Armored vans, private computer servers for security video, multiple accountants and dealing strictly in cash may be some maneuvers for marijuana businesses trying to operate legally.
Although the business has been legalized, the regulations finalized and license applications opened, many particulars of how businesses will operate day-to-day remain up in the air. The dissonance between federal and state laws on the legality of marijuana may force entrepreneurs to take some creative work-arounds to run a business.
For instance, marijuana business owners are subject to taxes, but they cannot pay them online. They will have to drive to Anchorage often to pay their taxes directly to the IRS in cash, but who wants to drive to Anchorage often with thousands of dollars in cash in their plain truck?
Thus, the idea for the armored van came forward. At a combined town hall meeting and cannabis “job fair” event held Thursday at Kenai’s Challenger Center, Red Run Cannabis Company co-founder Eric Derleth explained the idea to the 100-plus attendees.
“To make this a successful industry, we’re all going to have to work together,” Derleth said.
Derleth walked through the regulations with the crowd, repeatedly saying that he was both surprised and pleased with the turnout. Copies of the handouts were rare, and participants knotted around tables to peer over the packets and the “Employee Applications” that were available as a template for any marijuana business seeking employees.
License applications opened for marijuana businesses on Feb. 24. Several in the room said they have already applied or are planning to do so. Derleth walked through the basics of an application, saying it was not as hard to finish as some might expect, but the particulars may be difficult.
One obstacle may be the tax code. Marijuana businesses are weighed down by part of the tax code called Section 280E, which prohibits any business trafficking in an illegal substance from deducting its expenses, such as salaries and utilities.
On top of that, to sell any marijuana product, every cultivator has to have his or her product tested and approved by a state-licensed testing facility. Derleth said he had not yet heard any plans for a testing facility to come to the Kenai Peninsula, which would mean all cultivators would have to transport the product up to Anchorage or the Mat-Su Valley for testing.
Finding an accountant to process taxes and help with business financials could be tricky. Contracting an alarm company to set up the required security may not be possible yet because some companies may not want to take the risk of ensuring the security of a business that is selling a federally illegal product.
In addition to the alarms, all cannabis establishments have to keep high-definition security cameras running essentially all the time and store them for a minimum for 40 days, which would total a massive amount of computer storage space. With Internet service in Alaska being as limited as it is, Derleth suggested cannabis entrepreneurs purchase their own servers to store the required video footage.
“For those of you who think you’re just going to upload it to the cloud, you are not going to be able to upload ten cameras running in HD up into a cloud,” Derleth said. “You’re going to have to store it on-site, and then you’re going to have to lock all that down … it just goes on and on.”
Every employee and business owner will be required to have a marijuana handling license. The final requirements for the certification are expected to be complete by April 28, and then all interested parties will have to obtain a Marijuana Handler Certification from a state-accredited teacher.
Dollynda Phelps, a Nikiski resident who plans to operate a cultivating facility, said she has submitted curriculum material to the state and plans to teach classes for handler certification on the peninsula. The fee for the course has yet to be determined, but the fee for the card is $50.
Many of the attendees were simply “curious.” Others came to learn more about the particulars of a type of marijuana license, and still others came to hawk wares for an associated industry, such as glassware or fingerprinting for background checks.
Stonewall Dean, a glassblower in Kenai, handed out grab bags with his resume, business information and a hand-blown glass pipe to boot.
“Ideally, I’d like to see a glasswork revolution in Alaska,” Dean said. “Eugene, Oregon has kind of been the center of that.”
Sierra Glonek, a Kenai resident, said she was interested in working in the retail side of the business. Legitimizing the industry and making people more comfortable with the idea of cannabis, particularly its medical uses, is attractive to her, she said. The way cannabis entrepreneurs portray themselves will be important for the future of the industry, she said.
“People are expecting to see Cheech and Chong,” Glonek said. “How (the business) is presented definitely makes a difference.”
Throughout the presentation, Derleth repeated a hard-and-fast point: responsibility.
“You’ve got to be ultra-responsible and realize everybody’s watching us,” Derleth said to the crowd. “In 46 other states, they still put people in cages for this. We take that very seriously. We owe it to all of them to get it legalized in other parts of the U.S.”