Where Did the Idea Come from to Tax MJ?
In 2016 the city’s Marijuana Advisory Committee (MAC) created a framework for the industry legalized by ballot measure in 2014. In their report to the assembly the MAC made several suggestions: where to locate growers and sellers, rates for utilities, and a special tax to be instituted after the industry got off the ground:

“On the topic of taxation, one of the points that prompted action was the concern that at some point in the future the State government may choose to prohibit the levying of any excise taxation on marijuana sales. As was the case with taxation of alcohol, it was possible that any excise taxation that predated any such action by the State would be “grandfathered” in. The committee does recommend the imposition of a 2% point-of-sale excise tax on all retail sales of marijuana in Sitka.” (MAC report, 2016)

Sitka’s marijuana industry is a model of entrepreneurial spirit – the businesses in town are operated by hard-working individuals who contribute to the community and provide a product that is safe and legal. Marijuana business owners in Sitka have shown themselves to be good neighbors, shrewd and capable business owners, and leaders in this nascent industry.

As a reminder, the Marijuana Advisory Committee members were long-term Sitkans who were committed to making this industry work in Sitka: Levi Albertson (chair), Andrew Hames (vice-chair), Joe D’Arienzo, Lindsay Evans, Pamela Ash, Jay Stelzenmuller, Darrell Windsor, Steven Eisenbeisz and Bob Potrzuski. The committee was created “to research issues and give recommendations to the Assembly regarding the legalization of its recreational use.” Meetings were publicly noticed and well-attended, according to the 2016 report.

While there is a black market for marijuana in Sitka, as in other communities, consumers cannot be sure when they purchase on the black market whether the product they’re buying is safe and what potency they’re purchasing. There is room to improve how we handle the illegal sales of marijuana in Sitka, but that should not stop the community from following through on the recommendation of the MAC in 2016 to institute a 2% point-of-sale tax when purchasing safe, regulated marijuana products from local businesses.

Sitka is not alone in creating taxes specific to marijuana products. While Anchorage and Fairbanks have no sales tax, they do tax marijuana products at 5%. Juneau’s marijuana tax and sales tax together equal 8% and Ketchikan’s come out to 11.5%. In fact, when this modest tax on marijuana products passes it will enable exactly what the MAC encouraged our community to dour community to do: Sitka will be able to evaluate the tax on alcohol products, which research shows are generally more harmful and costly to society than marijuana.

Currently, marijuana sales are taxed like all other purchases in town: 5% in the winter and 6% in the summer. When marijuana products were legalized in Alaska in 2014 many voters across the state expressed the desire to bring sales into the tax base of our communities. This ballot measure will remove the usual sales tax and replace it with a separate 6% tax specifically on marijuana products for 2023, then it will rise to 8% in 2024 and dedicate these funds to a student activity fund. This means 100% of the revenue generated from marijuana sales in Sitka will go to support student activities. Effectively, this change will increase the cost of these products to consumers by 1% for half of 2023 and by an additional 2% starting in 2024, meaning anticipated support to student activities around $300,000.

Why Do Student Activities Matter?

Sitka School District consistently scores higher than comparable districts across the state on the annual state exam given to every student in Alaska. Our district is known statewide not only for the fine athletes and drama/debate performers, but for the model teamwork and sportsmanship these students demonstrate at events across the state. The storied history of Sitka’s strong performance in activities is the direct result of the community’s investment in our kids: businesses and individuals chip in regularly to help fund equipment, travel, and scholarships for participation. Our winning formula includes community support, dedicated families, and the talents and abilities and hard work of our kids.

Studies show that students who engage in extracurricular activities perform better in school. School activities begin as early as elementary school with music and art, but at this age they are introduced to students through the regular school day as teachers work to “educate the whole child.” In middle and high school, many student activities occur outside the school day, with coaches who are hired to lead the activity. Sitka Native Education Program activities span through the entire district.

The variety of activities quickly expands in our middle school to include sports and music opportunities outside of school hours, with one third of students participating in after school options. At Sitka High School and Pacific High School the variety of activities grows dramatically: Drama, Debate and Forensics, sports, Mock Trial, and a variety of music opportunities. Partially because of the success of our embedded elementary programs, and partially because of Sitkans’ dedication to the success of our schools and students, many students continue to participate in activities in middle and high school. The Sitka Native Education Program Ghajaa Heen Dancers spans throughout the Sitka School District.

Currently each Sitka High student pays a fee to participate in activities as determined by coaches and the Activities Director of $300-400 per activity to cover uniforms, coaches, and some travel. Additionally students are often responsible for other travel fees to attend State qualified tournaments ranging from $200-400. Ironically, the better students perform in their activities the higher their expenses: students who travel to regional or state tournaments often pay upwards of a combined one thousand dollars to be a part of an activity. At Sitka High, 79% of kids participated in school activities, 63% of students participated in sports last year with over half of those students participating in multiple activities. Students participating in more than one activity, and families with more than one child especially have to weigh how many activities they can afford.

Families of students in activities foot these bills, along with providing shoes, instruments, and food during travel and other expenses out of pocket and through fundraising campaigns. There is incredible support from Sitka’s business community to assist teams with travel expenses, from outright donations to calendar sponsorship and other fundraisers. Sitka has always stepped up for our students and supported their efforts to the tune of nearly $200,000 in funds raised annually. Yet it is important to recognize the cost to students and families of time and often, again, personal resources, to fundraise. These fundraisers are often embedded in community life, and are valuable in their own way, but they do not happen without a great deal of effort. The need for fundraising is unlikely to go away; however, reducing fees and expenses will open activities and all the benefits that come with activities to more students.

The Sitka School District has committed to maintaining their activities funding, which includes the salary of the Activities Director. Other ideas district leadership has proposed include capping student fees at $300 annually, opening the door to participation in as many activities as students would like. Reducing the expense for students who travel to regional or state tournaments is being discussed, as well as providing funds for meal support during travel for qualified students. In the absence of ferries the cost of travel has risen dramatically, and increasing the amount of money available for student travel will help offset this expense for families.

A yes vote on the Marijuana Tax Ballot Measure will fulfill a directive of Sitka’s own Marijuana Advisory Committee while committing 100% of the revenues from the sale of safe and legal products to student activities. This ordinance is a common sense way to continue Sitka’s tradition of supporting our kids.

Voters will now decide whether Sitka adopts a new cannabis tax. On Tuesday (6-29-22), the Sitka Assembly voted to put a consumer’s sales tax on marijuana on the municipal election ballot this fall. 

The new ballot proposition would eliminate the standard city sales tax on cannabis and replace it with one that would gradually increase to eight percent. The proceeds would benefit the Sitka School District’s “Student Activities Fund,” which pays for travel, supplies and other expenses.

Assembly member Thor Christianson said he supported putting it on the ballot but he didn’t know if he’d vote in favor or against at the polls. 

“Its essentially eventually gonna be about a 2 ½ percent hike in taxes, because most of this is gonna be a transfer from the money that we were already taking for normal sales tax,” Christianson said. “Honestly if I’m going to vote against it as a citizen, that would be why, just because of the hole its going to put in the general fund. But I have no problem putting it on the ballot to let the people of Sitka decide.” 

 
It’s not the first time the assembly has considered putting a marijuana tax out to the voters. In 2021, a ballot prop that would have levied an additional five percent tax on cannabis failed on a split vote. Assembly member Kevin Mosher was a no vote last year. This time, he voted in favor. 

“We talked about it quite a bit. The very first go around we made some adjustments, some compromises, and I feel like this is fair,” Mosher said, and added that he supported putting the prop out to the voters for a decision.

So what exactly are those compromises? The ballot prop the assembly settled on is different from the ordinance brought forth by sponsors Rebecca Himschoot and Kevin Knox in May. Initially they’d proposed a tax that would have gradually increased to 10 percent, but that was reduced to 8, and they also added language to confirm that the revenue collected from the tax would be separate from the city’s annual contribution to the Sitka School District. 

Assembly member Kevin Knox, concerned that there’s still some confusion about the ballot prop out there, and wanted to reiterate that the tax is not in addition to sales tax, it replaces it, and it’s levied on consumers, not businesses.

“Its not technically income that the business is losing or gains and then loses…its a consumer tax just like our sales tax,” Knox said. “Totally in favor of seeing this on the October ballot, myself, and if it passes tonight, looking forward to continuing the dialogue with the community and seeing how it fares.”

No one from the public commented on the final vote, but at previous meetings the ballot prop has been supported by a handful of educators and parents who say the tax is necessary in order to help fund student activities, which have become increasingly more expensive, especially with less accessible ferry service for student travel.

The measure was also challenged at previous meetings by a few cannabis business owners, who are concerned that the new tax will make legal cannabis less competitive against Sitka’s existing illegal market. 

At the first reading in early June, the ordinance passed 5-2 with member Crystal Duncan and Mayor Steven Eisenbeisz opposed. It passed 5-0 in their absence on final reading. It will appear on the ballot in the October 4 municipal election.

Read KCAW’s Additional Coverage Here:
Sitka School Board endorses plan to tax cannabis to support student activities

Cannabis tax ballot question progresses toward final vote

Assembly may put cannabis tax question out to voters in October election

The Sitka Assembly is one step closer to putting a marijuana tax question out to the voters, but it will be a slightly lower tax than previously advertised. 

When the group met on Tuesday (6-14-22), it settled on an 8% consumer tax on cannabis products to go before voters  in the municipal election this October. If the proposition passes, the consumer tax would replace the current 5-6% sales tax, and the revenue would go toward the Sitka School District’s student activities fund.

Initially, assembly sponsors proposed a consumer tax on marijuana that would have gradually increased to 10%. But after hearing pushback from Sitkans in the cannabis industry, they reduced the highest tax rate to 8%. They also removed language that would have lumped the funding in with the city’s annual allocation to schools. Sponsors intend that the revenue generated from the new tax is additional, and specifically dedicated to student activities. 

Sitka High School teacher Mike Viera said he appreciated the assembly’s approach and willingness to change direction, mid-course.

“I am appreciative of the thoughtfulness in the way that the co-sponsors have gone about this discussion, and their willingness to pull back and talk to industry and work with them on a compromise and come up with something that, again, you are not deciding tonight, you’re just deciding if the voters can decide,” he said. “So I think this is a great way to approach it.”

But during public testimony, the assembly continued to hear some pushback from Sitkans in the cannabis industry. Mike Daly owns Northern Lights Indoor Gardens, a local dispensary and grow operation. Opposed to a tax increase, he said the assembly was focusing on the wrong thing. He said if they addressed Sitka’s “black market” for cannabis, they’d have twice the tax revenue they have now.

“I really believe you guys are gonna stick with another tax and you’re gonna end up putting us out of business,” Daly said. “But I guarantee if there was guys making moonshine, or something like that, and selling it to the kids, you guys’d be all over that. But it’s like you guys could care less about the black market, and it’s all over this town.”  

No assembly members voiced concern with the concept of taxing marijuana at 8%, but Crystal Duncan remained concerned with how the funds would be applied by the schools. While she supported giving the schools more revenue, Duncan  wanted assurance that the funds would be used with equity in mind. 

“I’m kind of excited by the prospect of exploring how we can make this more accessible to the students who need it, who were turned away a long time ago, because their family, they just don’t have that type of support to offer students,” Duncan said. “Maybe its just a difficult thing for us to establish or figure out as part of this vote and how we would pass that money through. But if its about equity, this doesn’t bring equity.” 

Rebecca Himschoot said that wasn’t necessarily something they could control. 

“It wouldn’t be the purview of this body to create the policies around this,” Himschoot said. “I feel like that’s the work of the school board. But if we can eliminate one of the barriers, and a barrier to equity is the funding, then that’s what we have the power to do.”

And even with the updated language, Mayor Steven Eisenbeisz remained concerned that they wouldn’t be able to guarantee the funding would be truly “additional” which was his ultimate hope for the ordinance.  

“I don’t see yet how this doesn’t become just revenue replacement, instead of additional revenue to student activities,” Eisenbeisz said. “If you want to get a little more complicated, essentially we’re taking sales tax, which some sales tax does go to fund schools…we’re pulling it out and…in a very complicated accounting method, giving it back to them for the exact same purpose in a year with a slight increase.”

Eisenbeisz asked sponsors if they’d been able to figure out a way to ensure the money would be used as intended into the future. Assembly member Kevin Knox said there are no guarantees in governance or politics, and things can always change. 

“If you are uncomfortable with that change, or you don’t like changes that are being made, you go to the polls, you make changes there,” Knox said. This is going to give our community opportunity to weigh in and take this opportunity…the only guarantee that we have is death. So moving on from that, we have to trust the process.”

Ultimately the decision to put a marijuana consumer’s sales tax on the ballot this fall passed on a 5-2 vote with Eisenbeisz and Duncan opposed. It will come before the assembly for a final reading on June 28. 

The Sitka School Board has offered its informal support for a plan to tax the sale of cannabis products, in order to pay for extracurricular activities in the school district.

The Sitka Assembly has drafted a ballot proposition to put before voters this fall that would eliminate the municipal sales tax on cannabis, and replace it with a slightly higher consumer tax. At its most recent meeting, the school board backed the proposition – with one major caveat.

The problem is just a line in the ballot proposition ordinance stating that the money raised by the new tax would be “included in the calculation of local support” per state law – where it might have the unintended effect of diverting funding from classrooms into extracurriculars.

That’s an oversight, according to assembly member Rebecca Himschoot, who sponsored the ordinance. She cleared things up with the school board at its meeting on June 1. This money is intended to land outside the state funding formula, and directly support student participation in sports and activities.

“It’s really important to the assembly, or at least to the three co-sponsors that these funds be supplemental to the district’s existing effort,” said Himschoot. “So our expectation is that the district will continue with current funding levels. And we’ll be adding to that, and the ultimate goal — obviously, elusive-but-worthy — will be to make school activities, if at all possible, free and open to everyone.”

Himschoot said that the problem language would be deleted from the draft ordinance, with the approval of the rest of the assembly. Another likely change will be eliminating the highest proposed tax rate of 10-percent on marijuana, and capping it at 8-percent.

Sitka already charges a sales tax which alternates seasonally between 5- and 6-percent. Cannabis products would be exempt from the regular sales tax, if voters approve the ballot measure. Himschoot said this made the new consumer tax easier to bear for the cannabis industry in Sitka.

“So we’re hearing from the three companies we’ve been talking with: One company has been very supportive, one company has become supportive through the changes that we’re making, and we’re not really hearing from the third company,” said Himschoot. “And when I say ‘very supportive,’ they understand the need for activities in the end, and using this (tax) as a means to that end is something they’re supportive of.”

Taxing  marijuana is complicated. Outgoing school board president Andrew Hames recalled serving on the Marijuana Advisory Committee in 2016, and learning how excess taxes might make legal cannabis uncompetitive with the existing, illegal market.

“And at that time, there was so much concern by people who were looking to starting a business at being burdened down with taxes, and not being able to, number one, be competitive with the black market,” Hames said. “And number two, be sustainable with just the amount of expenses. Because of the nature of the product, they didn’t have the same tax write-offs. So they were really hesitant, which at the time surprised me because one of the main reasons for legalizing was we can tax this and we’re not taxing it at all right now. And so the thought was, let’s get things up on their feet. And then we can revisit this a few years down the road.”

Hames said that he was pleased that the assembly was now pursuing the idea.

Funding student activities has been a difficult problem over the last couple of decades. Travel costs are huge, and students and families are asked to both fundraise for activities, and pay fees that have grown so large that equity is a serious concern.

The school board has explored solutions over the years, formed parent committees, without any major breakthroughs. Board member Paul Rioux thought the consumer tax on cannabis products was the first real opportunity in a while.

“As much as I hate to see new taxes, I was thinking back to what my comment a few months ago about, you know, possibly looking around at the good old days,” said Rioux. “And we’re looking at situations with rising costs and stagnant — if not declining — revenues. And if we’re not working as a community to solve those problems before they reach our doorstep, then they’re just going to run us over.”

Both board members Blossom Teal-Olsen and Todd Gebler liked the proposal. Gebler said his knee-jerk reaction was that “any revenue stream would be welcome.”

Assembly member Himschoot encouraged board members to speak to the proposed ballot proposition at the assembly’s next meeting on June 14. She reminded the board that sales tax revenues were on the rise overall in Sitka, and that replacing the sales tax on cannabis with a slightly higher tax to benefit students wouldn’t be seen as unfair to the sector.

“And we do always have to acknowledge the risk of the black market when we increase taxes on this industry,” she said. “So I guess there’s a certain level of faith and trust in Sitkans to do the right thing. There won’t be a huge bottom-line difference to most people in town who are using marijuana products.”

The new measure would eliminate the standard city sales tax on cannabis, and replace it with a marijuana tax that would increase gradually over the next three years, from 6% to 10%. The proceeds would benefit the Sitka School District’s “Student Activities Fund,” which pays for travel, supplies and other expenses.  

The assembly considered a similar ballot question in 2021, but it failed on a split vote at the assembly table. 

Michelle Cleaver owns Weed Dudes, a local dispensary. She objected when the assembly considered taxing marijuana products last year too. She said the new tax would be unreasonable.

“COVID happened, we lost our tourists. And that was 2020-2021. We had the PPPs, we had all the assistance programs. But the marijuana people were not allowed to work with any of those programs. So we didn’t get any utility assistance, any payroll assistance,” Cleaver said. “We had to go through it alone.”

Assembly member Rebecca Himschoot, who co-sponsored the tax question with Kevin Knox, challenged the idea that COVID had disproportionately hurt the cannabis industry. 

“They paid more taxes to the city in 2020, than they did in 2019,” said Himschoot, alluding to the fact that in order to collect more in sales tax from consumers, the businesses would have generated more revenue in 2020 than pre-pandemic years. “So the idea that they experienced the losses that others experienced during COVID is, in Sitka, not true.” 

Teachers and coaches spoke in support of the new marijuana consumers tax. Jeremy Strong coaches track and cross country at Sitka High school. He said the costs to participate in sports is prohibitive for families, particularly due to the high cost of travel, and hoped that the new tax could offset some of the expense. 

“If you get a student athlete who runs cross country, does basketball, or swimming and wrestling and they do multiple sports throughout the year, you know, some families can end up paying $5,000 just to participate and give their kids that opportunity,” Strong said.

“If there’s ways to lessen that burden on families, I’m all for it,” he added.

Assembly member Crystal Duncan wanted to know how the fund would be used to ensure students who need financial aid got the support they needed, and how the assembly could guarantee that.

“And paragraph after paragraph [of the memo] said that this is going to be more accessible. But we’re basically handing over money saying figure out what to do with it,” Duncan said. “We also know that that fund is not just for travel. It is used to pay for things like referees. It’s used to pay for a director’s fee. All of those are very valid reasons. But I don’t know how that gets us to the point of the goal for this memo, [which] is to bring about opportunity to students who need it.” 

The district already budgets $268,476 for student activities, which covers everything from officials and referee fees, to athletics travel and other supplies and expenses. The program already provides some scholarships– activities director Rich Krupa said they would likely continue to use free and reduced lunch data to determine student need. Himschoot said in an ideal world student activities would be 100 percent free to all students who want to participate. 

“And this takes us some pretty significant steps in that direction. And again, it’s going to be up to the district. And the the beauty of working with a partner like the school district is they know their students,” Himschoot said. “And our intent, we can only express what we would like to see happen.”

Mayor Steven Eisenbeisz was the lone vote against the cannabis tax. He said he wasn’t sure that the assembly could guarantee that the tax would provide additional revenue to the school district. 

The assembly voted this spring to max out its contribution to the district under state law, and Eisenbeisz said he was concerned that the tax revenue would simply replace funding the assembly had already set aside for the school district.

“While I love putting things in front of the voters, I cannot support this as written,” he said. “And that is because I have no guarantee that we’re actually adding funding.”

The cannabis tax passed on a 6-1 vote. It will come before the assembly for a second reading on May 24. If it makes it through the assembly’s process, it will go to the voters for a final decision in the October 4 municipal election.

Two proposed ballot questions got a tentative thumbs up from the Sitka Assembly  last night: — an excise tax on motor fuels and sales tax on retail marijuana. 

As KCAW’s Katherine Rose reports, it’s still undecided whether either tax question will be on October’s ballot.

The fuel excise tax would add three cents to every gallon of marine and motor fuel sold at the pump. It wouldn’t apply to aircraft or heating fuel. The revenue raised would go toward Sitka’s roads and aging harbor infrastructure. 

Marijuana would be taxed at 5 percent on top of Sitka’s existing sales tax. The additional revenue would go toward the Sitka’s School District’s student activities fund.

During public comment, a couple of people voiced support for the fuel tax. Chris Ystad is the vice chair of the Port and Harbors Commission. He said after talking with fellow fishermen about, most preferred the fuel tax over the planned exponential increase in harbor rates, which are set to rise 5 to 6 percent each year for the next decade to pay for the replacement of Eliason Harbor.   

“At first, you know, when you first say, ‘Let’s add another tax,’ it’s obviously a little bit of Whoa,” he said. “I asked my fellow fishermen and business owners to run the math…compare how many gallons that they would burn on a yearly basis, three cents per gallon, and compare that to what their harbor rates would be doing at a 5% to 6% increase for the foreseeable future into the 2030s. And after I explained that, most people accepted that they would rather see this fuels tax.”

Former Assembly Member Richard Wein questioned why the sponsors hadn’t included a projected amount the fuel tax would bring in revenue for the city.

“I certainly would have liked to have heard what the approximate estimates were to bring in, which would give an idea overall of how much fuel Sitka uses,” he said. “If people are going to remit, there’s a certain amount of money that comes in and you can make certain very real assumptions as to how many gallons were sold.”

Read our interview with the ballot question sponsors here

During Assembly deliberation, Member Kevin Mosher voiced concerns about both proposals, particularly the marijuana tax. 

“I feel like it’s basically picking on one industry,” he said. “The tax that they already have is just tremendous.”

Mosher said he might be willing to consider a lower rate. “But 5% on top of all that they’re already paying, I think is too much,” he said.

Member Thor Christianson said he wasn’t sure how he’d vote on either question should they make it on the ballot in the municipal election this fall, but was okay with voting yes at the Assembly table. 

“Almost any semi-reasonable proposal, I’ll put forward to the voters,” he said. “I am not sure how I would vote for this if and when that comes that point, but I don’t have a problem letting it go to the voters.”

The Assembly unanimously approved the fuel excise ballot question on first reading. The Assembly narrowly approved the marijuana tax proposal on a 3-2 vote with members Valorie Nelson and Kevin Mosher opposed. 

Both ballot questions will come to the Assembly table for a second reading in July. If they receive a final green light from the Assembly, the measures will be added to the ballot for voters’ consideration in the October 5 municipal election. 

Weed Dudes owner Michelle Cleaver discussed her business’s growth in front of the Sitka Chamber of Commerce. “It’s hard to talk to a room full of people who may be with you on your dream, or against you. But I’d like to think that I’m educating the world,” Cleaver said. She hopes cannabis will be downgraded from a Schedule I drug to at least a II, which would lower some of the barriers in research on marijuana, and would eliminate some of the challenges retailers face in transportation and finance. (KCAW photo/Robert Woolsey)

Sitka’s budding marijuana business is poised for significant growth, despite major limitations in transportation and finance faced by the industry.

Because of a conflict with federal law, the producers of Alaska’s legal marijuana can’t deposit their sales in banks, which makes otherwise routine tasks like paying bills a challenge. Nevertheless, one of Sitka’s pioneering cannabis retailers told the Sitka Chamber of Commerce this week (2-21-18) that statewide pot sales had already topped $57 million.

Downloadable audio.

Michelle Cleaver was the first person in Sitka licensed to sell cannabis, and the seventh in Alaska, following the 2014 election which legalized marijuana in the state.

Her store, Weed Dudes, brought in nothing for the first ten months, while the state designed a regulatory structure. By 2017, everything was in place to do business, but Cleaver didn’t have much to sell.

“So up until July I was out of pot more than I was in pot. People would come in and all we had was pre-rolls. We rarely had bud, because that’s what people wanted. And it took a little longer for the edibles to come out, and it took a little longer for the manufactured items to come out. But the last time I was out of pot was in July.”

Unlike other businesses, you can’t just call up your cannabis wholesaler and have a bale of Mexican Sativa goldstreaked to your store. Marijuana remains on the US Drug Enforcement Agency’s list of Schedule I controlled substances, along with heroin, LSD, ecstasy, and peyote. You can’t put it in the US Mail, or transport it across state borders. Just getting samples of Sitka’s local crop to Anchorage for mandatory testing required Cleaver to meet with — and win the cooperation of — the Federal Aviation Administration, the Transportation Safety Administration, the vice-president of Alaska Airlines, and law enforcement.

“I was in a room with six men in suits or uniforms talking about weed, and I was not in handcuffs!” (audience laughs)

Sitka now has three licensed cultivation facilities which have taken up the slack (and five more applicants, according to Cleaver), and two other retailers. And business is going pretty well. In the first 14 months of legal cannabis sales in Alaska the industry statewide generated over $57 million in sales, and contributed over $5 million in taxes .

Cleaver’s biggest problem remains something you just wouldn’t think would be a problem.

“It’s really a hard thing. We should be able to put our money in a bank just like every other person. We should be able to use credit cards. We should be able to take checks. We should be able to do all of these things, but the banks are afraid.”

Cleaver operates almost exclusively in cash, because banks — which are federally-insured — are reluctant to receive money from the sale of a Schedule I drug. She thinks credit unions, which have a different insurer, will eventually come through for the cannabis industry, but until then she goes around paying her bills in cash — which means monthly trips to Seattle to pay her credit card bill, as well as a special trip to the IRS to pay her federal taxes, also in cash.

Cleaver and the two other retailers in Sitka paid a combined $116,000 in local sales taxes to Sitka in 2017, plus a $5,000 annual licensing fee.

These are expenses that her competitors don’t share.

“Really, my competition is the black market, and if the black market beats my price what good am I? No one’s going to come buy from me. So I have to keep my prices at the same or lower than the black market, and I have to know what the black market is doing these days.”

Cleaver says her retail model is not perfect, but she compensates for low prices with high volume — and variety. She’s got a range of edibles and oils in addition to the more conventional cannabis buds, and concentrates for dabbing and vaping — products which were developed in the black market, mostly by younger innovators who have an entirely different outlook on pot than the culture she grew up in.

Cleaver calls herself old school, but she’s definitely a pioneer, serving as a bridge between the estimated 60 people now employed in Sitka in the cannabis industry, and the world of conventional business represented by the chamber of commerce.

Although she worries about providing health plans for employees and other routine business matters, little else about her operation is routine.

“They ask me, Are we going to drug test? Hell yes I’m gonna drug test. I want all my employees to know what kind of drugs we’re selling. So they need to take them home, test them out and come back and tell me what they think — that’s my idea of drug testing in my store!” (laughter)

Cleaver believes that Sitka has already won a good reputation for its cannabis product, as evidenced by the number of out-of-town fishermen and other travelers who make a special effort to get to her store. “They know the weed is good in Sitka,” she says, “because we’re snobs.”

Note: This story was corrected on 2-25-18 to amend Cleaver’s remarks about the amount of sales tax her business paid in 2017. The figure she quoted — $116,000 — was the combined total sales tax for all three of Sitka’s cannabis retailers, not just Cleaver’s business.

Master Grower Eric Van Veen shows a freshly harvested marijuana in the flower room,. (KCAW Photo/ Cameron Clark)

The Sitka Assembly recently reauthorized permits for one cannabis cultivation facility, Green Leaf, and two retail stores – Weed Dudes and Northern Lights Indoor Gardens. But while local government has been reinforcing the rules for the marijuana industry, growers and retailers have been building their businesses — literally from the ground up.

KCAW recently went behind the scenes to explore the highs and lows of Sitka’s cannabis trade.

Downloadable audio.

Reefer. Cannabis. Pot. Weed. Whatever you call it, it’s been legal to recreationally grow and consume in marijuana in Alaska for almost two years now.

Since 2015, pot shops have been sprouting up all across the state, providing the green stuff to anyone 21 and older. Sitka has two thus far, located in the same shopping center and one store apart.

Michelle Cleaver is the proud owner of one of these dispensaries, appropriately named “Weed Dudes.”

“It’s a good job to come into. It’s interesting. It’s fun. You get to meet all different people all day long. And you get to sell them weed,” she said.

Weed Dudes was Sitka’s first marijuana retail store and it definitely gives off that vibe. Cannabis-inspired art and clothing by local artists line the walls and ceiling, drawing customers to a clear case that splits the room.

“In our case here, we have some locally grown pre-rolls. We have seven different strains. We have 818 headband, that’s with the highest THC content in our store. Then we have Lucky Sleven. We have our White Lady, some Skywalker — that stuff will take you to a place far, far away,” Cleaver said.

Like a lot of dispensaries, Weed Dudes doesn’t have its own growing facility. They have to partner with different companies to ensure they have enough product to fill their shelves.

Their local supplier is Green Leaf, which is owned by Sitka assembly member Aaron Bean and grower Eric VanVeen. After signing in and greeting their fish, Mary Jane, VanVeen led me on a tour of their warehouse-sized operation at the end of Halibut Point Road.

“So here’s our veg-room-slash-mother-room. All these different plants, the big ones here, are all different strains. Right now, we’re sitting on 23 different strains of cannabis,” he said.

Plants cover almost every inch of the room, leaving only enough space for growers to examine each product. It looks like a sea of green, with marijuana growing in batches intended to generate 800 flowering plants at all times. Green Leaf grows each plant hydroponically in rockwool cubes, which VanVeen says is preferable to soil.

“Generally, hydroponics is a faster growing, better turnover rate. We have less chance of disease. There’s a really quick in and out, about 90 days from the time they’re put in a block until the time they’re ready to harvest,” he said.

Slideshow: Marijuana Cultivation

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(KCAW Photos/ Cameron Clark)

Alaska is a good environment to cultivate weed indoors. Although it gets cold, growers can produce the heat. The threat of bugs and other pathogens isn’t as high as other states. Also, the water quality is top notch, so each plant can reach its full potential.

But what about cultivation? How does Green Leaf produce 23 different strains of cannabis for a market that knows the difference? Part of Green Leaf’s facility is dedicated to cloning.

“What we do is about every two weeks, we take cuttings.” Pointing to a plant, he said, “Let’s say that right there would be one clone. We’d take about 20 or so, not too many, and then we would go into [the clone room],” Van Veen said.

The clones are then put into rooting hormones and rockwool cubes, in a small humid room. Each plant receives a little blue tag with the date and strain on them, for tracking purposes.

Simultaneously, germinating seeds — both imported and from Green Leaf’s own stock —  are also transferred to cubes. After about two weeks, the tiny cannabis plants are transplanted to the “veg room” for a month until they bud. Then, it’s down to the “flower room.”

The lights have a violet hue to them and fans blow constantly. Rows of flowering marijuana plants are sectioned off by strain and fill two rooms. Some almost touch the ceiling.

Owner Aaron Bean says there’s a certain way to make sure the plant reaches it’s full potential.

“During the last week, you don’t feed it any nutrients. You’re just flushing it out. When you flush it out, it focuses all of its energy onto those buds and all the nutrients that are left in the plant go to the bud. That’s a good indicator that it’s time to chop,” he said.

The chopped plant is then brought upstairs to four Green Leaf employees, sitting at a big table with a mound of weed in the middle. They’re processing the best of the cannabis for drying and curing. VanVeen won’t disclose the exact time and temperature, but he’s clearly proud of the results.

“Open these babies up and they smell just really great, you have to take a whiff…[sniffs] mmm! This is one of our favs, it’s a 2.0…mmm,” Van Veen said.

This is the extent of the celebrating at Green Leaf, because — as always — another batch is waiting.  For something so closely associated with a laid back lifestyle, cannabis demands a lot of the people who produce it.

“It’s work. It’s not easy. It’s not running around in shorts, tank top or whatever.  Everyday we’re checking every single reservoir, we’re writing notes about how the plants look… more logging than I ever imagined,” Van Veen said

After testing, and some regulatory paperwork, Green Leaf secures the cannabis in a locked container for the trip to Weed Dudes — about 8 miles — where it’s packaged for sale at about $12.50 for the cheapest pre-roll. Or if you’re feeling adventurous, you can pay an extra $4.50 for the Skywalker OG Pre-Roll 1 Pack…and begin your journey to a galaxy far, far away.

Compared to other commonly-used substances, cannabis is medically benign. Fribush says the Centers for Disease Control reported no deaths whatsoever from cannabis overdose last year.

The use of marijuana has some risks, but the product itself is not deadly.

That was the message Dr. Myron Fribush delivered to the Sitka Chamber of Commerce this week (3-22-17).

Fribush has been a medical doctor for over 40 years, specializing in geriatric medicine.

Since Alaska legalized the use of recreational marijuana in 2015 Fribush has worked to inform residents about cannabis without necessarily advocating its use.

From a medical perspective, he says cannabis is far less hazardous that more commonly used substances like tobacco and alcohol.

How many overdose deaths from cannabis are recorded annually? None. None at all.

Fribush told the chamber that roughly 500,000 deaths in the US annually are attributable to tobacco, and another 45,000 residents die from overdosing on opioids and heroin.

Fribush himself does not use cannabis. His advocacy for it could be called medical advice.

If you have a choice between using alcohol or tobacco — which does alter cognition, whether you acknowledge it or not — or opioids or heroin or cocaine, or some other product, if someone is going to choose a recreational pathway, which I don’t endorse because I like to be sober, to read and learn more, and to be able to treat patients and not feel that’s jeopardized, so I personally don’t. But if I were going to, this at least has the advantages of it’s not going to kill you, it’s not going to destroy your liver, it’s not going to cause you to overdose and die, it’s not going to give you lung cancer. Whether or not it causes a problem in the heart if you smoke it is controversial — maybe it does — but it doesn’t cause cancer if you smoke it, and there’s a zillion ways to take it. You can smoke it, you can vape it, you can dab it, there’s hashish, there’s kief, there’s dab, there’s oils, there’s creams, there’s lotions there’s suppositories. You can smoke it as a reefer, you can smoke it in a bong — it’s like that old song, right? All the different ways you can take it are just legion.

But Fribush says that cannabis is not without its drawbacks. He says it’s been shown to impair learning, and can impair someone’s ability to form social connections. He doesn’t think adolescents should be using it.

And although it doesn’t create a potentially deadly dependency, cannabis can be habit-forming.

It is mildly addicting in that if you have high levels and you’re a heavy user, and you come off it you’ll be irritable and crabby. A lot like coming off cigarettes. You won’t be chilling!

Fribush’s presentation included information about the chemistry of cannabis and its psychoactive properties, and historical details about the early prohibition of the plant — including the development of its derogatory nickname “marijuana” and the link to Mexican immigration.

Listen to the entire presentation from Dr. Myron Fribush:

Downloadble audio.

Outgoing Mim McConnell and incoming Mayor Matthew Hunter served four years together on the Sitka Assembly. He presented McConnell with a gavel and offered thanks for her seven years of service. (Emily Kwong/KCAW photo)

On Tuesday night (10-11-16), nearly everything changed about the Sitka Assembly. They swore in a new mayor: Matthew Hunter. New members: Kevin Knox and Aaron Bean. All in a new building. The Assembly chambers were revitalized in the remodel of Harrigan Centennial Hall.

The Sitka Assembly first honored outgoing members. Deputy-Vice Mayor Ben Miyasato was true to form, encouraging citizen participation as he did at nearly every meeting in his tenure. “We do have comission seats open. We do have committee seats open. I’ve always said this again and again and again and again and I’ll say it again. If you want input, it is important that you either attend those and serve on those,” Miyasato said.

Assemblyman Aaron Swanson was characteristically concise. “Do I have a time limit?,” he joked after stepping up to the microphone. He added, “I just want to thank the city of Sitka for allowing me to serve the last three years. It’s been a privilege to serve with these other members, so thank you.”

Mayor Mim McConnell, who was elected in 2012, said “One of the things Matt [Hunter] is going to discover as Mayor is that when you introduce yourself as the Mayor of Sitka, [other people] go, “Ohhhh Sitka!” Being Mayor of Sitka is really cool. If you want to be a mayor from somewhere, this is the place to be mayor from because this place has an excellent reputation worldwide, as far as I know,” McConnell said.

McConnell offered thanks to the city staff and encouraged the Assembly to support them. “Sitka, keep doing what you’re doing. You’re on the right path. Keep talking to each other and working out your differences and finding common ground,” McConnell said.

The Assembly also certified the results of last Tuesday’s municipal election (10-04-16) and swore in new members Kevin Knox and Aaron Bean. They appointed Swanson to take over Hunter’s seat for a one-year-term. Swanson was the third highest vote getter, followed by Alexander Allison and Evy Kinnear.

Passing of the Gavel as 2016 Assembly Begins (Slideshow)

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Marijuana money for student travel

On Tuesday night (10-11-16), the Sitka Assembly established a dedicated travel fund for student activities. The fund will draw upon state fees for marijuana licenses.

See ordinance here: Ord 2016-39

Each state fee costs $5000 and local communities receive half of that. With this fund, Assemblyman Steven Eisenbeisz says the marijuana industry could raise $8000 to $10,000 a year for activity travel sponsored by the Sitka School District. Right now, student travel is funded through city dollars and fundraising within the schools.

Aaron Bean, owner of the grow and retail operation Green Leaf Inc., objected to the ordinance, which had its second and final reading last night.

During persons to be heard, Bean talked about the importance of keeping marijuana out of young hands. “If we’re funding school programs and the kids that are traveling know where these funds come through, I would hate to encourage…it’s not direct advertising, but I feel like it’s priming if that makes sense. I wouldn’t be in favor of that as a business owner.”

Mim McConnell, who completed her final meeting as Sitka’s Mayor Tuesday night, said that while she understand where Bean was coming from, there is precedent. McConnell said, “To me, it’s kind of like the tobacco tax going to the hospital. We don’t give it to the hospital and people thinking, ‘Money going to the hospital? Let’s smoke more.’ So hopefully that’s not what people are thinking.”

The ordinance passed unanimously, on second and final reading.

Money for geotechnical and legal support

The Assembly appropriated $100,000 for geotechnical work with Shannon & Wilson, a firm assessing landslide risk and mitigation in Sitka. The firm previously conducted a study of the South Kramer area. The Assembly also appropriated an additional $150,000 for legal representation from outside attorney David Bruce. Individuals whose lives and property were impacted by the Kramer Avenue landslide have filed suit against the city. Both appropriations were approved on first reading.

FEMA will also be funding a two-year landslide mapping project in Sitka.

Roles, Responsibilities Assigned

Bob Potrzuski was chosen as Deputy Mayor and Steven Eisenbeisz as Deputy-Vice Mayor. The 7-member body also divvied up liaison duties among the city’s boards, commissions, and committees.

Gary Paxton Industrial Park Board of Directors: Steven Eisenbeisz

Health Needs and Human Services Commission: Tristan Guevin

Historic Preservation Commission: Aaron Swanson

Sitka Community Hospital Board: Steven Eisenbeisz, with Kevin Knox as an alternate

Investment Committee: Tristan Guevin, with Matt Hunter as an alternate

Library Commission: Matthew Hunter

Local Emergency Planning Commission: Bob Potrzuski

Parks and Recreation Committee: Kevin Knox

Planning Commission: Kevin Knox, with Aaron Bean as an alternate

Police and Fire Commission: Aaron Swanson

Port and Harbors Commission: Matthew Hunter, with Bob Potrzuski as an alternate

Tree and Landscape Committee: Bob Potrzuski (appointed during the Assembly’s meeting on Tuesday, October 25th)

Informational Liaisons

Southeast Economic Development Association (SEDA): Steven Eisenbeisz

Sitka Tribe of Alaska: Aaron Bean, with Bob Potrzuski as an alternate

Sitka School District: Bob Potrzuski