Legislature(2015 - 2016)HOUSE FINANCE 519

04/10/2015 01:30 PM House FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Heard & Held
Heard & Held
Moved CSHB 15(FIN) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
HOUSE BILL NO. 123                                                                                                            
     "An  Act  establishing  the  Marijuana  Control  Board;                                                                    
     relating  to the  powers and  duties  of the  Marijuana                                                                    
     Control  Board; relating  to the  appointment, removal,                                                                    
     and  duties of  the director  of the  Marijuana Control                                                                    
     Board; relating to the Alcoholic Beverage Control                                                                          
     Board; and providing for an effective date."                                                                               
1:35:07 PM                                                                                                                    
CHRIS   HLADICK,  COMMISSIONER,   DEPARTMENT  OF   COMMERCE,                                                                    
COMMUNITY, AND  ECONOMIC DEVELOPMENT, relayed that  the bill                                                                    
was  the funding  vehicle for  the marijuana  initiative and                                                                    
would also create  a board to regulate  marijuana (an option                                                                    
left  to the  legislature  in the  initiative language).  He                                                                    
discussed  that the  administration  had spent  considerable                                                                    
time  reviewing  a variety  of  options  for the  regulatory                                                                    
framework.   Following    its   work    the   administration                                                                    
recommended a new five-member volunteer  board with a shared                                                                    
staff with alcohol. He explained  that while some additional                                                                    
staff was needed for the  increased workload associated with                                                                    
the  implementation  of the  initiative  and  a new  license                                                                    
pool, the cost  of the board remained  reasonable at $50,000                                                                    
annually for board travel and  per diem. He relayed that the                                                                    
cost  was  comparable to  what  would  be required  for  the                                                                    
Alcoholic Beverage  Control (ABC)  Board to  hold additional                                                                    
meetings to address marijuana  regulations and licensing; it                                                                    
would provide  a board solely  dedicated to  the responsible                                                                    
and safe regulation of the new industry.                                                                                        
1:37:22 PM                                                                                                                    
CYNTHIA  FRANKLIN,  DIRECTOR,   ALCOHOLIC  BEVERAGE  CONTROL                                                                    
BOARD,  DEPARTMENT  OF   COMMERCE,  COMMUNITY  AND  ECONOMIC                                                                    
DEVELOPMENT, provided a sectional analysis of the bill:                                                                         
     Section 1:  Amends Title 4  naming the director  of the                                                                    
     Alcoholic  Beverage Control  Board as  the director  of                                                                    
     the  Marijuana Control  Board. Establishes  the process                                                                    
     for appointment and removal of the director.                                                                               
Ms.  Franklin  elaborated  that a  majority  vote  would  be                                                                    
required for  both boards. She continued  with the sectional                                                                    
     Section 2: Establishes the 5 member Marijuana Control                                                                      
     Board in Title 17 with designated seats for public                                                                         
     health, rural, public safety, and industry.                                                                                
Ms. Franklin  added that the  section reflected the  way the                                                                    
division wished alcohol  was regulated; not the  way the ABC                                                                    
Board was  currently structured.  The structure for  the ABC                                                                    
Board was currently  contained in SB 99,  Title 4 revisions.                                                                    
She  stated  that there  was  no  requirement for  a  public                                                                    
health  or  public  safety  representative  on  the  current                                                                    
makeup of  the ABC Board.  The division felt the  seats were                                                                    
essential  in  the  new marijuana  industry.  She  addressed                                                                    
Section 3:                                                                                                                      
     Section  3:  Establishes  terms  of  office  for  board                                                                    
     members  and chair,  sets  out  requirements for  board                                                                    
     meetings  and  provides  for  board  member  per  diem.                                                                    
     Outlines the powers and duties  of the board to propose                                                                    
     and  adopt  regulations, establish  qualifications  for                                                                    
     licensure,  review  applications  for  licensure,  hear                                                                    
     appeals from  the actions of  the director,  reduce the                                                                    
     area of  a licensed  premise, and to  adopt regulations                                                                    
     according   to  AS   44.63.  Establishes   the  board's                                                                    
     enforcement powers as mirroring  those of the Alcoholic                                                                    
     Beverage  Control  Board   outlined  in  AS  04.06.110.                                                                    
     Provides for  appointment and  removal of  the director                                                                    
     and establishes the duties of the director.                                                                                
Ms. Franklin  elaborated that Section  3 included  the first                                                                    
change  from   the  House   Labor  and   Commerce  committee                                                                    
substitute;  it  put  into  statute   the  intent  that  the                                                                    
marijuana  board would  meet immediately  following the  ABC                                                                    
Board  in order  to  reduce spending  on  staff travel.  She                                                                    
moved to Sections 4 through 11:                                                                                                 
     Section  4: Defines  board in  AS 17.38.900(1)  to mean                                                                    
     the Marijuana Control Board created by this act.                                                                           
     Section 5:  Defines "director" as  the director  of the                                                                    
     Alcoholic Beverage Control  Board and Marijuana control                                                                    
     board. Defines  "registration" to mean  registration or                                                                    
     licensure as determined by regulation.                                                                                     
     Section  6:  Amends the  duties  of  the Department  of                                                                    
     Commerce,  Community,   and  Economic   Development  to                                                                    
     include providing  clerical and  administrative support                                                                    
     for the Marijuana Control Board.                                                                                           
     Section 7:  Places the Marijuana  Control Board  on the                                                                    
     list of entities whose procedural  hearings are held by                                                                    
     the Office of Administrative Hearings.                                                                                     
     Section 8: Provides for a sunset date.                                                                                     
     Section   9:   Amends   uncodified  law   for   initial                                                                    
     appointment of board members.                                                                                              
     Section  10: Provides  for transition  regulations such                                                                    
     that  if the  Alcoholic Beverage  Control Board  adopts                                                                    
     any regulations  before the Marijuana Control  Board is                                                                    
     created,   those   regulations  can   be   implemented,                                                                    
     enforced, amended or repealed  by the Marijuana Control                                                                    
     Board  and provides  that  regulations  adopted by  the                                                                    
     board in  any transition  period take effect  after the                                                                    
     effective date of the act.                                                                                                 
     Section 11: Provides for an immediate effective date.                                                                      
1:40:34 PM                                                                                                                    
Co-Chair Thompson  relayed that  the bill would  come before                                                                    
the  committee   again  at  a  later   date  for  additional                                                                    
discussion and public testimony.                                                                                                
Vice-Chair Saddler asked why Sections  1 and 2 both included                                                                    
provisions for the appointment and  removal of the director.                                                                    
Ms. Franklin  replied that Section 1  amended existing Title                                                                    
4 law so  that the statutes regarding  alcohol also indicate                                                                    
that the  director of the  ABC Board was  simultaneously the                                                                    
director  of   the  Marijuana   Control  Board.   Section  2                                                                    
addressed the same issue in Title 17.                                                                                           
Representative  Gara thanked  Ms. Franklin  for her  work on                                                                    
the bill. He observed that  enforcement would be needed when                                                                    
commercial   operations  began.   He  believed   that  extra                                                                    
enforcement   staff   (beyond   current   police   officers,                                                                    
troopers,  and law  enforcement)  were  not necessary  until                                                                    
revenue   was   generated  from   marijuana.   Additionally,                                                                    
regulations  would   need  to  be  developed;   however,  he                                                                    
disagreed  with  the process  where  the  Department of  Law                                                                    
charged the  ABC Board  for work done  by its  attorneys. He                                                                    
did not  believe the  services represented  a real  cost. He                                                                    
questioned  whether  the  cost  should be  included  in  the                                                                    
fiscal note.                                                                                                                    
Co-Chair  Thompson  believed   Commissioner  Hladick  had  a                                                                    
comment about  the possibility  of not  needing to  hire two                                                                    
sets of  enforcement officers. Commissioner  Hladick replied                                                                    
that any new enforcement  officers would be cross-trained in                                                                    
order to work together  when traveling throughout the state.                                                                    
The   administration   believed   that   before   commercial                                                                    
operations  began  there   would  be  commercial  operations                                                                    
starting, which would keep officers busy.                                                                                       
Co-Chair  Thompson surmised  that officers  would be  cross-                                                                    
trained  in order  for one  person  to have  the ability  to                                                                    
handle both alcohol and marijuana issues.                                                                                       
Representative  Guttenberg pointed  to  the 2018  expiration                                                                    
date  for the  board.  He  wanted to  ensure  that the  date                                                                    
allowed  sufficient time  for  the  Division of  Legislative                                                                    
Budget  and Audit  to  do  an accurate  job  to provide  the                                                                    
legislature  with a  report. Ms.  Franklin replied  that the                                                                    
division would follow  up with the timeline.  She added that                                                                    
the sunset matched the date of the ABC Board extension.                                                                         
Representative  Guttenberg understood.  However, he  thought                                                                    
the initial  audit of the  Marijuana Control Board  may need                                                                    
to be a bit different.                                                                                                          
Representative   Pruitt  addressed   board  membership.   He                                                                    
thought  the  public  health,   rural,  public  safety,  and                                                                    
industry seats  were fairly clear;  however, the  fifth seat                                                                    
was either filled by a member  of the general public or from                                                                    
the marijuana industry.  He cited Sections 2(e)  and 2(f) of                                                                    
the bill:                                                                                                                       
     (e) Not more than two members of the board may be                                                                          
     engaged in the same business, occupation, or                                                                               
     (f)  A board  member representing  the general  public,                                                                    
     the public safety sector, the  public health sector, or                                                                    
     a rural  area, or the member's  immediate family member                                                                    
     may  not have  a  financial interest  in the  marijuana                                                                    
Representative  Pruitt continued  that due  to the  language                                                                    
related to the fifth board  seat, there could potentially be                                                                    
two individuals  with a financial interest  in the marijuana                                                                    
industry on the  board. He asked if that was  the intent. He                                                                    
wondered about the reason for the potential duplication.                                                                        
Ms.  Franklin answered  that the  "or" was  included because                                                                    
the   background   of   the    director   was   taken   into                                                                    
consideration. For example, if  the director had a marijuana                                                                    
industry background, the  industry would lose a  seat on the                                                                    
board.  Likewise,  if  the  director  had  a  public  safety                                                                    
background, the  public safety  seat on  the board  would be                                                                    
replaced by  a member  of the  general public.  The language                                                                    
was a  recognition that with  a five-member  volunteer board                                                                    
that would  only meet a  few times per year,  the director's                                                                    
background had  a significant impact  on the agency;  it was                                                                    
an  attempt  to  avoid background  duplication  between  the                                                                    
director and a board member.  The replacement by a member of                                                                    
the general public would only  occur if the director had one                                                                    
of the designated backgrounds.                                                                                                  
1:47:40 PM                                                                                                                    
Co-Chair Thompson  noted that the  committee would  hear the                                                                    
bill the following week.                                                                                                        
Representative Guttenberg referred  to the board membership,                                                                    
specifically  related   to  a  member  from   the  marijuana                                                                    
industry. He  reasoned that there were  different components                                                                    
of the industry.  He wondered if the concept  had been taken                                                                    
into account.                                                                                                                   
Ms.  Franklin  replied  that   there  had  been  significant                                                                    
discussion  related to  the industry  seat, particularly  in                                                                    
the  first two  years when  regulations would  be developed.                                                                    
The department  recognized there would be  different aspects                                                                    
of the industry just as  there were in the alcohol industry.                                                                    
The makeup  of the  board did not  include a  prohibition on                                                                    
any  certain section  of the  marijuana industry.  She noted                                                                    
that  there  was a  section  in  Title  4 that  prevented  a                                                                    
wholesaler  from  having  a  seat  on  the  ABC  Board.  The                                                                    
division had not identified any  aspect of the industry that                                                                    
would  eliminate  a person  from  consideration  as a  board                                                                    
member. She added  that it was anticipated  that there would                                                                    
not be  a way to  represent all  aspects of the  industry on                                                                    
the board.                                                                                                                      
HB  123  was  HEARD  and   HELD  in  committee  for  further                                                                    

Document Name Date/Time Subjects
Workdraft CSHB15 4-8-2015.pdf HFIN 4/10/2015 1:30:00 PM
HB 15
HB 137 CS WORKDRAFT FIN G Version.PDF HFIN 4/10/2015 1:30:00 PM
HB 137
HB 176 CS WORKDRAFT E version.pdf HFIN 4/10/2015 1:30:00 PM
HB 176
HB 176 Legal Opinion.pdf HFIN 4/10/2015 1:30:00 PM
HB 176
HB 176 Letters.pdf HFIN 4/10/2015 1:30:00 PM
HB 176
HB 176 Sponsor Statement.pdf HFIN 4/10/2015 1:30:00 PM
HB 176
HB 137 Support letter.pdf HFIN 4/10/2015 1:30:00 PM
HB 137
HB 15 Amendment #1.pdf HFIN 4/10/2015 1:30:00 PM
HB 15
HB 137 Additional Info Sommerville.pdf HFIN 4/10/2015 1:30:00 PM
HB 137