Members of the Anchorage Assembly and the nascent marijuana industry are grappling over whether Assemblyman Patrick Flynn, the only representative from downtown on the body, should sit out votes on marijuana licenses when he is himself an investor in a marijuana startup.
Flynn, a part-owner in a company applying to grow commercial pot, was barred by fellow Assembly members last month from participating in votes on the city's first batch of cultivation licenses. Members of the majority said it wasn't appropriate for Flynn to decide the fate of competitors as businesses jostle for a foothold.
But a group of new participants in the marijuana business has asked the Assembly to reconsider its decision. Meanwhile, Assemblyman Pete Petersen, who chairs the Assembly's ethics committee and thinks Flynn does not have a legal conflict, said this week that his committee will re-examine the issue later this month.
During the Assembly's July 26 meeting, Flynn disclosed he was an investor in a company that had applied for a state marijuana cultivation license. Earlier this year, while the city was crafting regulations, Flynn acknowledged plans to invest in a pot business, though he declined to provide details before an application had been filed with the state.
After about 10 minutes of debate, the Assembly voted 6-4 that Flynn's part ownership in the company constituted a conflict of interest.
"It's a brand-new field. Whether you get the first or second cultivation license is a significant difference," said Assemblyman Eric Croft. He later added: "While I … personally believe Mr. Flynn would act honorably, I think the private interest is substantial."
According to state records, Flynn is one of 11 investors in a company called Great Northern Cannabis Inc. The company formed last fall and filed an application for a commercial grow operation on July 9, according to Cynthia Franklin, director of the state Alcohol and Marijuana Control Office. The Marijuana Control Board is still reviewing the application.
Flynn's company is hoping to grow commercial pot in an industrial area north of Abbott Road in South Anchorage, near Midnight Sun Brewing Co. Flynn said in an interview this week that he expects the company to develop a retail operation at some point, though not at the same location.
On the state's corporation database, Flynn is listed as the treasurer of the company, with a 5.7 percent ownership stake.
In voting on whether Flynn should participate in two license hearings July 26, Assembly members Croft, Bill Evans, Elvi Gray-Jackson, Dick Traini, Tim Steele and Forrest Dunbar voted for Flynn's exclusion; Petersen, Amy Demboski, Bill Starr and John Weddleton said Flynn should be allowed to participate.
In response to questions from Demboski, Flynn said his interest in the business was not substantial to his household income — he said he's losing money on the venture at this point. He also said he believed he could put the public interest before his own, and would not be dissuaded from moving forward with his investment if the Assembly voted to approve the licenses of his competitors.
Demboski said she thought Flynn's interest was too speculative and minimal, and that his knowledge would be a benefit to the public and to marijuana businesses. She also said downtown Anchorage should have representation in deliberations on licenses.
"I think the representation to his district far outweighs any potential conjectural bias," Demboski said.
But Croft, Evans and others voiced concern about Flynn weighing in on potential future competitors in a fledgling industry where being first could mean a higher profit.
After the Assembly's vote in July, Flynn left the room. He has now sat out votes on three cultivation licenses over two meetings.
On Aug. 4, a letter written by attorney Jana D. Weltzin and signed by nearly two dozen people in business urged the Assembly to reconsider. Among the signers were Dale Fox, president and chief executive officer of the Alaska Cabaret, Hotel, Restaurant and Retailers Association; and Bruce Schulte, an industry advocate who was removed by Gov. Bill Walker as a member of the Marijuana Control Board a few days earlier.
Weltzin wrote that Flynn had voted both for and against the industry in shaping local marijuana regulations earlier this year. She said his presence on the body had made the public and the Assembly "more informed" about marijuana businesses, and questioned the Assembly treating a business interest in marijuana differently than the alcohol or construction industries.
She also complained about the absence of a representative from downtown — Assembly District 1 — participating in discussions about marijuana licenses.
"We are dealing with an industry that has never been a legal market — it's a tough issue for a lot of our community members to accept and with which to be comfortable," Weltzin wrote. "Now, the entire District 1, which will undoubtedly encounter a larger number of licensing requests and land-use approvals than any other district due to its land zoning, will have zero representation on this Assembly."
Petersen agreed Flynn should have participated in the votes. He said he thinks Flynn's situation should have another look, and has scheduled a discussion about it for a committee meeting later in August.
Evans said in an interview this week that he doesn't think Flynn should be excluded from all votes on marijuana licenses. But when it comes to licensing grow operations, Evans said Flynn has a conflict, likely through the end of his term. Flynn's term ends in April, and he is barred by term limits from running again.
Evans said he disagreed with the argument that Flynn should participate because he's the only Assembly member from his district.
"Obviously, at some point the conflict outweighs the representation," Evans said. "I think right now we've reached that."
Flynn said in an interview he thinks he should be allowed to participate except when his own company's license comes up before the Assembly, though he said he sees both sides.
He said he understands the argument that getting a fast start could lead to a business advantage, but he noted that he does not recuse himself from liquor license votes when he owns liquor licenses himself.