Alaska Cannabis Startup Guide

Starting a cannabis company in Alaska? We’ve put together a comprehensive state-specific guide covering everything from available license types to fees, local rules, and what you should include in an Alaska cannabis business plan. Jump to a section by clicking below, or go straight to our sample cannabis business plan.
Alaska medical and recreational cannabis business startup guide and planning banner

Click to jump to a topic:

Overview
Cannabis license types
Fees and other barriers to entry
Are cannabis business plans required in Alaska?
What to include in a business plan
How to research city regulations
Helpful links
Get expert help

Overview of legal cannabis in Alaska

Alaska legalized adult medical marijuana use in 1998 (making it one of the first states to do so), and legalized adult recreational use in 2014. As of 2017, the state had the most expensive marijuana in America1, but the price has begun to come down. In 2018, total legal cannabis sales in Alaska will generate $70 million to $100 million in revenue, according to Marijuana Business Daily, with between 70,000 and 90,000 in-state customers. During fiscal year 2018, tax revenue from cannabis sales exceeded $11 million, and it goes to a good cause: keeping ex-convicts from becoming reoffenders.2

Alaska could be the first U.S. state to legalize cannabis lounges, where adults 21 and up can purchase and consume marijuana on-site. Alaska’s Marijuana Control Board proposed as much in August 2018. If legalized, people would be able to buy and enjoy up to one gram of bud or flower or edibles with up to 10mg of THC in the marijuana lounges, in outdoor or ventilated indoor areas. As some landlords don’t allow cannabis consumption in rental units, and public marijuana use is illegal, the lounges would provide a legal space to do so, similar to a bar. Plus, Alaska’s recreational dispensaries target cruise ship tourists, but if visitors purchase marijuana, they have nowhere to legally enjoy it. Marijuana lounges would meet that need. Business applications for a marijuana lounge would cost $1,000. The state will decide whether to legalize lounges in late 2018.3

Cannabis business license types

Alaska issues licenses for four broad categories of recreational cannabis businesses: retail stores (aka dispensaries), cultivation facilities (aka grow operations), product manufacturers (e.g., extracts or edibles), and testing companies. Note that marijuana delivery is illegal in Alaska.

Retail store: This is a dispensary where anyone 21 and over (with valid ID proving as much) can buy cannabis, including flower, concentrates, and edibles, as long as they have 5,600 mg of THC or less. Cannabis must be tested, packaged, and labeled according to Alaska regulations, and it can’t be consumed on-site without prior approval of the Alcohol and Marijuana Control Board4. Retail store employees can’t sell marijuana to intoxicated people, sell it over the internet, or offer free samples. Every employee has to have a marijuana handler’s card, and retail stores must use the state’s mandated marijuana inventory tracking system (see “Fees and other barriers to entry” section below). Alaska has rules about how many signs retail stores can have, what they can say, and how big they can be (details on page 34 here).

Marijuana cultivation facility: These businesses, also called grow operations, grow cannabis plants indoors or outdoors, and then package and label them. A random selection from each harvest batch of marijuana must be tested by a cannabis testing facility, and additional random testing by the board can happen anytime. Marijuana may then be sold to another cultivation facility, retail store, or product manufacturer that will use it to create extracts and edibles. Cultivators and employees are not allowed to sell or give product to the public or consume product on-site.

In Alaska, if you have a business license for cultivation, you’re allowed to also have a license for a retail store or product manufacturing facility (but not a testing facility).

Product manufacturing: Cannabis manufacturers buy cannabis from cultivators or other product manufacturers, then produce items like edibles and extracts. In Alaska, they’re allowed to create extracts, edibles, ointments, salves, patches, and tinctures. They can then sell those products to cannabis retail stores or other product manufacturers, but they can’t sell or give away product to the public, in person or online. Product manufacturers are forbidden from creating marijuana products that look like candy, could appeal to kids, or that are “adulterated food or drink.”

The production area has to be temperature-controlled and under video surveillance. Products from every production lot must be randomly selected and tested by cannabis testing facilities. There are detailed rules about producing concentrates, which you can read more about on page 57 here, as well as rules about labeling, packaging, and THC potency limits. Finally, marijuana product manufacturers in Alaska have to get the board’s approval for each product they want to create, including a photo or drawing and the manufacturing process.

Testing facility: These companies test, analyze, and/or certify potency, moisture content, pesticide residue, mold, mildew, bacteria, or other contaminants in cannabis. If you own or work for a retail store or cultivation facility, you cannot own or have any financial interest in a testing facility (conflict of interest).

Ancillary business: If you don’t want to grow, sell, or test marijuana, you have plenty of options that don’t require a cannabis business license. You can create an app, payment processing service, advertising and branding agency, ad network, consulting firm, or anything else you can think of.

Alaska medical and recreational marijuana business plan facts callout.

Fees and other barriers to entry

The North Pole is the only area in Alaska to make marijuana sales illegal5, but you should still check your local regulations just in case. There are no statewide caps on the number of marijuana business licenses, but local governments are allowed to limit these, or forbid certain locations. The first step in applying for an Alaska cannabis business license is either renting or buying a location, but it can’t be within 500 feet of a school, a recreation or youth center, religious facility, or correctional facility. You also can’t share a facility with a company that has a liquor license (e.g., you can’t run a store that sells both alcohol and marijuana).

Permits: Every cannabis business employee in Alaska also has to have a marijuana handler’s permit (even if they’re only transporting product or checking ID), which costs $50.

Application fees: Applying for any kind of cannabis license initially costs $1,000 (but only $600 to renew). You also have to pay $47 per person to get fingerprinted, and there are various fees for changing your business name, licensed premises diagram, operating plan, or ownership.

License fees: In addition to an application fee, new cannabis companies in Alaska must pay $5,000 for a retail store license, $1,000 for a “limited” cultivation facility (which has 500 square feet or less devoted to cultivation), $5,000 for a standard cultivation facility (more than 500 square feet for cultivation), $1,000 for a concentrate-only manufacturing facility, $5,000 for all other product manufacturing facilities, or $1,000 for a testing facility.

Tracking: The State of Alaska requires cannabis business owners to use a marijuana inventory tracking solution (they currently have a contract with Franwell). You’ll have to pay Franwell $40 per month to use its system, METRC, which involves placing tags on each marijuana plant and labels on wholesale packages.

Do you need a cannabis business plan in Alaska?

According to Alaska’s Alcohol and Marijuana Control Office (AMCO), “All license types are required to submit an operating plan with their application.” Your operating plan has to include your plans for security, inventory tracking, employee qualification and training, waste disposal, marijuana transportation, and signage and advertising. Cultivators also have to specify their plans for fertilizers and chemicals, growing medium, odor control, irrigation, and so on.

Technically you don’t have to have a business plan as part of your application, but you will need one if you plan to raise money from investors.

What to include in your business plan

Here’s what an Alaska recreational marijuana business plan should include:
  • Product description: Will you run a retail store, grow operation, testing lab, product manufacturer, or something else? What’s unique about your business? Be as specific as you can. If you’ll open a recreational marijuana retail store, which strains of flower or whose manufactured products will you sell?
  • Market research: If you’re opening a recreational dispensary, how many people live within a reasonable distance? If you’ll wholesale flower or edibles, how many retail stores will you sell to? If you’re creating an app, who will be the user base, and why would they use your app instead of someone else’s? Use concrete numbers verified by a third party whenever possible (instead of estimates).
  • Competitors: Who will you compete with, both directly and indirectly? What do they do well and poorly? What is their online reputation? How will you differentiate your company?
  • Management team: Summarize your qualifications and those of others on your management team. (Think of it as a shorter, “greatest hits” version of your resume.) Obviously include cannabis industry experience, but it’s fine if you don’t have any. Highlight leadership skills, customer service, and business development experience in other industries.
  • Financials: This part can be tricky. You need a five-year financial forecast, including projected annual revenue, operating expenses, costs, and net profit. Each year’s projected revenue should include not only revenue but also your margin and direct costs. You can forecast revenue by estimating how much product you think you’ll sell (based on market potential), your retail price, your production cost, and how much you’ll spend on payroll, rent, and other expenses. Your cash flow statement will show that you’ll have enough cash to stay operational. You might want to include a sensitivity analysis (best- and worst-case scenarios), which shows 15% higher and 15% lower revenue than your initial forecast. For marijuana cultivators, it’s important to do a sensitivity analysis based on future potentialities of the wholesale price per pound. You can also include a break-even analysis, showing which month you will be profitable.
  • Requirements specific to your license type: Depending on which license type you’re applying for, if you don’t already include this in your operating plan, you’ll have to include details about your security system, product tracking, secure product transport, manufacturing waste plan, or other aspects of your business.
  • Investor proposal: If you are presenting your plan to investors, how are you valuing the shares? Consult with your attorney to make sure you are within state and federal compliance. Sometimes, you’ll need your attorney to draw up an offering memorandum, often called a private placement memorandum (PPM). A PPM informs potential investors on the details of the investment vehicle (your company) and potential risks associated with the investment.
How to research city regulations

Google your city or municipality name and “cannabis regulations” or “marijuana laws” -- here’s Anchorage’s page, for example. If your city or municipality’s website doesn’t have information about cannabis, contact your city clerk, city manager, or town hall.

Helpful Links
Get expert help

Confused or overwhelmed yet? That’s normal. With such a highly regulated industry, and one with different rules in every state, starting a cannabis company can be very complex. Get help with your cannabis business plan from Masterplans, the industry leaders. We’ve worked with hundreds of cannabis entrepreneurs like yourself to create investor-ready documents and presentations so you can not only meet regulations but get the funding you need. Click below for your free, confidential consultation:
Get my free consultation now