Marijuana May Be Legal But Marijuana Social Clubs Are Not, Says Alaska AG

by | September 2, 2016

By DJ Summers

Alaska's gray market marijuana social clubs may have just gone up in smoke.

Alaska Attorney General Jahna Lindemuth issued an opinion Wednesday that marijuana social clubs -- which include Anchorage's Pot Luck Events and Kenai's Green Rush Events -- are illegal.

Lindemuth said these clubs, which allow fee-paying members to consume marijuana on premises but do not sell marijuana, fall under the definition of public consumption, which is prohibited by statute.

Though the Marijuana Control Board may allow retail stores to have onsite consumption, neither Pot Luck nor Green Rush is licensed as a retail store or any other cannabis business license type.

"When Alaskans voted in 2014 to liberalize personal use of marijuana and to allow a commercial marijuana industry, they also voted to prohibit public consumption of marijuana," said Lindemuth in a statement. "Unlicensed marijuana social clubs are public places like any other place of business--such as cafes, movie theaters, or retail stores--where marijuana consumption is not allowed by law."

Chris Hladick, Commissioner of the Department of Commerce, Community, and Economic Development, requested that Lindemuth offer an opinion on marijuana social clubs.

In a statment released hours later, the DCCED said it appreciates Lindemuth's opinion, as it clarifies a longstanding disagreement between interpretations of Ballot Measure 2. With the opinion, Hladick wrote local governments can now work with law enforcement to address these clubs.

"The ballot measure anticipated a licensed, regulated commercial marijuana industry in Alaska," reads the statement from DCCED. "In order for the Department and the Marijuana Control Board to be able to fulfill the meaning and intent of the law, this clarification was needed. The Alcohol and Marijuana Control Office enforcement staff, in cooperation with local law enforcement, will work to address illegal consumption. Local governments may use their civil and injunctive powers to disallow the operation of illegal businesses in their cities and boroughs."

Her legal opinion caps a lengthy standoff between the clubs' owners, law enforcement and regulators.

Marijuana social clubs like Anchorage's Pot Luck Events previously existed in a legal gray area. They allow consumption and sharing on premises in exchange for a membership fee, but sell no marijuana directly. The Marijuana Control Board issued an opinion saying the Legislature would have to create the license type for them to either issue a license or close the club.

Opponents of the clubs including Marijuana Control Board director Cynthia Franklin defined clubs as "public places," in which marijuana consumption was banned during the summer of 2015.

Pot Luck owner Theresa Collins said throughout 2015 and 2016 she was perfectly within the confines of the law because the fee-based membership did not fill the definition of a public place.

"You don't pay a membership fee and sign a membership contract at a movie theater," Collins said.

Law enforcement took no action against Pot Luck Events or a Fairbanks club that opened its doors in November 2015. Soldotna club Green Rush Events closed that month, based on fears of law enforcement, then reopened.

Lindemuth is unequivocal in her opinion.

"If that place is not a licensed retail marijuana store, consuming marijuana there is unlawful," she wrote. "Charging people a fee to consume marijuana at a physical venue, if done regularly and for financial benefit, is to operate a business. The venue itself would therefore be a 'place of business' where it is unlawful to consume marijuana ,even if the venue's proprietor expressly invites people to do so."

Even if it were not acting "as a business," she wrote, it is still public consumption, as a substantial amount of people have access to it.

Furthermore, Pot Luck's distribution of marijuana samples qualifies the venue as a business, Lindemuth said, as they are taking money in exchange for providing them if the total amount exceeds one ounce, the statutory limit.

"If this person has 'dominion or control' of the marijuana provided as samples -- even if he does not own or have physical possession of the marijuana -- he is acting unlawfully if the total amount of marijuana is more than one ounce or if he receives payment for transferring that marijuana to patrons."

(c)2016 the Alaska Journal of Commerce (Anchorage, Alaska)