Legislature(2015 - 2016)BUTROVICH 205

04/07/2015 09:00 AM Senate STATE AFFAIRS

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSHB 93(STA) Out of Committee
-- Public Testimony --
<Initial Presentation>
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
        SB 62-REGULATION OF MARIJUANA BUSINESSES; BOARD                                                                     
9:16:22 AM                                                                                                                    
CHAIR STOLTZE  called the committee  back to order  and announced                                                               
the consideration of SB 62.                                                                                                     
9:16:40 AM                                                                                                                    
CHAD  HUTCHINSON,  Staff,  Senator  John  Coghill,  Alaska  State                                                               
Legislature, Juneau, Alaska, introduced himself.                                                                                
JESSE  LOGAN,   Staff,  Senator   Lesil  McGuire,   Alaska  State                                                               
Legislature, Juneau, Alaska, introduced himself.                                                                                
MR. HUTCHINSON  said SB 62  is the regulatory bill  for marijuana                                                               
businesses.  He  noted  that Senator  McGuire  has  a  heightened                                                               
interest in some of the  provisions and discussions as it relates                                                               
to  advertising,  labeling,  serving   size,  and  packaging.  He                                                               
remarked  that the  issues previously  noted have  been mentioned                                                               
constantly in other bills.                                                                                                      
MR. LOGAN explained  that based on various  discussions and floor                                                               
debate  on SB  30, major  areas of  interest were  identified and                                                               
addressed.   He  specified   that   marketing  and   advertising,                                                               
packaging  of  products, labeling,  and  serving  size of  edible                                                               
marijuana were  looked at. He  detailed that brief  excerpts were                                                               
taken from the  issues that SB 62 addressed  and compared against                                                               
recommendations made  from the  Alaska State  Medical Association                                                               
(ASMA) and the  Colorado Task Force Report  on the Implementation                                                               
of  Amendment  64.   He  specified  that  Amendment   64  is  the                                                               
constitutional  amendment that  legalized marijuana  in Colorado.                                                               
He  added  that the  some  of  the  recommendations made  by  the                                                               
Colorado Task Force (CTF) were  not fully implemented and some of                                                               
the state's actual laws will differ from the recommendations.                                                                   
9:18:36 AM                                                                                                                    
He addressed  "Marketing and Advertising of  Marijuana, Marijuana                                                               
Products, and Marijuana  Accessories." He said in  SB 62, Section                                                               
17.38.075  states  that  marijuana   may  not  be  advertised  or                                                               
marketed  in a  manner enticing  to  minors. He  stated that  the                                                               
section relating  to minors was  the most important  provision of                                                               
the  marijuana advertising  allowables.  He  said ASMA  similarly                                                               
recommended that  products are  ensured to  not be  advertised or                                                               
marketed directly  to those under  21 years of age.  He specified                                                               
that  ASMA  recommended   allowances  for  in-store  advertising,                                                               
publically  visible advertising,  web-based advertising,  etc. He                                                               
revealed that the  bill's sponsors are awaiting  legal opinion on                                                               
the extent to restrictions that  can be placed on advertising and                                                               
marketing relating to the First Amendment.                                                                                      
MR.  LOGAN revealed  that CTF  recommended  that the  legislature                                                               
should provide  certain guidelines  on a  state level,  but allow                                                               
for further limitations at a  local level. He detailed additional                                                               
CTF marketing recommendations as follows:                                                                                       
   · Prohibit mass marketing campaigns that have a high                                                                         
     likelihood of reaching children: television, radio, and                                                                    
     direct mail.                                                                                                               
   · Prohibit health or physical benefit claims.                                                                                
   · Allow for "opt in" marketing programs such as e-mail clubs.                                                                
   · Allow marijuana to be offered in retail stores only and not                                                                
     allow for regular non-marijuana products to be sold as                                                                     
     well; example, a soda could not be purchased at a marijuana                                                                
     retail store.                                                                                                              
   · Allow for "opt in" based location services; example, text                                                                  
     messaging on mobile devices.                                                                                               
   · Prohibit unsolicited pop-up ads on the internet and only                                                                   
     allow advertising banners on adult orientated websites.                                                                    
     Advertising on websites such as Facebook where minors use                                                                  
     would not be allowed.                                                                                                      
   · Allow marijuana retailers to host their own websites.                                                                      
9:21:07 AM                                                                                                                    
He addressed "Packaging Requirements  for Marijuana and Marijuana                                                               
Products." He  noted that Colorado  and Washington vary  in their                                                               
approaches  to packaging.  He  explained that  SB  62 allows  the                                                               
control  board  to  adopt  regulations  regarding  packaging  and                                                               
labeling, which  was in  Ballot Measure  2. He  noted that  SB 62                                                               
specifies  that  marijuana  products  can only  exit  the  retail                                                               
establishments  in  a  child-proof  container. He  added  that  a                                                               
wording change to  the bill was advised  where child-proof should                                                               
be changed to child-resistant.                                                                                                  
He revealed  that ASMA had similar  recommendations that products                                                               
are ensured to  not be packaged or marketed to  entice or attract                                                               
children.   He  pointed   out   that   ASMA  vacillated   between                                                               
identifying people under 21 or  children. He added that there was                                                               
confusion on the  difference between marketing to  someone who is                                                               
age  20 versus  age 21,  so SB  62 stuck  with the  definition of                                                               
"minor." He said  ASMA also recommended that  marijuana should be                                                               
prohibited from  packaging that  appears familiar,  e.g. anything                                                               
that looks like a normal product like a candy bar or a soda.                                                                    
He explained that  CTF recommended that packaging  in Colorado be                                                               
addressed  in  three ways:  packaging  by  the manufacturer  that                                                               
meets certain  standards set by  the control board,  packaging by                                                               
the retail establishment's  operator prior to the  point of sale,                                                               
or the  use of an  exit shopping bag  or container with  a child-                                                               
resistant lock. He revealed that  Colorado decided to go with the                                                               
child-resistant  shopping  bag or  container.  He  added that  an                                                               
opaque rather  than a clear child-resistant  bag was recommended.                                                               
He noted  that the intent  was to  add language pertaining  to an                                                               
opaque child-resistant bag  in the drafting of Section  C-1 of AS                                                               
17.38.090, but  the drafting created some  confusing language. He                                                               
said a variety  of different languages were considered  as to how                                                               
to  implement  an exit-bag  in  statute.  He  set forth  that  an                                                               
overall definition for an exit-bag would be:                                                                                    
     A  child-resistant  package  which  meets  all  of  the                                                                    
     requirements and definition  of child-resistance in the                                                                    
     American  Society  for  Testing  and  Materials  (ASTM)                                                                    
     standards. If the package is  not for one-use, then the                                                                    
     package should  be re-closable  and when  closed should                                                                    
     meet the same ASTM standards.                                                                                              
MR.   LOGAN  summarized   that  an   exit-bag  would   provide  a                                                               
concealable way to exit and  transport marijuana so that children                                                               
are not enticed or cannot view the marijuana.                                                                                   
9:24:01 AM                                                                                                                    
He addressed labeling for marijuana  and said there are a variety                                                               
of safety  factors to consider.  He referenced image  examples of                                                               
labeling used  in Colorado and  Washington. He said SB  62 states                                                               
the following:                                                                                                                  
     A container  must be packaged and  clearly labeled with                                                                    
     the  contents,  it  may  not  have  pictures  or  other                                                                    
     representations that  would be enticing to  minors, and                                                                    
     it should  be labeled  for potency and  a certification                                                                    
     of safety.  The certification  of safety would  be done                                                                    
     by a testing lab certified  by the Alaska Department of                                                                    
     Environment Conservation (DEC).                                                                                            
He  said   ASMA  recommended  that   labeling  should   show  the                                                               
    · Tetrahydrocannabinol (THC) content.                                                                                       
    · Number of servings contained in edible products.                                                                          
    · Warnings that the product contains marijuana.                                                                             
    · Marijuana potency.                                                                                                        
    · Warning similar to tobacco for use while pregnant.                                                                        
MR.  LOGAN   said  CTF  recommended  labeling   should  show  the                                                               
   · Total content of THC by weight or a milligram dose of                                                                      
     active THC in the total THC for edibles.                                                                                   
   · Listing of pesticides, herbicides, fungicides, and solvents                                                                
     that were used in the cultivation of processing.                                                                           
He added  that all testing  for labeling requirements  is assumed                                                               
to be done by a laboratory certified by DEC.                                                                                    
He  addressed "Serving  Size and  Packaging  of Edible  Marijuana                                                               
Products."  He said  there was  recent debate  on edible  serving                                                               
sizes. He said  SB 62 specifies that individual  THC doses cannot                                                               
be more than  10 milligrams. He pointed out that  some people are                                                               
interested in  lowering the individual  dose threshold.  He added                                                               
that  SB  62   recommends  that  each  edible   dose  be  wrapped                                                               
individually, but marijuana packages  could be sold with multiple                                                               
doses inside.  He noted that  ASMA recommended the  following for                                                               
serving size and packaging for edible marijuana products:                                                                       
   · Require edible products to be stamped or shaped into                                                                       
     distinct and easily recognizable ways.                                                                                     
   · Labeled for THC content, number of servings, and a warning                                                                 
     that the product contains marijuana.                                                                                       
He  said  CTF  had  a  variety  of  serving  size  and  packaging                                                               
recommendations  that are  very  similar  to the  recommendations                                                               
made in SB 62. He specified CTF's recommendations as follows:                                                                   
   · Appropriate limitations on THC.                                                                                            
   · Amount of servings in a dose should be set at 10                                                                           
   · Serving size clearly labeled on the package.                                                                               
He  explained   that  the  intent  for   smaller  serving  sizes,                                                               
labeling,   and  packaging   requirements  is   to  get   at  the                                                               
possibility for over consuming THC.                                                                                             
9:27:16 AM                                                                                                                    
CHAIR  STOLTZE noted  that ASMA  had some  things that  were even                                                               
more important that were not  mentioned. He pointed out that ASMA                                                               
made  recommendations  for  strict testing  requirements,  strict                                                               
liability  in identifying  responsibility,  and requirements  for                                                               
insurance  and bonding.  He asked  if the  three important  items                                                               
dismissed in  the presentation  will be  addressed by  the Senate                                                               
Judiciary Committee.                                                                                                            
MR. LOGAN  answered that the  Senate Judiciary Committee  will be                                                               
happy to address the items noted by Chair Stoltze.                                                                              
CHAIR STOLTZE  remarked that the three  ASMA recommendations that                                                               
were not mentioned  in Mr. Logan's presentation are  three of the                                                               
most important features for the  public's protection. He asserted                                                               
that there  must be an  assurance that dosages are  accurate, the                                                               
product  is safe  when  compared to  other  regulated drugs,  and                                                               
liability must  be addressed for  litigious reasons.  He remarked                                                               
that he questioned  the public's protection without  a bonding or                                                               
insurance requirement.                                                                                                          
9:28:56 AM                                                                                                                    
MR. HUTCHINSON replied  that SB 62 does touch on  the testing and                                                               
certification process  for the  marijuana testing  facilities. He                                                               
said  the  bill's sponsors  are  open  to suggestions  to  better                                                               
articulate the language.                                                                                                        
CHAIR STOLTZE asked that bonding and insurance be addressed.                                                                    
MR. LOGAN answered that bonding  and insurance were not addressed                                                               
in the bill.                                                                                                                    
SENATOR   WIELECHOWSKI  recommended   that   Legal  Services   be                                                               
contacted  to   address  the  possible  interplay   of  marijuana                                                               
labeling  regarding pesticides,  herbicides,  and fungicides.  He                                                               
noted  that the  U.S.  Supreme Court  ruled in  a  case that  the                                                               
Federal  Insecticide,  Fungicide   and  Rodenticide  Act  (FIFRA)                                                               
preempts inconsistent rules on labeling.                                                                                        
9:30:05 AM                                                                                                                    
SENATOR COGHILL  asked to  confirm that the  state would  have to                                                               
initially use out-of-state testing.                                                                                             
MR. HUTCHINSON answered yes.                                                                                                    
SENATOR COGHILL  remarked that  certification is  going to  be at                                                               
least problematic due  to a lag in time and  expense. He asked if                                                               
the logistics with out-of-state testing has been looked at.                                                                     
MR.  LOGAN  answered that  his  understanding  is the  Interstate                                                               
Commerce Clause  would be violated  if recreational  marijuana is                                                               
sent out-of-state. He  revealed that a few  private companies are                                                               
interested in establishing testing facilities in Alaska.                                                                        
SENATOR COGHILL  remarked that out-of-state testing  would be one                                                               
of the industry barriers where  the state makes requirements that                                                               
the industry will have to figure out how to comply.                                                                             
CHAIR  STOLTZE opined  that testing  is  a barrier  that DEC  has                                                               
pretty much  been hands-off  on. He  remarked that  DEC testified                                                               
that they  are not going  to receive any assistance  from federal                                                               
agencies on  how to  regulate an illegal  substance. He  said DEC                                                               
will  have to  clarify what  their statutory  testing involvement                                                               
will be  and set up testing  requirements to bring in  an out-of-                                                               
state entity. He pointed out  that the initiative's sponsors have                                                               
testified that they want to  self-regulate and test in-house with                                                               
their own testing companies. He  asserted that addressing testing                                                               
regulations has been  all over the map. He remarked  that he does                                                               
not know  if a product can  be guaranteed as safe,  but informing                                                               
the public what is in a product can be guaranteed.                                                                              
MR. LOGAN explained that testing  facilities were addressed in SB
62  and certification  for facilities  would be  done by  DEC. He                                                               
said  the testing  facilities  can  test for  a  wide variety  of                                                               
things, but safety is probably the most important one.                                                                          
CHAIR STOLTZE  commented that the  Department of Labor  should be                                                               
involved  due  to  possible   workers'  compensation  issues.  He                                                               
remarked that  he does not  know how dangerous  testing marijuana                                                               
9:32:50 AM                                                                                                                    
SENATOR HUGGINS  asked what  will be used  for marijuana  to keep                                                               
kids  from being  able to  have  access marijuana  when they  are                                                               
unsupervised at home.                                                                                                           
MR.  LOGAN  responded  that  child-resistant  exit-bags  was  the                                                               
solution that  Colorado came  to. He noted  that similar  to pill                                                               
bottles,  child resistant  exit-bags will  not work  for children                                                               
over 10 years of age.                                                                                                           
SENATOR HUGGINS  asked if  there have been  cases in  Colorado or                                                               
Washington where child-resistant bags did not work.                                                                             
MR. HUTCHINSON  revealed that Colorado  and Washington  have seen                                                               
an increase  in emergency room  visits due to  children ingesting                                                               
marijuana. He said  the states are looking at  funding a campaign                                                               
to  educate parents.  He said  child-resistant  packaging is  one                                                               
issue that SB 62 is trying to address.                                                                                          
9:34:45 AM                                                                                                                    
At ease.                                                                                                                        
9:35:27 AM                                                                                                                    
CHAIR STOLTZE called the committee back to order.                                                                               
9:35:36 AM                                                                                                                    
KEN ALPER, Director, Tax Division,  Alaska Department of Revenue,                                                               
Juneau, Alaska, introduced himself.                                                                                             
CHAIR STOLTZE asked for an overview  of the state's tax regime on                                                               
the  marijuana  legislation  as defined  by  the  initiative.  He                                                               
inquired what net gain the state  can expect in the coming fiscal                                                               
year and the years after.                                                                                                       
MR. ALPER replied  that the Department of  Revenue (DOR) provided                                                               
a fiscal note on tax revenue  that projects a range of $5 million                                                               
to $17  million with a mid-line  number of $12 million  for FY17.                                                               
He specified  that tax collections  are anticipated to  start the                                                               
first month of  FY17 in July 2016. He detailed  that in 2016, the                                                               
first licenses are expected to be  issued in May, the first legal                                                               
sales roughly in  June, and the first tax collection  to occur in                                                               
He  revealed  that  the marijuana  consumption  projections  were                                                               
based on  academic studies  and poling. He  opined that  the data                                                               
acquired from poling may be  inherently flawed because people are                                                               
not honestly answering  if they consume marijuana.  He added that                                                               
calculating  marijuana consumption  also involves  projecting the                                                               
proportion  of people  who will  buy legal  marijuana versus  the                                                               
black market. He  remarked that people converting  from the black                                                               
market  to the  legal  market is  going to  be  dependent on  the                                                               
actions taken in the Legislature.                                                                                               
He  detailed that  maximizing marijuana's  "legal umbrella  size"                                                               
will depend on  legislation that makes it easier  to conform, get                                                               
a  license,  and making  sure  that  taxes  create the  chain  of                                                               
custody  in the  regulatory oversight  that will  enable adequate                                                               
law enforcement.                                                                                                                
He said  the tax disposition  is anticipated to be  regulated and                                                               
enforced  the way  alcohol  is.  He explained  that  half of  all                                                               
alcohol taxes  are diverted to  dependency programs.  He detailed                                                               
that $40 million in alcohol taxes  come into the state every year                                                               
with  $20 million  going  to  the mental  health  budget and  $20                                                               
million  going  to  the  general  fund.  He  explained  that  the                                                               
entirety of the $50 an ounce  marijuana wholesale tax would go to                                                               
the general fund; however, the  eventual writing of that would be                                                               
up to the will of the Legislature.                                                                                              
9:38:43 AM                                                                                                                    
CHAIR STOLTZE asked if Mr. Alper meant the will of the people.                                                                  
MR. ALPER answered yes. He  specified that tax laws, details, and                                                               
making sure all of the pieces  fit together is most certainly the                                                               
responsibility of the Legislature.                                                                                              
CHAIR STOLTZE  replied that he  wanted to confirm that  Mr. Alper                                                               
said success  is dependent on  the Legislature. He  asserted that                                                               
Mr. Apler's budget submission is a panacea.                                                                                     
SENATOR COGHILL noted that a  lingering question with legislators                                                               
addresses cash and  how transactions will be brought  in. He said                                                               
currently  the banking  industry is  not willing  to step  up. He                                                               
asked if DOR has addressed tax payments made with cash.                                                                         
MR.  ALPER answered  that  DOR has  addressed  tax payments  with                                                               
cash. He  specified that DOR  has decided  not to take  any steps                                                               
until the  legislation has  been reviewed  after the  session. He                                                               
noted  that  Colorado  collected   $65  million  in  their  first                                                               
calendar  year  through  marijuana  excise and  sales  taxes.  He                                                               
revealed that 40 percent of  Colorado's tax payments were brought                                                               
to their  front-door via cash.  He said the department  will have                                                               
to consider  security measures such  as safes, armored  cars, and                                                               
security guards due to the possibly of dealing with cash.                                                                       
9:40:47 AM                                                                                                                    
CHAIR STOLTZE asked  if DOR has projected the  fiscal impact from                                                               
the safety measures due to cash tax payments.                                                                                   
MR. ALPER answered  that DOR has not. He said  DOR hopes that the                                                               
tax payments  do not come down  to paying with cash.  He asserted                                                               
that cash  payments are dependent  on the federal  government. He                                                               
noted that a bank in Colorado  is trying to receive approval from                                                               
the federal government to allow  interbank transfers. He said all                                                               
of the banking  problems would go away if  the federal government                                                               
relents and  lets some degree  of marijuana industry  banking. He                                                               
admitted that current  banking regulations for marijuana  is in a                                                               
CHAIR STOLTZE  asked if DOR  is working with any  institutions to                                                               
resolve the cash issues.                                                                                                        
MR.  ALPER answered  no.  He reiterated  that  the department  is                                                               
waiting to  see the  legislation and then  begin a  fairly robust                                                               
regulatory process  during the summer that  will include reaching                                                               
out to the banking and cash handling industry.                                                                                  
SENATOR COGHILL  addressed Section  29 in the  bill and  asked to                                                               
confirm  that licensing  is tied  to accountability  where excise                                                               
taxes   are  reported   through   a   statement  submission   and                                                               
enforcement is done through maintaining a license.                                                                              
9:42:32 AM                                                                                                                    
MR. ALPER answered  that the concept fits into  what Colorado has                                                               
described  as  the  seed-to-sale   chain  of  custody  where  the                                                               
marijuana is tracked to see where  it is and where it comes from.                                                               
He  specified  that  the  reporting  process  identifies  whether                                                               
marijuana was  purchased from  a licensed  grower. He  noted that                                                               
DOR  has  submitted  expanded and  proposed  language  that  will                                                               
increase  the department's  ability to  track marijuana,  enforce                                                               
taxes,  and  identify  people who  might  be  selling  unlicensed                                                               
SENATOR HUGGINS asked  if illegal marijuana from  Mexico that was                                                               
confiscated would be auctioned off for tax purposes.                                                                            
MR. ALPER  answered that scenario that  Senator Huggins described                                                               
is  hard to  envision where  the state  is involved.  He surmised                                                               
that federal  or local officials  would be involved  with illegal                                                               
contraband and  the marijuana would  ultimately be  destroyed. He                                                               
said the Alaskan  marijuana growing community is going  to try to                                                               
establish  themselves  as  the   source  for  Alaska's  marijuana                                                               
consumers.  He specified  that DOR's  concern is  that unlicensed                                                               
marijuana grown in Alaska is sold by a retailer or processor.                                                                   
9:45:48 AM                                                                                                                    
CHRIS  HLADICK,  Commissioner,  Alaska  Department  of  Commerce,                                                               
Community,  and  Economic  Development (DCCED),  Juneau,  Alaska,                                                               
stated that he  is not aware of any insurance  companies that are                                                               
interested  in being  involved with  the  marijuana industry.  He                                                               
noted  that  he  will  find  out if  any  bonding  companies  are                                                               
involved with the marijuana industry.  He asserted that legalized                                                               
marijuana has many questions surrounding  it and will continue to                                                               
have many questions for many years.                                                                                             
CHAIR  STOLTZE remarked  that without  insurance there  would be,                                                               
for example, no aviation or  seafood industries. He detailed that                                                               
insurance is a  fabric of a societal compact on  sharing risk. He                                                               
asked if the insurance issue is solvable within the next year.                                                                  
9:47:04 AM                                                                                                                    
COMMISSIONER  HLADICK  answered  that   he  does  not  know  what                                                               
Colorado  is  doing,  but  DCCED will  work  with  the  insurance                                                               
industry. He agreed that insurance is extremely important.                                                                      
CHAIR STOLTZE  said the legal sector  is not ready for  a general                                                               
immunity  for  the marijuana  industry.  He  pointed out  that  a                                                               
liquor  store has  certain requirements  from a  municipality and                                                               
the initiative  specifies regulation  like alcohol. He  asked how                                                               
the public  will be  protected if  marijuana exists.  He asserted                                                               
that the assignment of risk and responsibility will not change.                                                                 
COMMISSIONER  HLADICK answered  that  the  insurance aspect  will                                                               
have to be figured out  because municipalities will face the same                                                               
CHAIR STOLTZE  asked if Commissioner Hladick  received input from                                                               
municipalities  regarding   their  half  of   marijuana  taxation                                                               
revenue and risk.                                                                                                               
COMMISSIONER HLADICK  responded that municipalities will  have at                                                               
least half of the risk from the regulations that they might do.                                                                 
CHAIR  STOLTZE stated  that the  initiative sponsors  are adamant                                                               
about    boutique-growers   and    smaller   operations    within                                                               
neighborhoods having an inherent right  to privacy. He noted that                                                               
the Attorney General's  office and realtors have  said the public                                                               
has a right to know. He  asked where the Administration stands on                                                               
the privacy of operations issue.                                                                                                
COMMISSION HLADICK answered that he is  not aware of the right to                                                               
privacy issue.                                                                                                                  
9:50:28 AM                                                                                                                    
CYNTHIA  FRANKLIN,  Director,  Alcoholic Beverage  Control  (ABC)                                                               
Board,   Department   of   Commerce,  Community,   and   Economic                                                               
Development, Anchorage, Alaska, answered  that the ABC Board will                                                               
follow the  same scheme as  alcohol licensing where  all licenses                                                               
are publically  noticed. She  specified that  the public  is made                                                               
aware of  where an  establishment is proposed  to be  created and                                                               
the public has the opportunity for  input. She said the ABC Board                                                               
anticipates  that the  same  scheme will  initially  be used  for                                                               
marijuana licenses.  Public input  on the process,  locality, and                                                               
communities knowing  exactly where  the licenses exist  and being                                                               
operated are integral and essential  to the process. She asserted                                                               
that a regulatory scheme would not exist that is secretive.                                                                     
CHAIR  STOLTZE asked  Commissioner Hladick  if what  Ms. Franklin                                                               
described is the official position of DCCED.                                                                                    
COMMISSIONER HLADICK answered yes.                                                                                              
CHAIR STOLTZE  replied that he  appreciates the  DCCED's position                                                               
and noted  that the issue  pertains to public safety.  He pointed                                                               
out that  DCCED has become  the default agency for  all marijuana                                                               
questions. He  asked if  Commissioner Hladick  is going  to defer                                                               
most of  his policy  questions to  the ABC  Board and  will other                                                               
divisions   within  DCCED   be  involved   with  other   commerce                                                               
COMMISSIONER HLADICK  answered that  issues and  regulations will                                                               
be  vetted   out  through  a  board-process.   He  surmised  that                                                               
regulation  approval will  be done  by  the designated  marijuana                                                               
control board.                                                                                                                  
CHAIR  STOLTZE asked  if Commissioner  Hladick  sees any  overall                                                               
responsibility in  overseeing the board that  ultimately controls                                                               
COMMISSIONER HLADICK answered yes.  He specified that DCCED wants                                                               
to ensure  that things  are done correctly  from a  public safety                                                               
and  health  perspective.  He  said  he  would  have  a  role  in                                                               
overseeing  and making  sure DCCED  is meeting  the legislation's                                                               
CHAIR STOLTZE remarked that he did  not expect Ms. Franklin to be                                                               
involved with  the insurance issue.  He asked if  insurance would                                                               
be an  example of an issue  where a higher level  commissioner or                                                               
director would be more involved.                                                                                                
9:53:46 AM                                                                                                                    
COMMISSIONER HLADICK  answered yes. He specified  that DCCED will                                                               
be  more involved  with insurance,  banking, and  working closely                                                               
with  the  Department  of  Environmental  Conservation  (DEC)  on                                                               
testing issues to meet the legislation's intent.                                                                                
CHAIR STOLTZE  asked if  Commissioner Hladick  had an  opinion if                                                               
the marijuana law will help or hurt.                                                                                            
COMMISSIONER HLADICK replied  that the marijuana law  is here and                                                               
DCCED needs to take the  next steps to implement the initiative's                                                               
intent. He remarked  that marijuana has been in  the black market                                                               
and  now  the  state  will  have the  ability  to  enforce  legal                                                               
marijuana regulations.                                                                                                          
CHAIR  STOLTZE  asked  how DCCED  would  regulate  the  marijuana                                                               
9:56:47 AM                                                                                                                    
COMMISSIONER  HLADICK   answered  that  the  first   step  is  to                                                               
establish a  statutory framework  with maximum flexibility  for a                                                               
board  to  deal  with  situations  that are  not  yet  known.  He                                                               
remarked that  nobody can  predict how many  growers or  what the                                                               
interest  for marijuana  will  be. He  remarked  that DCCED  will                                                               
probably be  coming back to  the Legislature in the  coming years                                                               
to address things that have not been thought about.                                                                             
CHAIR STOLTZE  asked to confirm  that Commissioner  Hladick wants                                                               
the maximum amount of flexibility with a rigid framework.                                                                       
COMMISSIONER  HLADICK  specified  that  oversight  is  a  tension                                                               
between policy and regulation.                                                                                                  
CHAIR  STOLTZE asked  if the  committee can  receive at  its next                                                               
meeting  some   suggestions  on  a  policy   directive  from  the                                                               
department's  "top of  the food  chain." He  emphasized that  his                                                               
statement is no disrespect towards  Ms. Franklin. He continued as                                                               
     It's probably  too much of a  burden on her to  come up                                                                    
     with a policy  and the implementation; I  think that is                                                                    
     our  job   as  a  policy   and  it  is   certainly  the                                                                    
     Administration's job  at the high  levels of  the food-                                                                    
     chain other  than putting it  on an agency  director to                                                                    
     come up with  all of the solutions. I think  we need to                                                                    
     know what  the compass is of  the Walker administration                                                                    
     on this  and be  involved in the  process and  not just                                                                    
     say,  "All  things  point to  Ms.  Franklin  and  don't                                                                    
     bother us  with the details."  That's not a  request, I                                                                    
     think  that  is  the  imperative.  Maybe  I'm  speaking                                                                    
     singularly here,  but if we  don't know at  the highest                                                                    
     levels what  the commitment to fulfilling  our mandates                                                                    
     in this role are, it's really  tough and I hate to just                                                                    
     turn it  over to  an agency  which the  Legislature has                                                                    
     expressed a lack  of confidence in as  recently as just                                                                    
     a couple of years ago.                                                                                                     
9:59:44 AM                                                                                                                    
SENATOR COGHILL commented as follows:                                                                                           
     For us, as  we come into the  next legislative session,                                                                    
     the  licensing procedure  has to  be  proceeded by  the                                                                    
     economic factors,  the bonding,  and the  licensing. We                                                                    
     need to have a long  conversation with those people who                                                                    
     are going  to be handling  the money and who  are going                                                                    
     to be  undergirding the businesses, because  almost any                                                                    
     business plan  that I have  ever seen starts  with that                                                                    
     risk  management  profile as  you  come  in; I  totally                                                                    
     agree with  the Chairman  on that and  I think  we just                                                                    
     need to see  some of those things set  out. Even though                                                                    
     we  set  out  regulations for  licensing,  there's  the                                                                    
     consumer  public safety,  but  there  is also  entering                                                                    
     from a  black market into  a legal market,  there needs                                                                    
     to be clarity on that and we just don't have it yet.                                                                       
SENATOR HUGGINS noted  that DCCED becomes the lead  agency on the                                                               
economics by  default if SB 62  or its equivalent does  not pass.                                                               
He asked what DCCED's actions will be if SB 62 fails to pass.                                                                   
COMMISSIONER  HLADICK  answered that  the  ABC  Board by  default                                                               
would  become the  board and  would work  at trying  to get  some                                                               
regulations in place for next year.                                                                                             
SENATOR  HUGGINS recommended  that  having  DCCED's experts  push                                                               
information to the Legislature would be more productive.                                                                        
COMMISSIONER HLADICK replied that he agreed.                                                                                    
10:02:11 AM                                                                                                                   
SENATOR  WIELECHOWSKI asked  if  DCCED  needs SB  62  or can  the                                                               
department regulate the industry on its own without the bill.                                                                   
COMMISSIONER HLADICK answered that DCCED supports the bill.                                                                     
SENATOR  WIELECHOWSKI   asked  if   DCCED  will  be   capable  of                                                               
regulating the industry if SB 62 does not pass.                                                                                 
COMMISSIONER HLADICK replied that he  would rather have SB 62. He                                                               
specified  that SB  62 gives  DCCED  good guidelines  and a  good                                                               
starting place.                                                                                                                 
CHAIR  STOLTZE commented  that the  committee is  left with  more                                                               
questions   than  answers.   He  noted   his  appreciation   that                                                               
Commissioner Hladick is not looking  at marijuana regulation with                                                               
"rose  colored glasses."  He remarked  that Commissioner  Hladick                                                               
has  shown interest  in marijuana  regulation  prior to  becoming                                                               
commissioner when he attended the Chiefs of Police Conference.                                                                  
COMMISSIONER HLADICK answered correct.                                                                                          
CHAIR STOLTZE commented  that SB 62 might not be  the vehicle for                                                               
regulation and noted the bill's committee assignments.                                                                          
SENATOR  HUGGINS  remarked  that many  people  hold  Commissioner                                                               
Hladick in high  regard as a person that makes  things happen. He                                                               
opined that Commissioner Hladick  is the right person, especially                                                               
if SB  62 fails  to pass,  and he looks  forward to  working with                                                               
10:04:20 AM                                                                                                                   
CHAIR  STOLTZE echoed  Senator  Huggins'  comments. He  announced                                                               
that SB 62 would be held in committee.