New Hampshire Flirts With State-Run Franchises

Already a medical cannabis-legal state, New Hampshire is so unsure about legalizing cannabis for adult use that it appears willing to consider a quasi-regulatory structure that no other state has seen to employ, the state-run franchise model. A clarion call of concern is now being sounded about a strike-all amendment promoting the franchise model just passed by the Senate Judiciary Committee that substitutes new language for the previous version HB 1633, which made its way to the Senate Judiciary Committee after passing the New Hampshire House with rare bipartisan support.

In anticipation of a make-or-break vote on the amended version this week by the full Senate, supporters of the House version are speaking up. The New Hampshire Cannabis Association (NHCANN), for example, has been warning “residents to get ready for the McDonald’s of cannabis if the bill is not heavily amended or reverted back to the version that passed the House twice.” Cannabis Business Executive spoke with NHCANN founder Daryl Eames one year ago about New Hampshire’s road to recreational, a journey that continues today.

NHCANN argues that the amendment essentially puts New Hampshire’s Liquor Commission “in the business” of cannabis rather than regulating it for the benefit of New Hampshire businesses. “Simply put,” warns the org, “NH will be to cannabis what McDonald’s is to hamburgers. Absent the side of economic opportunity, the residents of New Hampshire demand (and desperately need) to improve their lives. Instead, handed on a silver platter to the wealthy and connected.”

The purpose of such a bizarre stance may indeed be grossly pecuniary, but it could also be a bluntly political attempt to emasculate the market in order to make it palatable to opponents of adult use, or more cynically, to make it so unworkable that it fails to get enough votes to pass. Either way, the issue would be left unresolved for a future legislature to deal with.

NHCANN describes the amendment as an attempted takeover by the state of adult-use cannabis using four simple steps:

Hand the cannabis industry over the Liquor Commission to compensate for the decline in alcohol consumption of future generations, putting the commission ‘in the business’ rather than acting solely as a regulatory body. Allow [the Liquor Commission] the ability to meddle in everything up and down the supply chain including price fixing. Create 15 Walmart-style metal and concrete warehouses filled to the brim with the “McDonald’s” of cannabis. Set it up in a way where primarily the wealthy and connected get to participate, ensured of success with the full faith of the commission watching their backs.

The allure of the state-run franchise model has been on the table in New Hampshire for several months, enough time for interested parties to have debated its merits. The hope among those advocating for a market-based industry was that the strength of a bipartisan bill would prevail. That hope is obviously under threat now that the Judiciary Committee has for the moment imposed its will upon the rest of the legislature.

HB 1633 is currently scheduled for a vote by the Senate this Thursday. The latest bill text can be found here. Additional amendments can and almost certainly will be made, but the nonpartisan folk at NHCANN remain adamant that the amended bill as envisioned by a minority of New Hampshire citizens is not in the best interest of the state. To further that case, the org offered bullet-points that highlight a few of the differences between the bipartisan version of HB1633 and the amendment passed in the Senate Judiciary Committee last week. They are copied below with the original bold emphasis:

HB1633 provides flexibility in pricing to balance supply and demand signals in the market so retailers can stay competitive. The amendment states not that the commission can simply ‘consult’ on pricing but rather that the commission has “…the final authority to set the price of all cannabis products sold in a retail store”. Also known as price fixing. HB1633 bill understands that vertically integrated companies may want to co-locate cultivation or manufacturing with retail if allowed in their municipality to reduce cost and risk. The amendment forbids retail colocation entirely even where it is legal. HB1633 bill believes medical patients shouldn’t be burdened paying another 15% tax on their medicine, the amendment finds it perfectly acceptable.  HB1633 bill views the advisory board as an asset to help these new operators with things like education and funding and act as a conduit to communicate what is and isn’t working back to the commission. The amendment sets the advisory board up as an opposition entity layered on top of the regulatory body. Let’s take a peek at some of the composition.  The chair of liquor commission to be chair of the advisory board. The regulator advising itself. The president of the associations of the chiefs of police. Some random member of the public appointed by the Governor. A State Senator and a State Rep. All people who can talk to the commission already. This is not a cannabis advisory board, it is a government and commission advisory board.  HB1633 bill provides clear legislative intent to ensure our medical cannabis industry has a path to survival. The amendment creates a high risk that our medical industry crumbles. HB1633 bill allows municipalities in partnership with private owners to determine their location. The amendment bill puts that decision solely up to the commission. If you end up choosing a location that doesn’t work, don’t think you have the right to work with an opted-in municipality to secure a new one. The commission may not approve it! HB1633 bill understands the size, nature and layout of the facilities is a consideration for the private owner and the municipality to determine, the amendment allows the commission to be the sole arbiter. Of the LAYOUT of your building. HB1633 bill slightly increases penalties for public consumption from where they are today, the amendment ramps it up creating more victims of over enforcement. This amendment also declares the commission “shall have the primary responsibility for the enforcement of all cannabis laws including any illegal trafficking.” “In the last several years, Chinese-backed marijuana operations have cropped up across the United States, including major drug busts in New Mexico and Maine. In Maine alone, Border Patrol has reportedly identified at least 270 illegal marijuana grow operations throughout the state… “ ‘Worrying’: Top Lawmakers Receive Classified Briefing on Spread of Chinese-Backed Marijuana Farms in United States Does this mean the Liquor Commission will set up stings at the border since out of state sales will cut into their profits? This amendment provides some sweet financial rewards to commission employees with a 10% pay bump for 18 months., just for showing up to work.

The discussion of HB 1633 by the Senate Judiciary Committee can be viewed here starting at the 2:07:13 mark. The discussion includes extended comments from the committee Chair, State Senator Sharon Carson, why New Hampshire does not need adult-use cannabis at all.