Are cannabis startups legal in Alaska?

Ronny Kerr · July 15, 2016 · Short URL: https://vator.tv/n/4662

One of four U.S. states, Alaska allows the sale and possession of cannabis for non-medical uses

Note: The CannaVator accelerator, which includes a 10-week online and in-person program, is accepting applications until August 15, 2016 for its Fall 2016 cohort. More details about the program and how to apply here.

Though cannabis remains illegal as far as the U.S. federal government is concerned, laws regulating the drug on state and municipal levels have been rapidly evolving over the past several years.

Dozens of states have legalized cannabis for limited (typically medicinal) use cases. A few states have decriminalized it, and four states (Colorado, Washington, Oregon, and Alaska) have legalized it for recreational use. All told, 40 states have legalized cannabis in some form, according to the 2016 U.S. Cannabis Investment Report by Ackrell Capital. (The latest report only cites 39 states, which was the figure at the time. But Ackrell informs me that, since the report was published, Pennsylvania has legalized medical marijuana.)

Even the federal government has taken a somewhat less restrictive approach. Though committed to enforcing the Controlled Substances Act (CSA, which makes cannabis illegal in the U.S.), the Department of Justice in August 2013 issued the oft-cited "Cole Memo," effectively admitting that it wouldn't intervene with state laws except in specific cases, for example the selling of drugs to minors, the funneling of revenue to gangs and cartels, or in cases where substances cross into border states with stricter rules.

Given all the complexity in U.S. law governing cannabis, things can be a bit confusing for your average cannabis consumer, not to mention for entrepreneurs hoping to capitalize on the emerging cannabis market.

The purpose of this series is to help demystify the legality of starting and growing a cannabis startup in various U.S. states. My last segment in this series focused on Oregon. This segment is on Alaska.

The law: In 2014, Alaska voters successfully passed Measure 2, legalizing recreational use of cannabis, which would be regulated and taxed by the state's Alcohol & Marijuana Control Office (AMCO). Medical marijuana is regulated by the state's Division of Public Health.

Buying: At this time, the AMCO is in the process of issuing licenses for cultivation and testing facilities. The board anticipates it won't issue licenses for retail store and product manufacturing businesses until September 2016. Once cannabis establishment licenses have been issued, people aged 21 and over will be able to purchase cannabis and cannabis products.

That said, the law allows people aged 21 and over to "possess marijuana harvested from up to six plants (three or fewer being mature, flowering plants) on the premises where the plants were grown. The statute does not specify a limit on the amount of harvested marijuana that may be possessed."

Using: In Alaska, as in Colorado, Washington, and Oregon, it is illegal to use cannabis in public or in view of the general public, including federal lands. Essentially, you can use it on private property as long as no one else can see or smell it. It is possible that, in the future, people will be able to smoke on the premises of cannabis retail stores.

Business licenses: As in Colorado, Washington, and Oregon, only approved medical marijuana stores will be able to sell recreational marijuana in Alaska. As of July 6, 2016, no licenses for medical marijuana stores have been issued. AMCO doesn't plan to start issuing licenses for these facilities until September 2016.

The state offers six different kinds of business licenses related to cannabis. Individuals and businesses may hold multiple license types and licenses with one exception: testing facility licenses cannot be paired with any other kind of cannabis license.

A Retail Marijuana Store is authorized to sell cannabis and cannabis products. Pending approval from AMCO, they may also permit consumption on-premises.
A Standard Cultivation Facility is authorized to cultivate cannabis to be sold to licensed retail marijuana stores or manufacturing facilities.
A Limited Cultivation Facility is the same as a Standard Cultivation Facility except that it must have fewer than 500 square feet under cultivation.
A Marijuana Product Manufacturing Facility is authorized to purchase cannabis from cultivation facilities or other product manufacturing facilities in order to extract cannabis concentrate for manufacturing cannabis products.
A Marijuana Concentrate Manufacturing Facility is the same as a Marijuana Product Manufacturing Facility except that it may only manufacture cannabis concentrate.
A Testing Facility is a facility for testing cannabis in order to identify potency, harmful microbes, etc.

Each license costs $50 for fingerprinting fees plus $1,000 for the application fee. Additional license fees, which must be paid annually, are as follows:

Retail Marijuana Store: $5,000
Standard Cultivation Facility: $5,000
Limited Cultivation Facility: $1,000
Marijuana Product Manufacturing Facility: $5,000
Marijuana Concentrate Manufacturing Facility: $1,000
Testing Facility: $1,000

As of July 6, 2016, only four individuals or businesses have had their cannabis business licenses approved, and they are all for standard cultivation facilities. Another 998 applications are in process, with most of these waiting to be assigned to an investigator or awaiting local government review.

Retail store licensing isn't slated to begin until October 2016.

Licenses can be transferred as long as you have applied for and received written consent from AMCO

Examples of cannabis companies in Alaska

Because Alaska is still in the process of approving cannabis licenses for businesses, there are not yet many existing businesses to speak of. Another factor that could inhibit growth in Alaska (compared with Colorado, Washington, and Oregon) is its small population size: ranked 48th in the country with under 800,000 people, the state is less populated than many U.S. cities.

Here are a few of the companies that have received cannabis licenses in Alaska so far:

Pakalolo Supply Co.

Based: Fairbanks, AK
What it is: Cultivator and seller of cannabis and cannabis products.
Funding: N/A

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Rainforest Farms

Based: Juneau, AK
What it is: State-licensed grow facility that also plans to open the first retail store in Alaska's capital with in-house edibles and drinks.
Funding: N/A

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