Local pot businesses ordered to ‘cease and desist’

WASILLA — Two local marijuana-related businesses were among six that received cease-and-desist orders from the state this week.

Northern Heights LLC, a “cannabis-friendly” hookah lounge, and Discreet Deliveries, a business offering marijuana for sale and delivery, both based in the Mat-Su Borough along Bogard Road, joined businesses from Kenai and Anchorage on the list. The certified letters mailed to property owners were a follow-up to phone conversations on the subject, which alleged both businesses violated Alaska statute, according to the letters.

The cease-and-desist letters threatened “enforcement action” ranging “from criminal penalties to civil fines, tax penalties and prohibition from receiving an actual marijuana license when they become available in 2016,” the letter states.

Northern Heights had planned to re-opened Friday evening, the operators said. However, it remained closed because the state had not issued a letter rescinding the original order, which the business owners maintain was issued improperly.

“We opened tonight for all our members and guests and due to an issue with a rescinding letter not being issued, we are having to close our doors until this letter comes after the holiday,” a Facebook post read.

Rocky Burns who co-owns the largely web-based Discreet Deliveries with Larry Stamper, did not respond to an e-mail seeking comment Thursday evening.

Northern Heights, located on the first floor of the Northshore Ale House building and open since June 20, bills itself as a hookah lounge of the type commonly found throughout the United States.

The chief element triggering the letter appears to be Northern Heights’ business model and willingness to allow some marijuana smoking on the premises. The club is primarily driven by the about-50 paid monthly memberships (an entry-level membership costs $25 per month, which includes discounts for hookah sales and soft drink and snack tickets) as opposed to retail tobacco or pipe sales. Business owners say they went with a membership model specifically because they were “cannabis friendly,” and to limit membership to people old enough to legally consume marijuana.

The membership was a form of social responsibility, Backlin said.

That was apparently enough to trigger enforcement under statues prohibiting “bottle clubs,” defined as “a place in which alcohol beverages are received or kept, or to which alcoholic beverages are brought, for consumption by members of the public or by members of a club, corporation, or association” or “premises for the purpose of providing, for a consideration, a place for drinking alcoholic beverages by members of the public or other persons.”

Owner Dottie Edwards and manager Sarah Backlin said the state’s phone call and follow up latter took them by surprise, Backlin recalled.

“The subject of conversation was that we were an illegal pot club, and I corrected her and said ‘I’m a hookah lounge,’” she said. “Then it was that a future dispensary was operating the club and owning the club.”

That’s an apparent reference to Midnight Greenery, an organization that aims to become a full-service dispensary and retail destination for marijuana — someday. Backlin has made several public appearances at rallies and public meetings where marijuana was a topic, sometimes alongside Midnight Greenery and Borough Marijuana Advisory Committee chair Sara Williams. However, Edwards is the sole owner registered with the state, business documents show.

Franklin “told me that if I ever want a future in this industry, I have to run far away from Northern Heights, because I was illegal by running an illegal pot club and that question was also going to be on the application for a future marijuana license,” Backlin said.

Backlin and Edwards say they don’t keep marijuana on the premises, don’t sell it out of their location, and aren’t interested in becoming a licensed marijuana retailer. They simply don’t turn away members who ask to use their equipment for consuming marijuana, which is apparently where control board staff got the idea that the hookah lounge was actually a marijuana club, a la the “Alaska Cannabis Club” run by marijuana policy lightning rod Charlene Egbo, which also received a letter, and was the subject of a large-scale seizure earlier this year.

“We do have cannabis enthusiasts who enjoy their membership at the club, but that isn’t the reason for our existence,’” Backlin recalled telling Franklin.

Backlin insists that her business and Burns’ business share only the trappings of marijuana culture.

The operators also don’t allow employees — some of whom, like Backlin, use marijuana to self-medicate — from smoking while they’re on the clock, or even to touch cannabis brought in from the outside by members. Backlin said she tries to keep employees from breathing too much second-hand smoke by frequently changing the server in smoke-filled areas of the lounge. The windowless lounge also employs two large ventilation systems to disperse smoke quickly.

Ten-dollar day passes ($15 for couples) provide access to the hookahs, and the business usually sells a few varieties of flavored tobacco — known by the Egyptian Arabic word “shisha.” The businesses operating guidelines don’t allow employees even to touch marijuana brought in from the outside, though they do allow the employees to show people how to load it into their equipment.

For Edwards, the lounge represents a personal vision glimpsed after marijuana helped in a struggle against a long-running intestinal illness that sent her weight plummeting to 85 pounds.

“None of the medications were working, and I was getting worse, and I have children I have to take care of,” she said.

When a friend suggested marijuana, she was initially hesitant, but it helped alleviate her symptoms.

Discreet Deliveries, by contrast, is a warehouse and delivery service for retail-sized amounts of marijuana, with an associated “church” that promises “24-hour access to our community area that has recreational areas, vending machines, and a food court,” according to the website.

“Our Church will be a safe haven from the taboo and State penalties, that comes from the use of cannabis,” according to the website, which also pledges to follow “strict rules on transportation of any cannabis for personal consumption.

The statutes cited for Discreet Deliveries also differ from those cited for Northern Heights. In this case, the letter issued to Discreet Deliveries specifically cites the newly passed marijuana ordinance, Alaska Statute 17.38.

“Your business, Discreet Deliveries, is not legitimate, does not pay taxes, is not regulated and is not subject to consumer protection regulations, which the ABC/MCB is still in the process of creating,” the letter reads.

Burns has in the past been unapologetic about his business, though he has said he intends to comply with all law enforcement directives on the subject. His business has been in operation since at least February.

News reports indicate Franklin testified at the Marijuana Control Board meeting she would not seek enforcement action before the August meeting of the Marijuana Control board.

Backlin and Edwards said they would pay taxes when the bill came due, though they admitted they’re without a guidepost for how exactly to do that. They also said they had expected some challenges on the road to legalization.

“We’re bringing something in from prohibition,” Backlin said. “We didn’t think it would be easy.”

Contact Brian O’Connor at 352-2269, brian.oconnor@frontiersman.com, or on Twitter @reporterbriano.