Like Days of ‘98, cannabis rush very different in Alaska and the Yukon

You often hear that the Gold Rush was a free-for-all in Alaska, while on the Yukon side of the border, Superintendent Sam Steele of the North-West Mounted Police quickly established order. Soapy Smith was wreaking havoc in Skagway, but Steele was regulating Sunday shopping and sentencing unruly miners to corrective stints chopping wood.

More than a century later, echoes of these divergent philosophies are evident in our approaches to marijuana retailing.

Superintendent Steele would have approved of the approach planned for Whitehorse. We’ll have one weed store, run by the government and inconveniently located in the Marwell area. He would be rooting for it to be closed Sundays, too.

Steele was no stranger to the sin industries. He permitted gambling, but made sure government captured a share of the revenue for public services. He tolerated and informally regulated prostitution in Dawson City.

Modern Fairbanks, on the other hand, is taking a laissez-faire approach to weed retailing. According to the Fairbanks Daily News-Miner last week, city council authorized up to 25 — yes, 25 — retail outlets. The Golden Heart of Alaska, as the city’s motto has it, could end up with one cannabis store for every 1,300 people. That would be like Whitehorse having 19 outlets.

The numbers are a bit less eye-popping if you take the population of the whole Fairbanks North Star Borough into account. The 25 stores in Fairbanks would work out to one store per 4,000 borough residents.

And rather than restricting stores to one part of town like in Whitehorse, as city council has done here, they just have to be 750 feet (about 225 metres) away from schools, drug and alcohol rehabilitation centres, and other sensitive zones.

Fairbanks is also regulating marijuana growing facilities. For example, city council decided that such facilities will need city-approved air-filtration systems and that the bylaw department will be able to investigate odour complaints.

So what we are seeing emerging in Fairbanks is a hybrid model, mixing some regulation with some aspects of the free market. Essentially, entrepreneurs will be free to invest their money and time into capturing a chunk of the cannabis retail market. But there will be significant regulation.

Some Alaskan marijuana growers have already run afoul of regulators. The News-Miner also reports that Alaska’s Alcohol and Marijuana Control Office has already shut down a Fairbanks manufacturer. Frozen Budz’s license was suspended after allegations of excessive THC levels in their “edibles,” as well as complaints they had “sold edibles contaminated with mold, used untracked marijuana, made products not approved by the marijuana control board, allowed onsite consumption and sold more than 114,000 untested edible marijuana products.”

Yukoners may know Frozen Budz since it was sold in the Skagway marijuana store. I wrote about this outlet a year ago, when the proprietors told me they were “sold out of bud” after an influx of Yukoners over the Victoria Day weekend.

Meanwhile, in Whitehorse, customers await the opening of the government store. Details remain murky, but it is possible that at some future point Yukon entrepreneurs will be able to get into marijuana retailing.

It seems unlikely that the government would get out of the business at that point. They would have already hired unionized employees as well as invested in systems, inventory and real estate. So future Yukon entrepreneurs will have to compete with a deep-pocketed government agency.

One likely scenario is that a model something like liquor offsales will emerge. There may be some profitable niches for retail outlets that offer some combination of superior convenience, location, product selection or customer experience. But the bulk of sales volume will likely be via the government store.

It’s an outcome that is very consistent with the Sam Steele tradition. It is also consistent with another Yukon tradition: the weekend getaway to Skagway.

Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels. He is a Ma Murray award-winner for best columnist.

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