Marijuana

One of the state’s key regulators on commercial cannabis has been unexpectedly ousted by the governor.

Bruce Schulte was active in the 2014 ballot initiative legalizing commercial marijuana in Alaska. He then served as chair of the Marijuana Control Board, a position with tremendous influence in crafting regulations for the new industry.

Recently though, he’d been voted out of the chairmanship. And last Friday, Schulte — who is a commercial pilot — landed after a flight to find an unexpected voicemail.

“I received a call from the governor’s office saying that I was being removed from the marijuana control board. No explanation was offered,” Schulte said by phone Tuesday. “I’ve tried to reach out to the head of Boards and Commissions to get some sort of explanation, and have received no response back.”

A letter emailed to Schulte and signed by Gov. Bill Walker on July 29 thanked Schulte for his service on the board, but concluded that his tenure is “no longer in the best interest of Alaska.”

Grace Jang, the governor’s director of communications, wrote in a Tuesday email that Walker “felt it was time for a change,” and that “Schulte’s approach to the staff and administrative process was not satisfactory.” Jang did not respond to a request for specific examples.

In the past, Schulte has clashed with Cynthia Franklin, who directs the Alcohol and Marijuana Control Office, which is tasked with developing regulations for the state. The two disagreed about specific regulatory policies, as well as over the timeline of implementing statewide laws, which critics said placed an unfair burden on the fledgling industry.

Schulte believes the makeup of the marijuana board reflected Alaskans divided opinions on commercialization, with both proponents and skeptics of the new industry giving regulations a measured, conservative shape in the course of the last year. He sees the effort to shake up the board’s composition as an attempt to change how regulations develop in the coming months.

“I think I was subject to some internal politics, and I think there was an internal effort within the administration to change the make up and the dynamic of the marijuana control board,” Schulte said. “Part of that was getting me off that board.”

Franklin with control office declined an interview request on Schulte’s departure, referring comments on the subject to the governor’s office. However, she responded with a list of the Marijuana Control Board’s accomplishments that included setting up the regulatory protocols for the electronic application process, the review of nearly 100 license applications, and meeting all deadlines set out in the original voter initiative.

The chair of the Alaska Alcohol and Marijuana Control Board is gathering signatures to have Kenai Peninsula Borough vote on outlawing commercial cannabis operations in areas of the borough outside cities.

That isn’t sitting well with members of cannabis industry on the peninsula.

Soldotna police chief Peter Mlynarik who’s community instituted a two-year ban on commercial cannabis activity, chairs the state Alcohol and Marijuana Control Board, tasked with regulating the fledging industry created with the passage of Ballot Measure 2 in 2014.

Mlynarik is a registered signature gatherer on a voter initiative to ban commercial marijuana in the Kenai Peninsula Borough outside the cities that have legal authority to determine their own rules.

Legally, there’s no problem with the intersection of these rolls.

Harriet Milks, legal counsel for the board, has advised that a board member’s participation in political activity, even on issues relevant to the board, doesn’t violate the Alaska Executive Branch Ethics Act.

Outside activity only constitutes an ethical violation when a board member would personally — primarily financially — benefit from an issue before the board.

Legal doesn’t mean acceptable to many in the commercial cannabis industry on the Kenai Peninsula. Dollynda Phelps is working toward opening Peace Frog Botanicals in Kenai in October.

“I know from a legal perspective he’s not violating any legal code of any type, but I think, morally, to play both sides is wrong,” Phelps said. “I believe that the chair of a board that’s set to regulate an industry should not on his free time turn around and work against that industry.”

Mlynarik wanted to be on the board to help regulate the new industry, particularly with an eye toward public safety, he said.

“Trying to make sure that, as you’re starting this new industry, you keep those kind of matters, the public safety-type issues, in mind as regulations are being crafted, as licenses are being approved or if there’s any enforcement action that needs to be taken,” Mlynarik said.

He said his involvement gathering initiative signatures doesn’t affect his work on the board, nor would his personal opinion of commercial marijuana. In fact, he’s voted to approve every complete license application that’s come before the board.

“You can look at my voting record on the board. And you’ll see that I’m pretty consistent in the way I vote. And I’m not always the most conservative. I didn’t deny any of the licenses that came out on the principle that I did or did not like the establishments. We are there to regulate, and that’s our job for the board,” Mlynarik said.

He said he supports the initiative because Ballot Measure 2 gives municipalities the right to opt out of commercial marijuana if residents so choose. He wants the borough to exercise its right to decide.

“So when people voted for Ballot Measure 2 they also voted to allow local governments the option of whether or not they wanted to opt out. My hope is that people will be allowed to vote on that,” Mlynarik said.

Phelps said she doesn’t question Mlynarik’s right as a citizen to participate in the political process, nor does she say he’s been obstructive to the industry in his work on the board. Her concern is the combination of the two.

“We’re not talking about a conflict of interest being collecting signatures. The intent to work against the industry is the conflict of interest. You cannot work for the industry on a regulatory board and against the industry in your free time,” Phelps said.

Kenai Peninsula Borough Assembly Member Stan Welles is another registered signature gatherer. Phelps isn’t bothered by that, though.

“We all know where Stan Welles stands. He’s not working on one side to regulate an industry, he’s just 100 percent against it,” Phelps said. “Welles being a signature-gatherer was no surprise. I was surprised with Mlynarik, simply because of his role to create a regulated industry.”

Mlynarik’s actions erode trust in the board among the business owners who are investing a lot of money to participate in the new industry, Phelps said.

“Denying licenses that are outside (cities) of the borough, some of which have invested hundreds and hundreds upon hundreds of thousands of dollars, who are members of the community, who have children here in our community, who we all own businesses here in our community,” Phelps said. “Every one of us will be financially burdened by this.”

If the initiative passes, Phelps said it will be a blow to the legal commercial marijuana industry, as well as to public safety.

“Banning only outside of city limits is not going to get rid of commercial cannabis in our area,” Phelps said. “It’s going to push all the commercial cannabis into the very cities where most of the people that are involved with this don’t want to see it.”

“Not allowing legal, licensed, regulated, inspected facilities, you are absolutely giving all the power back to the black market. The only way to shut down the black market is to support their competition. And the legal market is the only competition for the black market.”

If the initiative petition is approved, the question will appear on the October municipal ballot.

After lengthy discussion Monday, two tax items on the Ketchikan Gateway Borough Assembly agenda each were postponed: an increase to the sales tax cap and a tax on retail marijuana.

The retail pot tax discussion is an item that carried over from the second meeting in July.

During that meeting, an ordinance that called for a marijuana sales tax of up to 10 percent was sent back to borough management with direction to link the additional tax to the potency of marijuana products, such as concentrates and edibles.

When it returned to the Assembly, though, there was lengthy discussion about how complicated the borough’s excise tax should be.

Assembly Member John Harrington suggested indefinitely postponing the measure and asking borough management to come back with another, simpler ordinance calling for a 5 percent excise tax on retail marijuana.

That motion passed 4-3, with Mike Painter, Alan Bailey and Stephen Bradford voting no.

Glen Thompson, though, added that he’d like some options with the new ordinance, including an additional excise tax related to potency.

“I think there’s some validity to an additional excise tax on potent products that can be a danger to children, and we’ve seen this in places in Colorado where toddlers pick up something they think is a candy bar and wound up in the hospital,” Thompson said. “An additional excise tax on those types of products to dissuade their use is probably warranted.”

The assembly also discussed and ultimately postponed a proposed increase to the sales-tax cap on single-item purchases, which has remained at $1,000 for about three decades.

The original proposal tripled the tax cap, but during the second meeting in July, the motion’s co-sponsor Bill Rotecki asked that it be lowered to $1,500, and adjusted to inflation every five years.

The tax increase still wasn’t a popular proposal. Local business representatives spoke during public comment against raising the tax cap, stating that they compete against big-box online stores that offer free shipping, so taking away this small advantage could affect their sales.

Hannah Ramiskey of Schmlock Mechanical said it’s in the community’s interest to help local businesses, and not provide more incentive to shop online.

“They don’t provide any services here. They don’t give money to your children,” Ramiskey said. “They don’t provide employment for your workers here. As retail gets smaller and smaller and smaller in Ketchikan, those are jobs that are gone. That is money donated through all of those stores – to donations to this community — and it’s harder and harder.”

Rotecki questioned whether someone would choose to buy online rather than locally over about $30 – which is the extra sales tax they would pay if the tax cap jumped to $1,500.

Rotecki’s argument in favor of raising the tax cap is that leaving it as is means a greater percentage of taxes comes from smaller-item sales, putting more of a burden on lower-income residents.

But, with an apparent majority on the Assembly opposed to raising the sales-tax cap, he suggested not raising it, but still adjusting it to inflation every five years.

“The inflation thing is a very minimal increase,” Rotecki said. “I don’t know that this (assembly) body would have the nerve to do anything and I think that doing nothing is really wrong, so I propose that we do something, which is inflation-proofing.”

That amendment passed, with Painter, Thompson and Bailey voting no.

But then, Thompson proposed postponing the whole thing indefinitely. He argued that the conversation was premature, and the Assembly needs to have a wider discussion about taxes in general.

That motion to postpone passed 6-1 with only Rotecki voting no.

Prescription drug prices continue to climb, putting the pinch on consumers. Some older Americans appear to be seeking an alternative to mainstream medicines that has become easier to get legally in many parts of the country. Just ask Cheech and Chong.

Research published Wednesday found that states that legalized medical marijuana — which is sometimes recommended for symptoms like chronic pain, anxiety or depression — saw declines in the number of Medicare prescriptions for drugs used to treat those conditions and a dip in spending by Medicare Part D, which covers the cost on prescription medications.

Because the prescriptions for drugs like opioid painkillers and antidepressants — and associated Medicare spending on those drugs — fell in states where marijuana could feasibly be used as a replacement, the researchers said it appears likely legalization led to a drop in prescriptions. That point, they said, is strengthened because prescriptions didn’t drop for medicines such as blood-thinners, for which marijuana isn’t an alternative.

The study, which appears in Health Affairs, examined data from Medicare Part D from 2010 to 2013. It is the first study to examine whether legalization of marijuana changes doctors’ clinical practice and whether it could curb public health costs.

The findings add context to the debate as more lawmakers express interest in medical marijuana. This year, Ohio and Pennsylvania passed laws allowing the drug for therapeutic purposes, making it legal in 25 states, plus Washington, D.C. The approach could also come to a vote in Florida and Missouri this November. A federal agency is considering reclassifying medical marijuana under national drug policy to make it more readily available.

Medical marijuana saved Medicare about $165 million in 2013, the researchers concluded. They estimated that, if medical marijuana were available nationwide, Medicare Part D spending would have declined in the same year by about $470 million. That’s about half a percent of the program’s total expenditures.

That is an admittedly small proportion of the multibillion dollar program. But the figure is nothing to sneeze at, said W. David Bradford, a professor of public policy at the University of Georgia and one of the study’s authors.

“We wouldn’t say that saving money is the reason to adopt this. But it should be part of the discussion,” he added. “We think it’s pretty good indirect evidence that people are using this as medication.”

The researchers found that in states with medical marijuana laws on the books, the number of prescriptions dropped for drugs to treat anxiety, depression, nausea, pain, psychosis, seizures, sleep disorders and spasticity. Those are all conditions for which marijuana is sometimes recommended.

The study’s authors are separately investigating the effect medical marijuana could have on prescriptions covered by Medicaid, the federal-state health insurance program for low-income people. Though this research is still being finalized, they found a greater drop in prescription drug payments there, Bradford said.

If the trend bears out, it could have other public health ramifications. In states that legalized medical uses of marijuana, painkiller prescriptions dropped — on average, the study found, by about 1,800 daily doses filled each year per doctor. That tracks with other research on the subject.

Marijuana is unlike other drugs, such as opioids, in which overdoses are fatal, said Deepak D’Souza, a professor of psychiatry at Yale School of Medicine, who has researched marijuana. “That doesn’t happen with marijuana,” he added. “But there are whole other side effects and safety issues we need to be aware of.”

Study author Bradford agreed: “Just because it’s not as dangerous as some other dangerous things, it doesn’t mean you want to necessarily promote it. There’s a lot of unanswered questions.”

Because the federal government classifies marijuana as a Schedule I drug, doctors can’t technically prescribe it. In states that have legalized medical marijuana, they can only write patients a note sending them to a dispensary.

Insurance plans don’t cover it, so patients using marijuana pay out of pocket. Prices vary based on location, but a patient’s recommended regimen can be as much as $400 per month. The Drug Enforcement Agency is considering changing that classification — a decision is expected sometime this summer. If the DEA made marijuana a Schedule II drug, the move would put it in the company of drugs such as morphine and oxycodone, making it easier for doctors to prescribe and more likely that insurance would cover it.

To some, the idea that medical marijuana triggers costs savings is hollow. Instead, they say it is cost shifting. “Even if Medicare may be saving money, medical marijuana doesn’t come for free,” D’Souza said. “I have some trouble with the idea that this is a source of savings.”

Still, Bradford maintains that if medical marijuana became a regular part of patient care nationally, the cost curve would bend because marijuana is cheaper than other drugs.

Lester Grinspoon, an associate professor emeritus of psychiatry at Harvard Medical School, who has written two books on the subject, echoed that possibility. Unlike with many drugs, he argued, “There’s a limit to how high a price cannabis can be sold at as a medicine.” He isn’t associated with the study.

And, in the midst of the debate about its economics, medical marijuana still sometimes triggers questions within the practice of medicine.

“As physicians, we are used to prescribing a dose. We don’t have good information about what is a good dose for the treatment for, say pain,” D’Souza said. “Do you say, ‘Take two hits and call me in the morning?’ I have no idea.”

Kaiser Health News is a national health policy news service that is part of the nonpartisan Henry J. Kaiser Family Foundation.

Copyright 2016 Kaiser Health News. To see more, visit Kaiser Health News.

Gov. Bill Walker has called the legislature into a special session to address the budget and other bills lawmakers failed to pass during the 121-day session that ended Wednesday.

It didn’t take long. The governor, at midnight, called a special session starting Monday at 11am in Juneau. #akleg pic.twitter.com/PUbWwVlfZT

— Austin Baird (@AustinBaird) May 19, 2016

A minute past midnight, Walker called for legislators to return to Juneau on Monday. He asked them to consider the capital and operating budgets. The special session will also focus on legislation to draw money from Permanent Fund earnings to pay for the annual budget, as well as a bill to overhaul the state’s oil and gas taxes.

Walker also called for legislators to consider bills to introduce an income tax and to raise taxes on motor fuel, alcohol, mining, tobacco, marijuana, and commercial fishing.

Some legislation that isn’t related to the budget will be on the agenda. It includes a bill that would make changes to some adoption procedures. Other measures are aimed at foster care, the state’s individual insurance market, and benefits for law enforcement officers and firefighters who die in the line of duty.

The majority caucuses of both houses tried to extend the session by 10 days. But the House minority caucus opposed an extension. State workers would receive layoff notices on June 1 if the legislature hasn’t passed a budget by then.