By Garrett Rudolph
The new industry of legalized marijuana in Alaska is already creating a palpable excitement for the future of The Last Frontier.
By sheer land mass alone, Alaskans face challenges no other state can fathom. More than 600,000 square miles are rippled with titanic mountain ranges and a varied terrain of dense forest, marshlands, tundra, glacial ice and more than 3 million lakes. The Bering Sea wraps its arms around 34,000 miles of jagged coastline, and hundreds of islands are jostled like buoys in the surf.
Every island, every borough inaccessible by road, every snowed-in village creates a unique challenge for the structuring and operation of the cannabis industry.
It’s probably one of the most misunderstood states in the nation, small in population, but rich in natural resources and separated by more than 2,000 miles from the U.S. mainland. For better or worse, most Americans associate the 49th state with reality television, snow and Sarah Palin. They read about Seward’s Folly in grade school history books, but many have never seen its breathtaking beauty.
Ballot Measure 2 — the state’s third attempt at legalizing marijuana — was approved by voters in November by a margin of 52% in favor, 48% against. It was the narrowest margin for any of the four states that have now enacted legislation to end marijuana prohibition. That narrow margin of victory means nothing is going to come easy for Alaskans; the battle is far from over. It’s creating a buzz of conflict among cannabis opponents and supporters, but there’s an unmistakable sense of hope and optimism among the entrepreneurial dreamers who want to launch business ventures.
EMERGENCE OF AN INDUSTRY
Entrepreneurs are wasting no time in establishing business plans, starting ancillary companies and being proactive in lobbying for favorable regulations.
“In terms of the people that are interested, there are a bunch of folks that want to take part in a wide range of avenues: tourism, education, dispensaries, clubs, grow facilities,” said Cory Wray, director of the Alaska Cannabis Institute and one of the organizers of the Alaska Cannabis Classic trade show scheduled for Anchorage.
Wray said it’s a nerve-wracking, frustrating and exciting time in Alaska all at once.
“Right now I think there’s more excitement because their imaginations can run wild,” he said.
Many people are taking the practical, by-the-book route, biding their time and focusing on sound policy before getting in too deep. Others are diving headlong into commerce with a devil-may-care attitude, almost daring police agencies to uphold the law.
Discreet Deliveries in Wasilla acknowledges it’s jumping the gun by offering straight-to-your-home marijuana deliveries.
“Technically we are acting rouge (sic) while this transition from Prohibition takes place, but look forward to being legal soon,” the Discreet Deliveries website says. The website also says the business plans on paying all applicable taxes and following state rules and regulations once implemented.
Some say these business ventures undermine the process, or give opponents ammo for potential bans and moratoriums. Others just see them as manifestations of Alaska’s fiercely independent spirit.
For decades, Alaska has already maintained some of the most lenient marijuana laws in the country. The transition to legalized, regulated cannabis might not be as drastic in Alaska as it is in other states.
“A lot of folks in Alaska are do-it-yourself folks,” Wray said. “They might already have a piece of property that they own that they can turn and build a greenhouse. Or land where they’re already doing farming, and they can turn that over to cannabis.
“To be honest, I think the people that say it’s going to be super-expensive and there’s going to be all this red tape are lawyers. I think the people in Alaska will be able to bring skills to the table that other business people in other states might not be able to bring to the table. It’s the do-it-yourself nature Alaskans have. They’ve already been growing marijuana for a long, long time.”
Alaska has the highest ratio of men to women in the entire nation. Perhaps that’s all the more reason for local chapters of Women Grow, a networking organization that provides support to women in the cannabis industry. Women Grow has chapters in more than a dozen cities across the U.S.
Kim Kole started the Anchorage chapter following her key role with the successful “Yes on 2” campaign. She began to see the need on a fact-finding tour of Colorado dispensaries, where she noticed the industry was largely dominated by men. She said there were several times that she was the only woman in a waiting room of more than a dozen men. It didn’t create a sense of comfort, she said.
Her own plans in the industry are to “have a medical dispensary, but I am certainly not turning away any recreational users,” she said. “And I want to make sure my dispensary is comfortable for women.”
Later, when she attended an Alaska Cannabis Institute event in October, she said she was impressed that there were a fair number of women in attendance.
“But I was saddened to hear some of them say they were overwhelmed and thought about leaving.”
Stay; get the information; remember everybody starts at square one, she told the women she met.
That was what she called the “second nail in the coffin” of Alaska needing an organization where women could network and support each other.
“I like the idea of encouraging women in the cannabis industry,” she said.
Dollynda Phelps followed suit and chaired the Kenai Peninsula chapter.
Phelps said she and her husband intend on starting a cultivation facility once the licensing process begins.
“I am confident that Women Grow will prove to be a very powerful entity in Alaska, helping to create a functional, profitable role for women in our state’s cannabis industry by promoting active participation,” she said.
She added that being able to use the mistakes of Washington and Colorado can work to the advantage of Alaska.
“They’re making some mistakes we can learn from, but they’re also enjoying some successes we can tap into and learn from. … Getting that easy point across to our assembly members is another story. They’re a little more hesistant to see the black and white writing on the wall.”
Brothers James and Giono Barrett are doing the legwork for what could eventually become one of the top production operations in Alaska.
With Giono as the master grower and James working to establish contacts and liaison with different government agencies, they are putting Rainforest Farms on the map early. Few other cannabis-related businesses have been as up front about their plans as Rainforest.
“Our approach from the beginning was to be public,” James Barrett said.
Their first order of business is finding a warehouse-type location to house the grow operation. The Barretts are looking for a warehouse between 5,000 and 20,000 square feet. While they plan on expanding down the road, their initial plan is to start with a central location in Juneau.
That facility will act as a central hub for other facilities in outlying areas.
While most of Alaska is only suitable for indoor growing, James said there were parts of Southeast Alaska, “which would be absolutely perfect for greenhouses.”
The trick is finding those areas that not only have a suitable location, but are not in National Parks. The federal government owns nearly 70% of the land in Alaska, therefore limiting the places that will be eligible for marijuana production facilities.
Despite the potential earnings, James said he recognizes that just getting licensed for a cannabis business is not a golden ticket.
“The glamor’s kind of washing away now and it’s about getting down to brass tacks and running the numbers,” he said. “Sure, there’s a lot of money here, but if we don’t get this margin of profit right, we’re going to flop.”
RAVEN WEED FARMS
Financial risks are an inherent part of any start-up business.
The Holdiman family is hoping a huge risk will pay off with Raven Weed Farms.
“Capital is actually the only hurdle we face,” Patricia Holdiman said.
She and her husband David are planning on selling their home and a car, cashing out their retirement funds, borrowing money from family and seeking investors in order to operate a cultivation facility in the Matanuska Valley.
They’ve already spent thousands of dollars flying to Washington to meet with several growers, retailers and testing laboratories, and it could cost them up to $60,000 just to run utilities to the property where they are thinking about setting up their operation. And that’s not to mention the lighting, cameras and growing equipment they’ll need.
Part of the allure is the opportunity to get into the industry on the ground floor.
David Holdiman is a fourth-generation Alaskan whose ancestors worked on building the Alaskan Railroad in the early 1900s. His uncle, Bill Stolt, was a pioneer who became the mayor of Anchorage in 1941.
“Pictures of David’s pioneering family are on display at the Anchorage Museum, so it is only natural for us to carry on the family tradition of being pioneers in uncharted territory like the Green Rush that is the legal marijuana movement,” Patricia said. “What makes it even more exciting for us is that big business has not yet gotten involved so there is still a chance for anybody to make a go of it. Whether you are rich or poor, we are all on the same playing field just like the gold miners when they came to Alaska during the Gold Rush, and we all have a chance to be successful if we are willing to put in the hard work.”
But the challenges ahead aren’t just financial. The Holidmans recognize that over-regulation could cripple the entire industry even before it launches. Any regulations that would handicap the licensed growers and make them unable to compete with the black market could spell trouble for Alaska’s fledgling industry. It was a common theme they heard when visiting state-licensed growers in Washington: excessive taxes, strict testing requirements and high levels of security hamper success.
“The politicians do not understand the industry,” Patricia said. “They think it is nothing more than young adult criminals trying to expand questionable behavior on law-abiding citizens. We need to show them that they are wrong and that there is nothing to be afraid of.”
The Holdimans bring a great deal of Alaskan independence into the cannabis industry.
Patricia comes from a long line of farmers, spending many a childhood summer planting fruits and vegetables and tending crops in her family’s gardens.
She has spent 20 years working in retail, and she has a down-home, folksy nature that helps her relate to customers.
David’s career and hobbies have centered around automobiles.
“David has a gift for seeing systems and strategies and finding simple solutions to complex problems and that, along with his mechanical ingenuity, allows him to be successful and rise to the top in any endeavor he sets his mind to,” Patricia said.
The Holdimans hope to be leaders in the industry and to be able to provide a positive contribution to their community.
“We have the chance to make a real difference in this world with this unique industry; we cannot let this opportunity pass us by when there are so many who can be helped,” Patricia said.
BATTLE OF THE BANS
Just as in Washington and Colorado, much of the early focus of legalization is going to be on which cities, towns and boroughs will elect to ban marijuana businesses. Many municipalities, like Anchorage and Juneau, are already taking antagonistic stances against the cannabis industry.
Ballot Measure 2 specifically provides the option for municipalities to opt out, but proponents believe that could threaten the success of the entire system. There’s simply too much land for residents to be able to have safe, reliable access to legal cannabis if more than a handful of cities take advantage of the opt-out clause.
“While talking with an assembly member in Wasilla it was noted that here in the rural parts of Alaska there are concerns about the fact that they just do not have the personnel to enforce the regulations or the testing facilities to test the final product, let alone the people to help draft recommended legislation,” Patricia Holdiman said.
“The question they are facing at this point is how can they create a thriving atmosphere for a burgeoning industry, yet keep it regulated and safe when they don’t even have a police department, testing facilities or facility inspectors?”
Holdiman acknowledges there will continue to be a great deal of resistance from the local government, but that resistance will only feed the black market.
“We need to show them that this is a positive change for Alaska and will create the needed revenue to fund our schools, fire departments and many more needed services,” she said.
Alaska is also unique in its relationship to the federal government, which still maintains that marijuana is a Schedule I controlled substance. The federal government owns nearly 70% of the land in Alaska — far more than any other state in the nation — setting up an interesting conundrum about the extent of where state law holds power and whether or not the feds would withhold funding due to the acceptance of marijuana.
Wray pointed to Washington and Colorado as indications that Alaska is probably safe.
“Colorado and Washington aren’t losing funding through these federal programs,” he said. “Why make the assumption that Alaska would lose funding if they endorse local marijuana laws?”
Regardless of successes other states have had, Kole said there are still plenty of roadblocks and obstacles in the way.
“I’m encouraging people to make sure they get political, educated, involved and active,” she said.
She said it’s important for prospective business owners to be educated about more than how to run a business. She said they also need to be educated on policy and the rule-making process, and recommends people connect with the Coalition for Responsible Cannabis Legislation.
“Right now, the focus is just on making sure that everything goes how we want it to, to make sure we don’t end up like Washington,” she said. “It could be done better, and we would like to do it better.”
She said Washington’s exorbitantly high tax rate defeats the whole purpose of legalization and only allows the black market to thrive. As a hopeful dispensary owner herself, she said she also prefers Colorado’s vertically integrated system.
Those are among the laundry list of questions entrepreneurs are anxious to have answered. Will Alaska allow vertical integration? What kind of licenses will be granted? Will delivery services exist? What about smoking lounges? Cannabis-friendly lodges and hotels? How will Alaska’s tourism industry be allowed to dovetail with cannabis industry? Will industrial hemp be addressed?
Alaska can follow the lead of Washington and Colorado, while learning from their mistakes, Kole said.
It’s not likely to be a quick and painless process. Kole said the time frame she’s expecting is sometime between August and November of 2016 that businesses would be licensed and operational.
“The conservative culture has a strong base here in Alaska and it will be a challenge to help them see all the positive aspects that can and will come from welcoming this newly legalized industry to the Alaskan Frontier,” Holdiman said.
Phelps said one of her focuses is on getting government to recognize that there are three potential benefits of allowing regulated marijuana: revenue, medical benefits and being able to more effectively keep it out of the hands of young people.
“For me, I want to see some regulations written that are functional and fair,” Phelps said. “We see what’s going on in Washington and how their over-taxation is in essence killing the market.”
James Barrett said he believes Alaskans will be weary of any sort of lottery for licenses.
They’re very concerned about their personal freedoms and rights, he said.
“I personally believe the closer we stick to our state constitution, the better off we’ll be.”