to post a notice in the local newspaper once a week for three weeks. If there\u2019s no newspaper nearby, it has to make an announcement on the radio for three weeks.<\/p>\n The whole process is intended to make sure every neighbor knows that a new marijuana business is about to open.<\/p>\n Only after that notice period is the business allowed to send in its application. That application includes everything the local planning and zoning office needs, plus a business plan, a list of all the financial backers (who also must have passed a marijuana-handling certificate class).<\/p>\n Businesses that deal with edible or drinkable marijuana products have another hurdle: As they apply for a state marijuana permit, they also need to apply for a Department of Environmental Conservation food permit.<\/p>\n \u201cYou could start a marijuana application .. and then go over to DEC and say that I\u2019ve initiated the process,\u201d Franklin said. \u201cWe are not going to consider your application complete until we have a check-box from them. \u2026 It\u2019s like rocking back and forth.\u201d<\/p>\n Kim Stryker manages the state\u2019s food safety program and said marijuana businesses manufacturing edibles should expect to be treated just like anyone else.<\/p>\n \u201cIf they\u2019re going to need a food manufacturing (permit) \u2026 then they would need to have the equipment and buildings just like any other food processing or restaurant,\u201d she said.<\/p>\n That means having countertops and surfaces that can be kept sterile, using safe refrigeration and food-handling techniques, and keeping sanitation in check.<\/p>\n \u201cOur mission is to ensure safe food,\u201d she said. \u201cWe understand that it\u2019s our job to facilitate the implementation of the citizen initiative, and we\u2019re committed to doing that.\u201d<\/p>\n For both state permits, businesses are advised to apply once they have a local construction permit but before they start actual construction. <\/p>\n \u201cIt\u2019s much easier for you to know what you need out of the gate,\u201d Stryker said, if you talk to an expert first.<\/p>\n The permitting process for both the marijuana control board and environmental conservation involves submitting site plans, and it\u2019s much easier to change a plan than it is for something that\u2019s already been built, Stryker said.<\/p>\n DEC regulations state that a business should apply for a permit at least 30 days before beginning construction or operation, and Stryker said a business should expect to spend at least that amount of time in the process.<\/p>\n The state marijuana permit is expected to take up to 90 days for approval, but that limit can be extended if a business needs to change something to meet regulations or because another permit hasn\u2019t yet been issued.<\/p>\n Weighed and measured<\/strong><\/p>\n Water-quality and air-quality experts with Environmental Conservation said it\u2019s unlikely that any marijuana operation would require a pollution permit. Only outdoor grow operations would need a water discharge permit, and indoor growing operations would likely send their water into a municipal sewer system (where a local permit may be required). The state\u2019s air-quality regulations are designed around air pollution \u2014 there\u2019s no provision for odor \u2014 which means marijuana operations should not be affected.<\/p>\n There is one small permit that marijuana businesses will need to get, and it comes from an unlikely place \u2014 the Alaska Department of Transportation. Don Brewer is the state\u2019s chief of weights and measures, and he\u2019ll be the person in charge of making sure that every marijuana scale in the state is accurate.<\/p>\n \u201cAnytime a business is using a scale in commerce, they need to register it with the state of Alaska,\u201d he said.<\/p>\n For new businesses, he said the biggest thing to know is to buy a certifiable scale, not just one off the shelf. That scale will need to be professionally calibrated, then certified by Brewer\u2019s division.<\/p>\n You\u2019ve probably already seen his work \u2014 each gas station pump in the state carries a label from the division of weights and measures. Each marijuana scale will have to do the same.<\/p>\n Taxed and spent<\/strong><\/p>\n When a business has all its permits in hand, when it\u2019s built a storefront and stocked its shelves, there\u2019s one final hurdle: taxes. It\u2019s likely to be a big one.<\/p>\n Under federal law, any bank working with marijuana business could face prosecution. That has meant that businesses in Colorado, Washington state and Oregon are cash only, hauling sacks of paper bills to pay staff, buy electricity, even pay taxes. That\u2019s likely to be the case in Alaska as well, said Brandon Spanos, deputy director of the tax division within the Alaska Department of Revenue.<\/p>\n \u201cCash deposit is really our biggest issue,\u201d he said.<\/p>\n Speaking in December, Spanos said the division is re-drafting its regulations and procedures so it has the capability to handle millions of dollars in physical bills once sales begin. <\/p>\n \u201cWe have other issues that are going to be discussed in the regulations as well, but they\u2019re kind of lesser,\u201d he said. \u201cReceiving the cash is the big issue.\u201d<\/p>\n Cash transactions promise to be a huge hurdle for businesses as well. Spanos said the state is currently planning to accept payments only in Anchorage, and possibly in Juneau. Anyone operating a marijuana business outside those two cities will have to travel to pay their bills.<\/p>\n \u201cWe don\u2019t have sufficient employees in all the locations to be able to collect the cash,\u201d Spanos said. \u201cThere\u2019s going to be a limited number of locations.\u201d <\/p>\n In the first full year of operations, Spanos expects the state to earn $12 million in revenue from marijuana, all of it in cash.<\/p>\n Cash will mean a need for armored cars, guards, and tellers to handle it all \u2014 both on the business side and the state\u2019s side.<\/p>\n Even once the doors are opened and marijuana starts flying off the shelves, this is one obstacle that won\u2019t go away any time soon.<\/p>\n","protected":false},"excerpt":{"rendered":" The dozens or hundreds of new marijuana businesses in Alaska this year will be climbing a mountain. There\u2019s one big difference between summiting Denali and opening the doors of an Alaska pot shop<\/a>: There is no guide<\/a> for starting a marijuana business<\/a> in Alaska. Unlike every other state that has legalized recreational marijuana, Alaska is […]<\/p>\n","protected":false},"author":426,"featured_media":32345,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_stopmodifiedupdate":false,"_modified_date":"","wds_primary_category":4,"footnotes":""},"categories":[4],"tags":[230],"yst_prominent_words":[],"class_list":["post-32344","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-state-news"],"_links":{"self":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/posts\/32344","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/users\/426"}],"replies":[{"embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/comments?post=32344"}],"version-history":[{"count":0,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/posts\/32344\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/media\/32345"}],"wp:attachment":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/media?parent=32344"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/categories?post=32344"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/tags?post=32344"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/yst_prominent_words?post=32344"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}