The thin green line: Alaska's budding marijuana entrepreneurs waver between what's legal, what's not

At a glance, Alaska's first marijuana trade show suggested a slow march forward on the path toward regulated, commercial weed.

After fighting to be allowed to display marijuana at the Northwest Cannabis Classic in mid-May, organizer Cory Wray was given the OK just days before the event. Vendors could display marijuana at the show, legally and with the blessing of the city.

Thousands of cannabis enthusiasts and entrepreneurs flocked to the Dena'ina Center for the event. They congregated around bushy marijuana plants, lingered on the third-floor deck — where it was easy to catch a whiff of pot smoke — and listened to seminars by some of the major players in the emerging industry.

According to Wray, the state's first — though likely not last — trade show went off without a hitch.

But beyond the displays of glass pipes and shiny metal butane hash extraction equipment, beyond the green brochure declaring the event as the "most exciting thing to happen to weed in Alaska ever," another reality simmered: Alaska's marijuana market is one defined by uncertainty and conflicts, where the so-called illegal and legal markets swirl together, and businesses are vying for access to a legal industry that hasn't yet been developed.

A clue to the conflict was apparent right outside the main conference room. In a glass display case, winners of the event's pot competition were displayed atop glass jars. Next to each marijuana bud, the strain's test results for things like THC percentage were printed out by AK Green Labs. Business cards, made of thick plastic, gave each bud a stamp of legitimacy.

Yet AK Green Labs is a now-defunct facility that was in operation for only a few months. When the Alaska Alcoholic Beverage Control Board asked the business to shut down this spring, it complied.

AK Green Labs was one of four businesses identified by the state during legislative testimony as operating illegally — and one of only two that actually shut down at the state's request.

Now, four more businesses have been identified by the state as illegal — and those businesses appear poised to fight for the ability to keep operating.

For Anchorage Police Chief Mark Mew, touring the marijuana trade show was an unusual experience. An officer for nearly 26 years, he said that until recently he didn't believe he would ever "see marijuana in this context."

In the main conference room, Mew, dressed in his police uniform, visited vendor stalls promoting pipes and books, seeds and blinding LED lights. There was one vendor, though, that Mew didn't approach.

Stationed in the midst of the conference was Discreet Deliveries, another of those four businesses initially singled out by the state as illegal. The owners of the pot delivery service have been vocal and unapologetic about their business, which they say is booming.

Run by Rocky Burns and Larry Stamper, Discreet Deliveries began operations in December. Police, regulators and other industry players all say the business is acting illegally, as no licenses have yet been issued for marijuana sales. One of its delivery drivers was busted in January and is facing criminal charges.

Burns calls himself "open and notorious." He's upfront about his business practices and makes no apologies. He believes he is acting legally, giving his drivers well-paying jobs and providing a service to Alaskans that is, by his self-reported numbers, in high demand. He has opened a Fairbanks bureau, and a Soldotna bureau is coming soon, he says.

"I am not a criminal," Burns said during an interview in late May.

Since the trade show, another driver has been busted. On June 4, the Anchorage Police Department confronted a Discreet Deliveries driver with a search warrant, APD spokesperson Anita Shell confirmed. The car, cellphone and other property were seized, but the driver wasn't arrested.

"Rocky is skating on thin ice. … His activities are not unknown to the authorities and I just need to leave it at that right now," Mew said in an interview in late May.

Burns says he doesn't fear law enforcement, "not one bit," and says the company will take any charges to court.

Alcoholic Beverage Control Board Director Cynthia Franklin said in late May that when the appropriate procedures are in place, the state would take criminal and civil action against Burns, as well as forcing the company to pay back taxes.

"Al Capone got brought down by taxes," Franklin said. "Rocky Burns is no Al Capone."

These busts and warnings haven't stopped Burns from moving forward. At the trade show, he handed out business cards. He said afterward he was met with a positive response overall.

Organizer Wray said he included Burns in the trade show because "it's not my job as a show promoter to pick winners and losers."

Perhaps the most notorious operator to ignore the calls of the state, Burns' is one of a handful of businesses that are counting on perceived gray areas in the law to conduct business according to their desires.

Also at the trade show, two marijuana seed companies — Mr. Nice Seedbank and Stokes Seeds — were selling "brochures" or "stickers," respectively, that came with marijuana seeds — technically illegal, but also tolerated.

It's an almost common tactic now — buy a "membership" or "donate" money and get marijuana. With Burns, one buys an "empty bag" that happens to include some pot inside.

Wray said he knew there were seed vendors at the event but said he "can't specifically say that I saw anybody selling seeds." Still, Dena'ina Center officials had asked him to speak to the seed companies and reiterate the policy that no seed sales were allowed, Wray said.

Additionally, marijuana was not supposed to be consumed at the event, but attendees could be seen smoking outside as a security guard tried to corral them into white tents that had been erected on the third-floor deck, out of public view.

Franklin, whose agency just moved to the Atwood Building across the street, said she watched from her office as people smoked openly on the deck that Saturday in May.

What's illegal and what's tolerated, what is explicit and where the law is silent, and how Alaska's new law meshes with past statutes are all aspects of the industry still in development.

The more things change, the more they stay the same

Alaska voters legalized recreational marijuana on Nov. 4. The law went into effect Feb. 24. Even before voters gave the initiative a thumbs-up, business names were scooped up, potential business plans simmering as dueling campaigns vied to sway voters.

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After the ballot initiative passed, more business names were registered. Industry groups began forming. The national Marijuana Policy Project, which contributed funding crucial to the campaign promoting legalization, continued its presence in Alaska, working with state legislators and the Alaska initiative campaign.

Meanwhile, law enforcement agencies found themselves in limbo, wondering what the new landscape of legal weed would look like. Alaska State Troopers deferred questions about change of policy to the ABC Board. Fairbanks Police Chief Randall Aragon said his agency was waiting for more guidance before commenting on possible enforcement changes.

As legalization day approached, the question loomed: How would Alaskans react?

In Anchorage, police anticipated a "blatant, celebratory in-your-face … epidemic," based on Colorado and Washington's experiences, Mew said during an April interview. APD dispatched additional patrols downtown to stymie public pot-smoking parties. But Alaskans didn't take to the streets to celebrate.

"We got all geared up for that and frankly, it didn't happen," Mew said.

For just over three months — from Feb. 24 through May 31 — APD wrote 20 citations for public use of marijuana, according to data provided by department spokesperson Anita Shell.

While the public response has been somewhat muted since the initiative's passage, Alaskans seem to have become far more liberal in discussing marijuana publicly.

On Facebook, numerous groups have popped up, such as "Alaska Cannabis Trader," where people post images of pipes, plants and buds. People trade, give away, look for marijuana. They exchange advice and chat about strains and edibles.

On Craigslist too, dealers are selling marijuana, sometimes under the label "420," other times more openly, and often offering a cellphone number along with the ad.

An informal survey points to little change in black market prices across the state. That perhaps makes sense, given there's no place yet to legally buy marijuana.

In fact, most marijuana conduct remains illegal. All the state's old statutes are still in place. Only the personal-use conduct specifically outlined in the initiative — such as being able to transport 1 ounce of weed, and being able to possess six plants — is now legal.

If you are caught transporting 4 ounces of weed, that's still a felony. That's because the laws haven't changed yet.

Not for a lack of trying.

State of flux

During this year's legislative session, lawmakers wrestled with a bill that would update Alaska's criminal statutes to adapt to the changes in marijuana law.

Going into the session, some legislators said they wanted a role in crafting marijuana laws. Sen. Lesil McGuire, R-Anchorage, said it was naive to think the Legislature would have minimal involvement in the process. Meanwhile, Sen. Bill Stoltze, R-Chugiak, told Alaska Dispatch News he was "a little nervous" to hand over the reins to a regulatory agency.

The Legislature held 59 committee meetings and 20 floor sessions on marijuana. Ideas spanned the philosophical spectrum — from Sen. Pete Kelly's proposition to ban concentrates two years down the road, to the Senate Judiciary Committee's draft that would have removed marijuana as a controlled substance. Marijuana's fate seemed to shift at every turn of the legislative process.

As the session neared its end, Franklin became increasingly concerned that the Legislature would not pass any bills — most importantly, the one creating a Marijuana Control Board and providing the additional funding needed to regulate a newly legal substance.

In the end, the Marijuana Control Board bill passed on the final day of the legislative session. No other marijuana-related bill made it out alive. Thus, the rulemaking process has been left in the hands of a new agency, with no other new laws on the books, just as some lawmakers had feared.

The other bills legislators discussed remain on the table for the next session starting in January, and legislators said they would revisit the issues in the summer — but that was before they reached a budget gridlock that stretched six weeks past the end of session and all the way into June. Whether those bills go forward, and in what form, remains to be seen come 2016.

Initially, the rules were being created by the Alcoholic Beverage Control Board. Now that the five people who will make up the Marijuana Control Board have been chosen, they will take over crafting the state's marijuana laws.

Meanwhile, Franklin has immersed herself in all things marijuana law. It's her agency and staff that will oversee the Marijuana Control Board.

While Alaskans don't know how the final regulations will look, Franklin has offered indications: Low dosage amounts for edibles (a preliminary document identifies 5 mg of THC per serving). No collective gardens or co-ops. And, to the ire of some, no delivery services.

As the months have passed, Franklin has given countless hours of testimony, reporter interviews, and interviews with interested marijuana entrepreneurs. She's become more assertive, speaking openly about the ABC Board's plans to shut down businesses that have started and about the board's plans moving forward.

In and out of the public eye

While both the ABC Board and Anchorage police have been vocal in calling businesses illegal, the gavel has yet to fall. The businesses that have shut down, like AK Green Labs, have done so voluntarily.

Meanwhile, the "illegal" actors remain. There's Discreet Deliveries, for one. The Alaska Cannabis Club is another.

The Alaska Cannabis Club was raided March 20 under a search warrant for allegedly selling marijuana. Computers, marijuana plants and cellphones were seized, owner Charlo Greene told reporters. Yet more than three months later, charges have not been filed in the case. APD spokesperson Shell said on July 8 that the case was still active.

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Copycats are popping up, too. Alaskas Greenery Delivery Service and Absolutely Chronic Delivery Co. are also now delivering pot. ACDC has taken ads out in the Anchorage Press. The ABC Board says all such businesses will eventually be shut down.

The question, though, is when. During the Marijuana Control Board meeting in July, Franklin told business owners that no enforcement action would be taken — at least by the MCB — before the next meeting in August.

Meanwhile, the delivery services and social clubs have their legal arguments. For instance, Alaska's marijuana law is silent on social clubs, but Franklin compares them to a "bottle club," illegal under Alaska law.

Is a bottle club analogous to a marijuana social club?

The courts have yet to weigh in on these issues, so the answer remains elusive.

Marijuana industry attorney Jana Weltzin said that businesses starting up now are selling themselves short. "Even though it's technically legal, it's politically stupid and in this market you need to be politically smart," she said.

ABC Board Director Franklin has said repeatedly that businesses open now will be denied a license later.

In addition, these existing businesses are "drawing negative scrutiny on the industry which is making it more difficult for the rest of us," said Coalition for Responsible Cannabis Legislation spokesperson Bruce Schulte, who has since been appointed to the Marijuana Control Board.

Yet the businesses in the limelight today are just a handful of the players who have their sights set on the industry.

"The people that you think that you know that are in this market … you can take that number and double it, to be conservative," said Weltzin.

Most entrepreneurs are quietly making plans or picking up auxiliary business for the time being.

Such is the case of Sara Williams, who envisions her Wasilla-based Midnight Greenery as eventually being a "vertically integrated" farm, involved all the way from growing the product to processing and sales. But since that's not possible at the moment, she's focusing on education in the short term.

Consulting is another opportunity being seized by the state's prospective growers. Ryan Smith, the owner of AK Hydro Gardens — the fourth business identified by the state as operating illegally — quickly shifted his business from a medical marijuana grow to consulting. At the Northwest Cannabis Classic, he excitedly showed off a jar stuffed full of potential clients' contact information. A "blessing in disguise," Smith said of the state asking him to shut down his grow.

These variations show that solid ground is hard to find. Entrepreneurs are looking for ways to set up shop in a landscape as unstable as thawing permafrost. Build the wrong way, and the whole thing may buckle and break a few years down the road.

Wray said some businesses are afraid to start marketing, for fear that new regulations will be built around, and may stifle, their ideas.

So for many, business collaborations are being hatched behind the scenes.

Weltzin describes her role as connecting potential entrepreneurs with investors. Originally from Fairbanks, Weltzin is practicing law in Arizona but will be moving back to Anchorage this summer to work full-time with marijuana business clients.

"It's an investment with a lot of risk … and there's no guarantee of a reward," Weltzin said.

Not everyone who wants into the legal commercial market will be given that pass. Some license applications will be rejected. And the state expects to be sued by those people who don't get their ticket into the commercial market.

"We know it's gonna happen," Franklin told the Anchorage Assembly's marijuana task group in May, as both Colorado and Washington had faced similar lawsuits.

By May 2016, marijuana business licenses will be issued. Until then, the state must create an entire framework under which these businesses can function. Existing businesses will likely continue to interpret existing statutes, take risks both in and out of the public eye, and in the end, who succeeds in setting up a profitable business long-term remains to be seen.

While the regulations are crafted and laws put in place, much of the work continues behind the scenes. "They're out there and they're laying low and they're strategizing," Weltzin said.