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Colorado Marijuana Legalization Highlights Potential Alaska Problems

By Grace Jang, Investigative Reporter, gjang@ktuu.com
Published On: May 08 2014 12:29:46 AM AKDT
Updated On: May 08 2014 12:34:52 AM AKDT

( KTUU - TV )

DENVER -

In the Mile High City, a street corner conjures up images of home for Alaskans. On Nome Street and 49th Avenue, you’ll find Medicine Man, a shop employees have dubbed the “Costco of weed.”

Inside, customers are lined up to buy recreational marijuana or, in Daniel Layne’s case, medical marijuana.

“It always smells so good in here,” said Layne, who has a spinal contusion that causes back pain. “I work in manual labor, and I work very hard and a lot, and medical marijuana helps me deal with the pain while I work.”

The man behind the counter, Brian Land, is a budtender. He recently moved to Colorado from Kansas.

“I moved away from the state because they weren't going to provide me with my medicine and I was tired of feeling like a criminal,” Land said.

He, too, is a medical marijuana user.

“When I was younger, they had me on prescription medicine for ADD and bipolar (disorder), and I was just a zombie,” Land said. “I couldn't stay awake for my classes, and basically ended up having to drop out and get the GED because I couldn't perform in school. I quit taking my medicine and I lost 40 pounds in one month. It just shed off me like water. And I started smoking. I've been balanced ever since.”

Now that recreational marijuana is also legal in Colorado, businesses like Medicine Man are flourishing.

“Legalization, honestly, I didn't expect it this quickly,” said Elan Nelson, who’s in charge of business development and strategy at Medicine Man. “I didn't expect it in my lifetime, to be honest. But then you see how it's progressed, and the sky hasn't fallen in Colorado. Things have been going very smoothly.”

Medicine Man is one of more than 500 businesses cashing in on the new law, which in January allowed the sale of recreational marijuana. The marijuana industry has generated more than $5.5 million in revenue for the state of Colorado.

“Things have been going very well for us,” said Lewis Koski, director of Colorado’s marijuana enforcement division.

Backers of Alaska’s Ballot Measure 2 say Alaska could have a similar success story. The initiative is similar to one voters approved in Colorado.

But Colorado had a four-year advantage Alaska doesn’t have: a regulatory infrastructure, set up in 2010, for medical marijuana shops.

All of the retailers licensed to sell recreational marijuana began as established medical marijuana dispensaries, as required by law. So when legalization went into effect earlier this year, they simply expanded.

“We had the advantage of learning a lot by having already been in a similar regulatory environment with medical marijuana businesses,” Koski said. “So we applied a lessons-learned approach to retail marijuana, which I think ultimately helped with our implementation.”

In fact, Koski himself got his start four years ago as chief of medical marijuana investigations. He now leads 55 people since the division grew in January. The division’s No. 1 priority is public safety, he said.

“We want to make sure there's not diversion of marijuana products outside of the regulated environment,” Koski said. “We're working really hard to ensure our licensees are not selling the product to anyone who's under the age of 21.”

But critics of legalization say the industry has exploded and regulators can’t keep up.

“This is a big deal for me, because I know first-hand what addiction does in people's lives,” said Ben Cort, a former addict who now counsels other addicts. “I've seen it in my own life and my peer group.”

Cort said retailers are breaking rules about store hours and advertising to children.

“You can’t be open after 9 (yet) we’ve got 24-hour home delivery,” Cort said. “We’ve got take-out. I’ll show you as many pictures as you want of cartoons doing this, but you can’t have open advertising. We’ve got billboards. We’ve got stuff on the sides of taxis, we’ve got sign-holders, we’ve got sign twirlers. Because who’s regulating this?”

Cort is also with Smart Approaches to Marijuana, a national group that’s helping Alaska’s "No on 2" campaign.

Where the "Yes on 2" camp cites the healing aspects of marijuana, the "No on 2" camp highlights the harm.

“A 2-year-old girl two miles from my house, I think it was January 3, ate a (marijuana-laced) cookie and ended up in the (emergency room),” Cort said. “We've had instances, several instances, of toddlers having to go on artificial respiration because they've consumed so much inside of these things (marijuana edibles).”

Cort said Alaska should learn from Colorado’s mistake in legalizing pot. For one thing, Alaska has no dispensaries that sell marijuana for medicinal purposes.

“Colorado, we had the medical marijuana regulatory agency in place,” Cort said. “In the short period of time that we had to build all the regulation around it and figure out how to enforce it, at least we had a foundation. Alaska has nothing.

“That is an entirely new regulatory body that you guys will have to build from scratch, and if it's not working out with us building it when we already had some infrastructure, good luck.”

If Alaska voters approve Ballot Measure 2 in November, the state would have to set up a regulatory infrastructure within nine months. The commerce department, which oversees the state’s Alcoholic Beverage Control Board, would be tasked with spearheading the transition.

The state would also have to spend up to $7 million and hire dozens more people in the first year to get the system up and running.

As for revenue, the state does not have an official estimate on how much it could potentially get in taxes. The initiative calls for a tax of $50 per ounce of marijuana.

Then there’s the issue of tracking an industry that’s entirely cash-based. Because marijuana is illegal federally, banks don’t accept those earnings.

“Within this industry we call it the banking crisis and that truly is the correct title for what's going on,” Nelson said. “We're dealing with a very cash-heavy business, and because of that we're put at risk. Any time we have large amounts of cash here in the building we have to make sure that we're transporting it away so we're not putting our employees at risk. Of course, any time we're transporting it, wherever we're at, we're causing a public safety issue as we're out on the streets with large amounts of cash.”

Koski also said it’s a challenge.

“It makes it a little more difficult for them to be as transparent as we want them to be because that component is really cornerstone to the entirety of our regulatory framework where our licensees are required to be transparent on every front -- how they track their inventory, how they keep up with their books and records, who they're hiring,” Koski said. “Almost everything needs to be fully transparent. Banking is something regulators use to help substantiate that the regulatory community is doing what they're supposed to be doing and keeping accurate books and records.”

In six months, Alaskans will decide whether a store like Medicine Man should be in Nome or anywhere in the 49th state.

“The world is watching us to see whether or not we're successful,” Koski said.

Cort said legalization has turned “my state into an incubator.” He said he will continue to speak out against legalization, despite being the target of criticism.

“Everybody's saying Colorado's the canary in the coal mine,” he said. “Give us a year and then come back and check to see if we're dead or still singing.”