With defeat of Prop 1, cannabis industry breathes sigh of relief

Cannabis business owners and employees in the borough outside city limits have a weight off their shoulders on working and expanding their businesses with Kenai Peninsula Borough Proposition 1 soundly defeated.

Dollynda Phelps, co-owner of Peace Frog Botanicals in Nikiski, was holding her breath for the results of the election before opting to expand her business. Her limited cultivation facility was one of the first to receive a license on the Kenai Peninsula, has been operating in a limited space in her house for the last year, and she and her husband had been eyeing an empty facility across the street to expand to a larger cultivation facility.

“We had some opportunities come up that were (almost) too good to be true — close to home, triple our size, and be able to get out of our house and do a standard facility,” she said.

They just needed the affirmation that their facility wouldn’t be illegal.

On Tuesday, they got it. Nearly two-thirds of Kenai Peninsula Borough voters registered outside city limits voted not to ban commercial cannabis operations in the borough outside city limits, compared to about 35 percent that voted to do so, according to the unofficial election results, which don’t include absentee ballots. No single precinct anywhere in the borough held a majority “yes” vote to ban the businesses.

Phelps said she was fairly confident the vote would fail, but waited anyway because of the investment required to start a standardized facility. Even to apply for a license is thousands of dollars in fees, not counting the money to renovate and equip a standard cultivation facility.

The proposition began as a citizen petition in summer 2016, when citzens concerned about the impending openings of retail and cultivation facilities began gathering signatures to ban commercial cannabis operations in the borough outside city limits. They failed to gather enough signatures to make it onto the October 2016 ballot but made it for the October 2017 ballot. The cannabis industry organized almost immediately into a campaign called Keep Cannabis Legal to oppose the proposition, ultimately spending more than $50,000 in 2017 to lobby against the proposition, according to an Alaska Public Offices Commission filing from Sept. 28.

Phelps helped with the campaign, serving on the steering committee alongside other business owners, and attributed the proposition’s defeat to the public education the group spread through door-to-door efforts and presentations.

“That made the difference — us talking to people, knocking on doors, meeting with (groups like) the drug prevention coalition in Seward,” she said. “That provided the avenue for people to come and tell us, ‘We’re afraid of this and here’s why. It’s going to be bad for our community and here’s why.’ We were able to have real one-on-one discussions with people in the community.”

There was apprehension at the election party hosted by the Keep Cannabis Legal campaign in Kenai on Tuesday, but excitement, too, said campaign manager Amy Jackman.

“I think that everyone was rather confident, but of course, you never really know right until it happens,” she said. “There was a lot of hugging and a lot of whistling and arms waving and jumping up and down. I think the percentage in which we won really is what affected all of us and made that statement.”

There was a lot at stake for the peninsula’s cannabis industry Tuesday night. Of the between 20 and 30 cannabis businesses operating on the peninsula, all but a handful are outside city limits. Industry members estimate that the businesses so far have spent about $7 million to get their operations up and running, and that about 100 people now work in the industry on the peninsula.

Jackman said the campaign was able to organize about 10 sign-waving groups on highways all around the peninsula, from Seward to Homer, to oppose the proposition. With the legality of the businesses outside the cities, she said business owners would likely be more confident to move forward with investment.

“A lot of people were waiting and putting their lives on hold and their businesses on hold through this, and now I think you’re going to see a bonanza,” she said. “…I think we’re going to see that now, where people are more confident.”

Another group waiting for the result of the vote was an indirect stakeholder in the industry — the Kenai Peninsula Economic Development District. The organization, which provides economic research and support for businesses on the Kenai Peninsula, has been coordinating an effort to get a cannabis testing facility on the peninsula, to save the businesses the time and expense of transporting all their product to Anchorage to be tested before being sold.

KPEDD Executive Director Tim Dillon said he wasn’t ready to share many particular details, but now that Proposition 1 has apparently failed, they’re continuing to work on it.

“KPEDD is currently working with a couple of potential businesses that will continue to enhance the cannabis industry,” he said.

The other missing piece is a peninsula-specific cannabis association. The Keep Cannabis Legal campaign brought together most of the industry stakeholders regularly to talk about efforts, but now that the campaign is over, they either go back to representation through a statewide group called the Alaska Marijuana Industry Association or informal community groups. Phelps said she could see the benefit of forming a peninsula association in the future, but most of them are going to commit time to their businesses now that they put into the steering committee of the campaign before.

Jackman said she saw a niche for a peninsula industry association to fill — marketing.

“I think this is an opportunity for either the AMIA to step up or someone else to step in and form an organization that really meets the need of the cannabis growers on the peninsula,” she said. “We do need representation, and in my mind, there are two different parts to that. There’s the part where you go into the state and the legislature and lobby for better regulations, better practices, and I think that’s what the AMIA has been doing; and you also need a group to help market the cannabis associations.”

Reach Elizabeth Earl at elizabeth.earl@peninsulaclarion.com.

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