Nanalyze

Is Marijuana Legal in Alaska? It Sure Is.

If you managed to finance your college years by selling sacks of chronic to everyone in your dorm, you would have learned something about branding. While black market strains would often come with certain brand names attached that didn’t fit the product, the “good” dealers branded their strains appropriately and consistently. That’s because they bought those strains from growers who produced large quantities that could command premium prices. If you’re going to take the risk to grow, grow stuff that sells for premium prices. Blueberry, AK-47, and Alaskan Thunderfuck were all strains that existed on the black market long before marijuana was legalized. Legend has it that Alaskan Thunderfuck grew out of a marriage between two strains grown in Alaska’s own Matanuska Susitna Valley, a place we recently visited to learn more about the state of legal marijuana in Alaska.

The Matanuska Susitna Valley

With icy winters and summers where the sun shines all night, it’s awful easy to become an alcoholic in the Matanuska Susitna Valley. Just head out of Palmer to Butte and you’ll see where that depressing road to nowhere takes you. Better just to drink in moderation and buy a nice casa in Palmer or Wasilla, quaint little towns where people know “the Palins.” Head over to The Shak in Wasilla and pick up a glow-in-the-dark plastic pipe with a glass bowl and a “bowl saver.” That’ll come in handy when you’re jetting around town on your 4-wheeler wondering why everyone and his brother has personalized plates. While you’re not allowed to puff a bowl in public, in the Matanuska Valley and across the rest of Alaska, marijuana is legal as can be. You’ll see dispensaries around towns both big and small, yet many locals still use the black market.

We visited a few greenhouses in the Matanuska Valley to test some black-market product because that’s the sort of hard-hitting journalism our readers have come to expect. We learned about a thriving black market in Alaska where you can buy great strains for about $20 – $40 an eighth, prices that were much lower than the other marijuana dispensaries we visited in several Alaskan cities, all of which were more expensive than dispensaries in “the lower 48.” In order to better understand marijuana pricing and everything marijuana in Alaska, we sat down with the biggest vertically-integrated Alaskan marijuana company, Great Northern Cannabis, and talked with their CEO, Steve Brashear, and their VP of Strategic Development, Eric Logan, about legal marijuana in Alaska.

Great Northern Cannabis

Click for company websiteFounded in October of 2015, Anchorage startup Great Northern Cannabis has taken in about $3 million in funding so far to develop their vertically integrated cannabis operation that grows and sells marijuana in Alaska with their own proprietary strains making up about 70-80% of the product mix. They’re the first company to have multiple dispensaries in Anchorage, and all you have to do is go to the Anchorage information center in downtown Anchorage and look directly opposite across the street to find one. You won’t see shaded windows and people hanging out drinking Windex like you would in downtown Seattle. Great Northern is all about “light, bright, and safe,” the sort of place where every type of customer will feel comfortable. See how friendly that storefront looks?

Great Northern Cannabis storefront in downtown Anchorage

Great Northern Cannabis storefront in downtown Anchorage – Source: Nanalyze

Inside that store you’ll find fully digitized menus, a large number of trained staff (without the usual “tip the bud-tender” rubbish,) and price points that appeal to everyone. We went for the cheapest high, a .5 gram pre-roll of Mimosa for $7. Top selling strains like their own Tundra Berry will run you about $50 an eighth. There’s a frequent flyer program that uses your phone number to track purchases and then dispenses discounts for the more than 96,000 customers that regularly frequent one of the two – soon to be three – Grand Northern Cannabis dispensaries in the city of Anchorage.

Mr. Brashear went over the usual talking points about how they’re a “vertically integrated business seeking to provide a unique shopping experience,” and then we talked a bit about what’s happening behind the curtains. Great Northern has more than 90 employees on their payroll now with one-third of them employed in corporate activities like technology, legal, and marketing. The company’s in-house marketing team designs all their product packaging along with the digital display technology in their stores that can be updated instantly from headquarters.

Great Northern Cannabis digital retail menu - Source: Nanalyze

Great Northern Cannabis digital retail menu – Source: Nanalyze

On April 20, a line of people wrapped around the block waiting to spin the “wheel of weed” with prizes like a $1 ounce. They’ve developed their own in-house loyalty program which offers tiered discounts and uses geo-location to invite customers back at the most opportune times. Their product lines now contain dozens of SKUs with some leveraging local nomenclature to come up with cool sounding product names – like Bare Spray.

Bare Spray – Source: Great Northern Cannabis

That’s the sort of thing cruise ship tourists would eat right up. Literally.

Alaskan Cannabis Tourism

You might be reading this article because you asked Google “is marijuana legal in Alaska” and this article popped up. Maybe you plan to visit Alaska and wouldn’t mind puffing some of the magic dragon to forget about how much you’ll end up paying for a Hong Kong-apartment-sized tent spot in any one of the campgrounds near Denali. If that’s why you’re reading this, here’s a quick lowdown on how to actually smoke legal marijuana in Alaska.

Every year, millions of tourists flock to Alaska and spend billions of dollars which in turn creates lots of jobs.

Source: Economic Impact of Alaska's Visitor Industry 2017

Source: Economic Impact of Alaska’s Visitor Industry 2017

Half of them arrive by cruise ship, and it was only in the summer of 2017 that these tourists could begin purchasing weed from dispensaries. As a tourist, you can’t go wrong shopping at high-volume dispensaries like Great Northern Cannabis where you’ll find locals and tourists along with price points for everyone. Once you have your weed, you need to find a place to smoke it. That poses a problem and many people rent a hotel to avoid getting in trouble. (If you’re someone who goes to the most sparsely populated state in the entire union and feels the need to hide in a hotel to smoke weed, you’re probably not doing it right.)

With marijuana tourism representing a meaningful revenue stream for the State of Alaska, new laws are now being examined that will allow for people to buy marijuana and smoke it on premise – just like you can in Madrid. Each Alaskan city faces different challenges when it comes to consuming “on premise.” For example, you can consume edibles on premise in Anchorage but that’s largely pointless because who wants to do that? On the other hand, the city of Fairbanks is planning to open smoking lounges in retail outlets. While such regulatory inconsistencies pose a challenge, they’re helping the youthful Alaskan cannabis market to mature and take shape. Things move slower in Alaska, and simply entering the market poses a challenge.

Cannabis Challenges Unique to Alaska

When Great Northern Cannabis first applied with the State of Alaska to grow cannabis, they needed to acquire the property and set up the basic grow operation in advance. That means they secured their property lease in May of 2016 but only began growing in February of 2017. That’s just how things work, and it’s both a pain-point and a barrier to entry for anyone thinking about growing. Once growing begins, electricity becomes a pain point. It’s not just about reliability but also cost. Alaska is the third most expensive state in ‘Murica to buy electricity at 22.53 cents per kilowatt hour – nearly double the country’s average of 12.83 cents per kilowatt hour.

Source: Choose Energy

Once the flower leaves the grow operation, the State of Alaska gets about $50 an ounce. Then there are challenges associated with dispensing the product.

Great Northern cited staffing as a major pain point, even though they pay their “budtenders” more than most dispensaries. The people we saw working their counters were friendly and extroverted, eager to help you out but not in an oppressive manner. In other words, they’re the type of people who can help move lots of product. Since the Municipality of Anchorage has imposed a cannabis sales tax of 5% at the point-of-sale, Great Northern has “blended” the tax into the prices so everything remains “free of sales tax” just like every other store in the state. Some of their board members have previous stints in state politics which help them navigate compliance which is sometimes uncharted territory.

Since the emergence of legal cannabis is rather new to the State of Alaska, not everything is figured out. For consumers, it’s straight forward. If you’re over 21 then you can buy marijuana in any dispensary, no matter what place you hail from. Just don’t smoke it in public. For dispensaries or locals who want to grow for personal use, there are lots more rules to follow and unknowns. One Anchorage dispensary left leaf trimming outside their rubbish can and was fined a few thousand dollars for it. Mistakes like that don’t shine positively on the whole marijuana community so the bad publicity could be more damaging than the fine. One advantage of being vertically integrated is that you more tightly control compliance, something that Great Northern Cannabis plans to use as a competitive advantage.

Conclusion

The only way to appreciate Alaska is to venture off the cruise ship banana pancake trail into places like the Matanuska Valley where you can see the real Alaska. People who live in the real Alaska have a strong sense of belonging to their State. That’s why in order to operate a cannabis operation in Alaska, you need to be an Alaskan resident and so do your investors. That’s a formidable barrier to entry for any large Canadian grower that wants to step in and get a piece of Alaska’s action. Great Northern Cannabis seems to be well situated to grow both organically and by making selective acquisitions in a very fragmented market.

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