Econ 919 — Weeding out old regs
Before planting a seed or selling a gram, every commercial marijuana business in Alaska first needs a license.
Applying for a license is a lengthy process that can take months — a problem the state’s Alcohol and Marijuana Control Office has identified as a top priority.
Now, there’s one less step to that process for businesses within the Kenai Peninsula Borough. The borough assembly agreed this week to lift the requirement that any new licensee go through the public hearings with the borough’s planning commission. Instead, budding businesses will go straight to the borough assembly and then to the state for approval.
It might seem like a small change. But Ryan Tunseth, owner of Kenai retailer East Rip and president of the Alaska Marijuana Industry Association, said it’s a step toward smoothing out the application process and bringing the industry’s regulations more in line with those of the alcohol industry.
When Alaska first legalized the commercial growth and sale of marijuana in in 2015, each borough and city got to make its own choices about how it would regulate the industry going forward at the local level.
Today, Tunseth said, local bodies are figuring out what’s working and what’s not. He said sending applicants to the planning commission was one example of the latter.
“That applicant’s still going to have to go through the very rigorous process at the state level,” Tunseth said. “I think this was a great move because it really stripped out a layer that didn't need to be there and probably ended up costing the borough time and money.”
All businesses start out applying to the state for a license.
Next, they go through a series of local steps — which, until now, included that planning commission hearing for businesses in the Kenai Peninsula Borough.
That’s followed by another set of public hearings from the Kenai Peninsula Borough Assembly and a review from the Alcohol and Marijuana Control Office. AMCO makes its own determination and sends that to the state’s Marijuana Control Board.
At a committee meeting Tuesday, Planning Department Director Robert Ruffner said the planning commission approval hasn’t been a productive step in that process.
“It’s just too much bureaucracy,” Ruffner said.
Tunseth said the extra layer dragged out a process that already can take months. Today, there’s a huge backlog in processing new business applications at the state level.
“So if you wanted to put in an application to put in your marijauna license, right now that process is probably going to take you the better part of six months,” Tunseth said.
AMCO Director Joan Wilson said her office is working to reduce that waiting time and is holding a listening session to talk about the process next week.
Tunseth said one reason for the backlog is the patchwork of steps at the local level.
“The state has to wait on lots of things,” Tunseth said. “One of those things may be being an approval from the borough. And that approval from the borough is something that had been tied to meetings of the borough planning commission, whether or not those got delayed.”
The application process generally doesn’t take as long on the alcohol side.
Assembly member Jesse Bjorkman said at the assembly meeting Tuesday the elimination of the planning commission step is an important move toward regulatory parity with that industry.
“When the people of Alaska voted to legalize marijuana in this state, it was the understanding of folks who did that that those businesses would be regulated like alcohol,” Bjorkman said. “And that’s not the case. That’s not what’s happening.”
The borough’s planning department will still provide letters to confirm that new businesses comply with local zoning requirements — including that they’re a proper distance from schools and substance treatment facilities, for example.
The borough’s change only applies to marijuana businesses outside of the cities. Incorporated cities like Kenai have their own approval process that include getting conditional use land permits from local planning bodies.
Data from AMCO shows 57 active marijuana businesses in the unincorporated parts of the peninsula to date. Tunseth said he thinks there’s been a thinning in new applications.
“People have a much better understanding now of what the profit margins are and how tough it is,” he said. “But I think they’re still happening, absolutely.”
He said there’s still a ways to go before the industry’s regulations are congruent with those of the alcohol industry.
For example, distributors can’t transport marijuana like they can alcohol, due to stringent chain-of-custody rules.
Marijauna businesses also have to work completely in cash and aren’t allowed to bank like other businesses. Tunseth has said fixing that rule is a big priority.