N.H. House Panel Passes Marijuana Legalization Bill, Reworks Tax Structure

Mar 27, 2019

Credit Dan Tuohy / NHPR

A bill to legalize marijuana in New Hampshire has cleared another step in the State House, but not before a rewrite of how the state would tax it.

The House Ways and Means Committee voted Wednesday to legalize up to an ounce of marijuana, to be taxed at 5 percent at the cultivation level and 9 percent at the retail level. (Scroll down to the bottom to read the 27-page amendment.)

The original bill called for a tax of $30 per ounce of cannabis. 

State Rep. Richard Ames of Jaffrey, the vice chairman of the committee, could not cite how much revenue the proposed new tax structure would generate. But he said it would raise more than the original projection, which was a range of about $20 million to $31 million. The original bill estimates a New Hampshire customer base of 130,000.

The legislation would legalize recreational marijuana for adults 21 and older, with possession of up to 1 ounce of cannabis and up to 5 grams of hashish.

In brief discussion before the vote, marijuana opponent Rep. Patrick Abrami said he worries that legislators, the state and local government would become addicted to the funding provided by the cannabis industry. The bill lacks a sure way for municipalities to "opt in," as opposed to an opt-out provision, he said. 

An excerpt of the marijuana legalization amendment.

"Just because states around us are legalizing doesn't mean we have to do it," said Abrami, who served as chairman for a marijuana legalization study commission last year.

Ames said the bill came to Ways and Means as a well-crafted piece of legislation. And sponsors of it, like Rep. Renny Cushing, say it's that way because of the study commission led by Abrami.

A proposed opt-in measure would be one of the notable exceptions.

After the committee vote, New Futures advocacy director Kate Frey said the amended bill undermines an already bad bill because it would channel prevention and treatment funds through the budget process. 

“The proponents of this bill have said all along that a significant amount of revenue would go toward substance use disorder prevention, treatment and recovery and be transferred immediately. What this committee did was actually say: No, it’s going to go through the budget process," Frey said. "And as we know with the alcohol fund, that’s never been successful. We’ve had an alcohol fund, of which 5 percent of gross profits are supposed to go to prevention, treatment and recovery. That’s only happened once in the 13 years, so I don’t expect this to be any different."

The bill would appropriate $2 million to a Cannabis Control Commission to launch administration of the law, with "priorities for the allocation of the remaining funds subject to appropriation," starting with $100,000 annually to the Department of Safety for a drug monitoring initiative and data collection on health impacts. The remaining funds would be split:

  • 29 percent for use in substance abuse-related education, prevention, treatment, and recovery; and for public education campaigns.
  • 33 percent for aid to municipalities, providing that the commission may consider allocation based on towns or cities that may have cannabis business in their boundaries.
  • 5 percent to public safety agencies for hiring/training drug recognition experts.
  • 33 percent to the state's general fund.

The proposed change in how New Hampshire would tax recreational marijuana did not sit well with everyone on the committee. State Rep. Fred Doucette of Salem was one of them: "Now we're talking clearly about a sales tax," he said.

Matt Simon, New England Political Director of the Marijuana Policy Project, said calling it a sales tax is a dubious interpretation because the proposed retail tax is modeled after the state's meals and rooms tax.

"Five percent tax rate on cultivators and a 9 percent tax at the retail level, and that's somewhat lower than other states," Simon said. "Legislators are keenly interested in eliminating the illicit market and that's been driving this discussion."

The House Criminal Justice and Public Safety Committee previously passed the bill, and the House sent it to Ways and Means because of the proposed tax. The House of Representatives will consider the amended bill sometime in April.

(This post was updated Thursday with the amendment and more information on the revenue allocation.)

READ the amendment: