Oregon and Alaska Prepare for Recreational Marijuana

Meeting on Recreational

While Washington, D.C., is caught in a bog as to whether Initiative 71, the legalization of recreational marijuana, can truly be implemented, Oregon’s Measure 91 and Alaska’s Measure 2, both legalizing recreational marijuana, are each being processed to establish the necessary infrastructure for recreational markets.

Oregon and Alaska have to determine the best methods for cultivating, testing and distributing marijuana. They may look to Colorado and Washington state as models, but their programs will need to be tailored to size, giving lawmakers the opportunity to refine elements of the industry.

 

Onward in Oregon

The Oregon Medical Marijuana Program has been in effect since May 1, 1999. Until 2013, the program only allowed for patients and caregivers to grow their own; however, on March 3, 2014, House Bill 3460 was enacted, which created a medical marijuana registry system for licensing, regulating and overseeing medical marijuana distribution facilities in Oregon.

The law also required that medical marijuana be tested by state-licensed outlets for mold, mildew and pesticides. The law did not require seed-to-sale tracking.

On November 4, 2014, Oregon passed Measure 91, legalizing the sale and possession of recreational marijuana, with 56 percent of the vote. Taken together, medical and recreational marijuana have been estimated to have a legal market value of more than $720 million. With such potential, Measure 91 tasks the Oregon Liquor Control Commission with writing rules for a system that will track marijuana from seed to sale as a means of preventing diversion to the black market.

Steven Siegel, CEO of BioTrackTHC, provider of compliance, tracking and inventory management software, knows that some Oregonians may struggle with such a system’s learning curve, even though a seed-to-sale system is vital for preventing diversion.

“Oregon’s had legal marijuana for awhile, and all of sudden now they’re required to use technology. The biggest transition of a traceability system is the understanding and acceptance of it,” Siegel said.

Oregonians accustomed to the medical marijuana market will now have to familiarize themselves with the recreational market and for those that choose BioTrackTHC, Siegel’s team is ready to help. “There’s a huge transition of non-techies that really just resent all of sudden having to use this advanced technology. We try to make it simple and easy for them,” Siegel said.

On December 8, 2014, the Oregon Liquor Control Commission put out a Request for Information on seed-to-sale inventory tracking systems. While responses were due by December 19, the OLCC clarified that the RFI was “neither a Request for Proposals (RFP), nor a supplier ‘pre-qualification.’”

According to the OLCC’s “Budget Request for Implementation of Recreational Marijuana,” actions through July 2015 include an action to “release and award RFP for inventory tracking system (seed to sale).” For those seed-to-sale software providers that didn’t respond to the RFI, Oregon’s RFP should be released in the first half of 2015.

The RFP for an inventory tracking system will likely bring multiple out-of-state proposals, but curious minds will have to wait until after January 4, 2016, to find out if non-residents have submitted licensing applications to be producers, processors, wholesalers and retailers of marijuana in the state.

The concern over out-of-state players entering Oregon’s marijuana market was a hot topic on December 11, 2014, during a town hall meeting hosted by Oregon Public Broadcasting. The meeting also covered additional concerns in the state including the status of its medical marijuana program, municipal taxes and cannabis culture.

Discussion panelists included Hilary Bricken, attorney at Harris Moure’s Canna Law Group; Rob Bovett, legal counsel for the Association of Oregon Counties; Seth Crawford, Sociology instructor at OSU; Amy Margolis, criminal defense attorney at Margolis Law; and Matt Walstater, owner of Pure Green, a medical marijuana dispensary in Portland.

The issue of price was on the minds of panelists and audience members. Amy Margolis pointed out that “[Oregon’s] taxation system is much less onerous” than Washington’s and as far as product pricing goes, “The price is going to adjust itself by how much product is going in, what the demand is, what the quality is, and on some level we need to let the price be adjusted by the market … . This is a whole new economy.”

Margolis continued, “[Oregon is] in an interesting and unique position. We don’t have the residency requirements that both Colorado had and that Washington has and that was on purpose… . We are a small state, we have along the I5 corridor a fairly populated area. Once you start going east, we become less and less populated. There are going to be zoning restrictions, there are going to be real time real estate restrictions … so I think what we’re going to see happen is a natural regulation of big marijuana coming into Oregon and I’d like to see how that plays out.”

For those anxious to legally use recreational marijuana, starting July 1, 2015, under Oregon law, Measure 91 will allow the personal use and possession of recreational marijuana. However, if you are anxious to shop at a recreational dispensary, you will have to wait. According to Rob Patridge, chair of the OLCC, “best case scenario, last half of 2016 before [recreational dispensaries are] up and running.”

 

Obstacles in Alaska

Alaska legalized medical marijuana in 1998, but the law neglected to establish a system for state-licensed dispensaries. Now, it is 2015 and Alaska is in need of a regulatory system to carry out Measure 2, the legalization of recreational marijuana, which passed with 53 percent of the vote on November 4, 2014.

On November 26, 2014, the Alaska Division of Elections certified the measure, meaning it will go into effect on February 24, 2015. However, according to the measure, this does not mean dispensaries will open on this date, rather “possessing, using, displaying, purchasing, or transporting marijuana accessories or one ounce or less of marijuana” will be legal, as will “possessing, growing, processing, or transporting no more than six marijuana plants, with three or fewer being mature, flowering plants.”

Alaska has the opportunity to harness an estimated legal market of almost $135 million, but regulatory uncertainties may prevent it from coming together on time. Alaska’s Alcoholic Beverage Control Board is currently charged with crafting the state’s regulatory framework for recreational marijuana and has until November 2015 to finalize the state’s regulations, including, but not limited to, licensing, labeling, taxation, security, health and safety. As indicated in Measure 2, the board must begin accepting and processing applications for marijuana establishments by February 2016, with licenses being awarded by May 2016.

While Alaska’s ABC Board has begun the work needed to implement the many requirements of Measure 2, state Sen. Lesil McGuire has announced that she plans on introducing legislation that would create a marijuana control board, as permitted in the measure’s language, so that a separate regulatory board is charged with setting up the state’s regulations for recreational marijuana.

The main issue with creating a separate marijuana control board is that doing so would likely delay the regulatory process; however, McGuire has already taken the initiative to study the regulations at work in Colorado, Washington and Oregon, as evidenced by her office’s request for a report by Alaska’s Legislative Research Services. This report was delivered on November 28, 2014, and examined the establishment of mechanisms for the regulation of marijuana in Alaska.

The report highlighted that municipalities can exercise local control by prohibiting marijuana cultivation, processing and sales by ordinance or voter initiative. Amy Dembowski, member of the Anchorage Assembly, already attempted to prohibit recreational marijuana in Anchorage by proposing a ban, but her efforts failed on December 16, 2014.

The report also indicated that Measure 2 does not currently provide any provisions regarding diversion prevention, most often embodied in the form of a seed-to-sale tracking system; however, such provisions may be added during the course of developing regulations.

According to Steven Siegel, CEO of BioTrackTHC, “Alaska has been quietly in the background looking at all of the technologies,” as well as, “aggressively looking into everything they’re going to have to include in their traceability system so they can have all of their check boxes marked prior.”

In the marijuana industry, traceability systems are in high demand not only as a means for business owners to track inventory and prevent diversion, but also as a means for states to reinforce that the industry will not contribute to criminal enterprises.

Siegel explained that the sophistication of BioTrackTHC’s traceability system makes it so “if you’re doing anything questionable, you don’t want to go in [BioTrackTHC] because we’re going to bust you.” States need this type of reassurance because even though the cromnibus has prevented the Department of Justice from undermining states with medical marijuana programs, it did not address recreational programs. Requiring a seed-to-sale system is one way for states to demonstrate the industry’s dedication to lawful operations that do not necessitate federal interference.

With the ABC Board and McGuire investigating regulations for traceability, home cultivation, licensing, tax structure, driving under the influence of marijuana and revenue use, Gov. Bill Walker is also investigating “whether the state can extend its timeline for crafting marijuana regulations,” according to Alaska Dispatch News.

“The initiative creates a new industry that will require regulatory infrastructure that Alaska has to create from scratch and within a very short period of time. It’s no easy task,” Grace Jang, spokesperson for Gov. Bill Walker, said.

Cynthia Franklin, director of the ABC Board, also spoke with Alaska Dispatch News. “The timelines that are set out … are tight. Very tight,” Franklin said. However, the restrictive timeline was “very intentional,” according to Franklin.

The main concern is that delaying the regulatory timeline could push it to the point of licenses not being issued by February 2017, the two year mark at which point the legislature can repeal Measure 2, as noted in the report by Alaska’s Legislative Research Services. If the legislature seeks to repeal Measure 2 in February 2017 and no licenses have been issued by that time, repealing the measure will be easier to execute.

With this in mind, Alaskans ready to enter the state’s recreational market can only hope that the state carries out the will of the people, whether through the ABC Board or a marijuana control board, and does not intentionally thwart progress in the Last Frontier.

 

Post-Election Proof Needed

Election day 2014 was a pivotal moment for recreational marijuana. The people of Oregon and Alaska voiced their opinion and pronounced their willingness to embrace recreational marijuana markets. While advocates of legalization certainly deserve to celebrate the passing of Measure 91 and Measure 2, the true victory will be when each state successfully implements an infrastructure that demonstrates it can regulate recreational marijuana as a safe and viable product for the state’s economic benefit.

Caroline Cahill is the Managing Editor of MJINews. She earned her BA in Communications from College of Charleston and her MFA in Creative Writing from Virginia Commonwealth University. She has previously worked in higher education, development and radio. You can follow her on Twitter @CtheresaC.

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