With less than two months before the state will accept marijuana business applications, the borough’s Marijuana Task Force is still debating whether to set additional restrictions.
The task force has not yet reached a set of recommendations for the borough assembly. Several members supported sticking to the state regulations without any additional rules specific to the Kenai Peninsula Borough, but the task force ultimately voted down member Dollynda Phelps’ proposal to adopt the state regulations with no addition.
At the task force’s Thursday meeting, three people gave 10-minute presentations that forecast struggles for marijuana businesses on the peninsula.
“It’s going to be very, very tough,” said Brian Ehlers, who testified about the process of marijuana cultivation.
Ehlers said the startup costs, the licensing requirements and the low population of the peninsula will make it hard to succeed. He said he has been building a 5,300 square foot facility in Kasilof to grow marijuana and had to take out a $250,000 loan to do so.
Patricia Paterson, the owner of Lucky Raven Tobacco near Soldotna, said the retail side will be just as hard as growing or processing. A part of the tax code called Section 280E prevents marijuana businesses from writing off expenses such as payroll and insurance from their taxes and raises the overhead of doing business significantly, she said.
“From what I’ve read, $3 million is the rule of thumb,” Paterson said in her presentation. “Unless you’re making $3 million (in gross profit), you may as well not open your doors.”
Paterson said it was unlikely that small marijuana businesses would be able to operate in areas without high foot traffic. The overhead would not pan out with the profits, so marijuana businesses will have to operate in highly visible, public areas, she said.
The task force has been debating how to provide options for residents who want to bar marijuana businesses from their neighborhoods. One option presented is the formation of Local Option Zones, citizen initiatives that allow the majority of residents in a subdivision to bar certain types of businesses from their neighborhoods.
The borough assembly will debate changes to the Local Option Zone code at its upcoming Jan. 19 meeting, a rewrite that has been at least six months in the works. Marc Theiler, a member of the Marijuana Task Force, said he sees the Local Option Zones as a way of setting neighbors against one another and prohibiting marijuana businesses from operating.
“All this is another chance to create unsettlement, and a kind of divide,” Theiler said. “The days of the old worldviews are coming to an end. It would be nice to have some progressive perspectives rather than activity for the sake of activity.”
Blaine Gilman, a member of the task force and the sitting borough assembly president, said the code rewrite is not specifically targeted at marijuana businesses. If marijuana businesses object to it, owners should testify to the assembly, he said.
He also brought up the question of taking the basic debate of whether marijuana should be permitted at all in the Kenai Peninsula Borough to the assembly again. If the assembly votes to ban marijuana, all the work the task force has done so far would be moot, he said.
Both Kenai and Soldotna have set moratoriums on marijuana businesses. Kenai passed a year-long moratorium on businesses where customers can consume cannabis on-site; Soldotna passed a two-year moratorium on all marijuana businesses. Task force member Wayne Ogle said he disagreed with the moratoriums but that additional work still needed to be done on the regulations before they moved forward with recommendations to the assembly.
Task member Ron Long proposed a series of regulations that would require marijuana businesses to be permitted by the borough planning director every five years and, among other requirements, be located more than 1,000 feet from a school, recreational or youth center, religious center or correctional facility.
The 1,000-foot requirement has less to do with the safety of children than complying with the federal requirement for the drug-free zones surrounding schools, Long said. That way, if the federal government decided to intervene and require 1,000 feet, Kenai Peninsula Borough businesses will not have to relocate, he said.
“My concern is that we’re in sync with federal laws, and since we are not unintentionally putting another barrier on business, so in that way, I think we are on record as making a positive effort on the part of businesses,” Long said. “I think the state’s regulations have put a pretty darn good job … of protecting our kids.”
The task force did not vote on Long’s amendment, and will meet again Jan. 20 to accelerate their decision on a set of recommendations for the borough assembly.
Reach Elizabeth Earl at elizabeth.earl@peninsulaclarion.com.
