Pubdate: Mon, 07 Sep 2015
Source: Alaska Dispatch News (AK)
Copyright: 2015 Alaska Dispatch Publishing
Note: Anchorage Daily News until July '14
Author: DJ Summers, Alaska Journal of Commerce


Alaska cannabis businesses can sell you a hoodie, so long as the 
transaction is being recorded in high-definition.

The Alaska Marijuana Control Board covered allowable advertising 
strategies or retail dispensaries, as well as security protocol last 
week, on the second day of an extra meeting to consider draft regulations.

Board Director Cynthia Franklin argued Montana's greatest mistake was 
allowing too much advertising for medical marijuana. Montana 
legalized medicinal marijuana in 2004 only to have a ballot 
initiative introduced in 2014 to recriminalize it. This followed a 
ballooning industry that roused the ire of the state legislators and 
a 36 percent minority of the population who hadn't supported legal 
medicinal marijuana in the first place.

Because Alaska's initiative passed with a slimmer majority, she 
worries liberal advertising regulations could cause the same backlash 
from the 47 percent of Alaskans who voted against the ballot measure 
to legalize marijuana.

"Advertising is a very public thing," said Franklin. "Take a long 
view of this industry and don't think that we need to advertise to 
the max. If we go crazy ... we run the risk of attracting attention 
not only from our state legislators but the people who voted against this."

No giveaways, no medicinal claims

The board held a lengthy discussion on selling versus giving away 
branded merchandise like hooded sweatshirts, pens, calendars, or 
other popular gear.

Selling branded merchandise is legal, but giving it away for free is 
not, though the board plans to clarify language in a later draft to 
make those points clear.

"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," the draft language reads.

Franklin explained the purpose of the prohibition was to prevent the 
kind of marketing tobacco used with product giveaways.

"A time-honored tactic of the tobacco industry was to give away 
Marlboro Man T-shirts and candy cigarettes," said Franklin. "They 
were giving away branded merchandise to encourage promotion and 
purchase of their products."

Board members argued product giveaways were part and parcel of any 
developing business, and the board has no place making an economic 
restriction. Those decisions, they argued, should be left up to business.

"Should we be removing a business' ability to do this marketing?" 
asked board member Mark Springer. "They can't give out a calendar. A 
pen. A refrigerator magnet. I'm not convinced we have any place in 
that. That's economic management."

Franklin responded the public safety concerns of product giveaways, 
which she said could attract minors, are just as important as free market law.

"I'm not really sure it's the board's job to make business decisions 
in the other way," said Franklin, "to write rules that are designed 
to make businesses maximize their profits."

Springer introduced an amendment to clarify the language to say, 
"give away for free" rather than "distribute." The vote failed on a 
2-2 tie of the five-member board, with Loren Jones recused for a 
conflict of interest.

The cannabis industry, including growers, brokers, manufacturers, or 
retailers, cannot claim any therapeutic or medical benefits, a 
carryover from the state's colorblind marijuana initiative, which 
doesn't distinguish between medicinal and recreational marijuana.

"Do we really want to invite more federal attention by saying, 'yeah 
you can put whatever you want on there?'" asked Springer.

Board member Peter Mlynarik brought up a lack of substantiation for 
medical claims that would simply be inviting too much false advertising.

Members also added language to bar advertising on college campuses or 
near substance abuse and recovery facilities.

The high price of security

Security regulations will tack on another six figures worth of 
capital expense for potential cannabis entrepreneurs, regulations 
industry leaders say, and are onerous reminders of the black-market 
lens they believe the Legislature views them through.

"This treats us like criminals," said Sara Williams, owner of 
Midnight Greenery, regarding a regulation that requires marijuana 
businesses to wait three days before disposing of waste, in order for 
enforcement officials to inspect and log it for tracking purposes.

The bulk of public comment decried video surveillance, security 
lighting, and transportation regulations.

Draft regulations currently require extensive video surveillance, 
following Colorado laws. Alaska's proposed surveillance requirements 
specify cameras must be placed within 20 feet of a cannabis business 
entry or exit, with enough resolution to "clearly identify" features, 
and 40 days worth of video data storage.

Larry Clark, president and CEO of Valkyrie Security and Asset 
Protection, said the storage requirement alone, for high-resolution 
storage, will cost around $85,000.

Comments from the public, submitted electronically in writing to the 
board, expressed fear at the prohibitive cost. Board members echoed 
the concerns, wondering how strict the enforcement would be.

"It might violate the initiative by making business infeasible," said 
Emmett. "Let's say we pass this unamended, how strict are we going to be?"

Franklin said in response that enforcement, which will be under her 
authority as director, will not be looking to agonize over details.

"My management style over my enforcement officers is, this is our 
community," she said. "It's not designed to be a 'gotcha' environment."

On the transport side, the board removed a part of regulation that 
would have required a secure lockbox be bolted to the floor of 
whatever car is delivering marijuana.

After an amendment, the board allowed transporting in a sealed 
container in the trunk of a car, already required by the Municipality 
of Anchorage for all personal use.

On a cheap note, all members of the marijuana industry will be 
required to complete a marijuana handler's course, to be developed 
later by the board, and keep it in their place of licensed business.

Lastly, the board struck down a requirement of $1 million or greater 
in insurance coverage for any marijuana business, the unknown cost of 
which insurance companies have refused to tell the state of Alaska. 
Insurance will be required, but in no set amount. Insurance is not 
required by alcohol regulations, and board members again preferred to 
leave it in the hands of the business owners.

"I don't see it achieves any of our broader imperatives, and I do see 
this as an unnecessary burden," said board chair Bruce Schulte. "I do 
think it's good business policy, but it's up to businesses to decide 
that. It's just an additional layer of regulation we shouldn't be endorsing."
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MAP posted-by: Jay Bergstrom