By GARRY RAYNO, InDepthNH.org
CONCORD — A bill legalizing the recreational use of marijuana passed the House with a two-to-one margin, but ran into a buzz over its finances before the House Way and Means Committee on Thursday.
The bill would provide $14 million in public funds for start-up costs, which would be reimbursed, said the bill’s main sponsor, Rep. Daryl Abbas, R-Salem, who suggested legalization would produce between 260 and $360 million for state coffers. .
Under the bill, the first $25 million would go to drug treatment and prevention, while 90% of the additional funds would reduce the statewide education property tax, 5% would go to law enforcement training and 5% to child behavioral health.
The bill was crafted from a number of bills proposed last year and this session resulted in a compromise, Abbas told the committee.
The bill would sell marijuana through the Liquor Commission and, instead of sales or transfer taxes, generate revenue like the commission does as profits from liquor sales.
Abbas said he doesn’t want what has happened in other states with commercial sales where the tax and regulations are too high and the price is not competitive with the illicit market.
He said he wanted the price to be low enough to keep people away from illicit sales.
The four-plus-hour hearing produced more questions than answers and a subcommittee will work on the bill before the committee rules on its recommendation.
While many backing the bill when it first passed the House last month said it was not perfect but a step forward, the opposition went on Thursday, including existing alternative treatment centers that grow and distribute medical marijuana, large-scale growers from other states, and, as expected, law enforcement.
And despite overwhelming support from the House, most of those who testified had suggestions for changing the bill, particularly how cannabis edibles are treated, as well as a back-up plan to create a state bank to manage the money that the industry would generate if private banks were unwilling to service the industry which is still illegal under federal law.
Officials of state banks, both public and private, said a state bank would not be necessary because private banks would be willing to provide the necessary services under elaborate procedures already worked out.
And they said the state bank’s capitalization plan with $10 million is woefully underfunded and would require a lot more money with a continued injection of state money as the industry grows developed.
“We don’t think a state bank is necessary,” said Kristy Merrill, president of the NH Bankers Association.
The state’s police association opposed the bill, saying it would dramatically increase law enforcement costs across the state.
Bedford Police Chief John Bryfonski said rising costs aren’t the only problem, as all facets of law enforcement are understaffed.
He used examples in Canada, Colorado and other states that have legalized recreational use and the problems that result.
He noted that New Hampshire had no intoxication limit for THC levels, which made it impossible to prosecute two drivers in fatal crashes in his city.
What’s on offer “is akin to an episode in the shark tank,” Bryfonski said. “You can’t put dollars and cents above the cost of human life.”
But concerns about banks and law enforcement may be moot, as grow industry representatives operating in other states told the committee that no growers would be interested in working with the State within the framework of the structure put in place in the bill.
A person associated with East Coast Cannabis in Maine said the investment was far too expensive to be the state’s sole supplier because the bill requires the sponsors of the bill “just don’t get it.” .
He told the committee that cannabis is a perishable product and cannot be processed as quickly as the bill would require.
Committee members asked Abbas for additional information on things like how it was determined that $25 million would go to drug treatment, or how he came up with his revenue projections and what they include. .
Several members were concerned about edibles, which would be available at cannabis stores but only sold to residents with medical marijuana cards.
Committee vice-chair Rep. Patrick Abrami, R-Stratham, who chaired a cannabis legalization study committee several years ago, wondered how edibles would be treated under the draft. of law.
“I don’t understand why it’s here,” Abrami said. “We have seven stores that do all of these things, produce, grow and create edibles and retail them.”
He said edibles are very popular and if they’re only sold to those with medical cards, it could impact revenue assumptions.
Abbas said his revenue assumption was right for the “flowers” to make them as “conservative as possible”. He estimated that edibles and vaping would account for around 30% of total sales.
Abrami said he was concerned about the existing seven stores because people with medical cards could buy their cannabis from state-run stores.
Rep. Timothy Egan, D-Sugar Hill, was also concerned about existing processing centers and how edibles are handled in the bill.
While he supports the bill in general, he said, the bill leaves too much money on the table.
Egan said the industry is expected to continue growing and is expected to be a $41 billion industry four years from now, according to a study.
And he noted that the fastest growing section of the market is edibles and vaping.
He said edibles made up 13% of the market’s dollar volume and is expected to reach 18% by 2025 according to Headset.
Edibles have overtaken the flower market in states with commercial sales, Egan said, and additional sales would allow the cannabis industry to grow as local breweries and wineries have done in recent years. .
And he suggested the bill be amended to allow personal cultivation of plants, which it does not as passed.
Liquor commission officials said they plan to have separate buildings for the sale of cannabis products if the agency is to oversee the sale of cannabis as required by the bill, saying the brand of the commission was built over a long period of time and they don’t want the public to confuse the two.
The agency also has a much lower revenue estimate at $50 million per year and higher estimates for the cost of stores, staff, and administration.
The Liquor Commission would regulate the cultivation, processing and sale of graded products.
Initially, 10 cannabis stores would be located statewide, but there is no limit in the bill, Abbas said, but communities could refuse to host a retail store.
Several committee members noted that a cannabis store may not be viewed as positively as a liquor store, and high-traffic communities may not be interested.
A subcommittee will meet next week to begin work on the bill.
The bill had bipartisan support in the House, but faces an uphill battle in the Senate if it receives final approval.
Garry Rayno can be reached at [email protected]