Alaska Marijuana Rules Get Finalized, For Now

Alaskans voted to legalize marijuana earlier this year, and late last month the Alaska Marijuana Control Board made changes to the regulations that will govern the marijuana industry in the state. The below summarizes the Board’s key changes.

Alaska's Marijuana RulesWhere Does The Money Come From?  A key issue for the marijuana industry in every state is finding the right balance between resident and out-of-state investors. We discussed the pros and cons of residency requirements here. The Alaska Board had to balance protecting local investors while also trying to make it easier for Alaska marijuana businesses to access the deep pockets of out-of-state investors. In large part because Alaska is such a small financial market, the Board ultimately leaned towards making it easier for outside investors to bring their dollars to The Last Frontier (though several Board members felt the new rule went too far in lowering the barrier to outside investment). The finalized rule reduces the residency requirement from the “permanent fund residency rules,” which require a full calendar year for an investor to gain residency, to the “voter registration residency rules,” which requires only 30 days and an Alaska address.

“Public” Consumption Of Marijuana? The Board also considered the issue of “public” consumption of marijuana in retail stores and “pot clubs.” Figuring out where and how marijuana might be consumed in a semi-public setting, (think Amsterdam “coffeeshops”), is a big deal, and Alaska has been on the forefront of this issue.

First, the Board had to decide what to do about “pot clubs” — private clubs with membership fees that allow members to bring their own marijuana to consume in a social environment. The Board decided it lacked authority under Ballot Measure 2 to regulate pot clubs because the Measure did not explicitly create a license for such entities. This finding leaves pot clubs free from Board regulations, but still on shaky legal ground. The legal concern with “pot clubs” is that they may fall under the definition of a “public place,” in which case consumption there could be punishable with a $100 fine. The Board’s emergency rules do not offer a clear answer as to whether pot clubs fall under the definition of “public place” or not, and there has yet to be any further instruction from administrative bodies, the legislature, or from litigation to offer a clear answer.

Second, the Board had to consider whether to allow consumption in marijuana retail stores. It decided to allow onsite consumption by enabling marijuana retail establishments to request “onsite consumption allowances” from the Board. The new rules will also allow retail establishments to sell snacks, beverages, and refrigerated products. Alaska is the first state to allow in-store consumption and so its experiment with this will no doubt be watched closely by the rest of the country.

Other Changes.  The new rules also addressed several other important issues:

  • The Board decided to keep the buffer for children’s centers, schools, and churches at 500 ft., an issue which was of particular concern for Alaskans because of their small towns and densely packed tourist areas.
  • The Board eliminated brokerage licenses, which would have created and regulated marijuana brokers as middle-persons between cultivators and retailers.
  • The Board voted to allow branding in Alaska’s marijuana market.
  • The Board decided mandated that marijuana products leave stores in opaque, childproof containers. It refused to implement stronger proposed childproofing requirements on the grounds that children are the responsibility of their parents, not marijuana retailers.
  • The Board eliminated potency limits for marijuana.

For more on Alaska’s new rules, check out this Alaska Journal of Commerce article.