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NH looks to sell pot in state liquor stores, make millions. Marijuana growers fuming. – Seacoastonline.com

If New Hampshire was ever to legalize retail sales of cannabis, Paul Morrissette would be well-positioned to participate.

The New Hampshire resident is a part owner of East Coast Cannabis, a dispensary just over the border in Eliot, Maine, where retail cannabis is legal. The store sees plenty of over-the-border business from New Hampshire; legalization could allow for easy expansion into the Granite State, Morrissette says. 

But a bill this year to legalize marijuana and allow consumers to buy cannabis products in New Hampshire state liquor stores has drawn criticism from cannabis advocates within the industry. And if the bill passed, some sellers like Morrissette say they would not be interested in growing cannabis in the state.

“We’re totally uninterested in what they’re doing with this bill,” he said in an interview. “We would be one of the prime people that would be hired for the state to cultivate because we cultivate for our stores and others.”

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The reaction by Morrissette and others has laid bare frustrations with the bill, House Bill 1598, which passed the House, 169-156, after a long debate on the House floor Thursday. Sponsored by Rep. Daryl Abbas, a Salem Republican, supporters have presented the bill as an approach that could bring revenue into the state, curb the potential commercialization of cannabis, and prove palatable to Gov. Chris Sununu and a skeptical state Senate.

The New Hampshire Liquor and Wine Outlet at the Capitol Shopping Center in Concord on Thursday.

But cannabis stakeholders and legalization advocates say the state-run model would be overly controlling and unworkable. Some argue that killing the bill would be preferable to passing it. Others have instead advocated for House Bill 629, which would legalize the possession and home cultivation of cannabis plants in the state but not include retail provisions. That bill passed the House in January. 

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“It is past time for New Hampshire to stop being an island of prohibition,” wrote Karen O’Keefe, director of state policies for the Marijuana Policy Project, a national advocacy group, in testimony to lawmakers. “But it’s important that the bill to replace prohibition actually works.”

Bill would legalize marijuana for ages 21 and older

HB 1598 is the latest in a string of recent attempts by the New Hampshire House to find a cannabis legalization approach that can win support in the Senate. 

The bill would legalize the possession and use of cannabis for all residents 21 and older. And it would allow the New Hampshire Liquor Commission “to regulate and administer the cultivation, manufacture, testing, and retail sale of cannabis statewide” and allow towns and cities to limit or prohibit the number of cannabis establishments within their borders. 

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Unlike bills in past years that created a regulated market and tax scheme for retail cannabis, the bill would authorize only the commission to sell the products in stores across the state. Supporters say that’s a key selling point.

Advocates say the state could reap helpful revenue gains through the approach, arguing that up to to $30 million per year would come to the state should the bill pass. Fifty percent of that money would be used to offset towns’ contributions to the statewide education property tax; 30 percent to help pay off the state’s retirement system debt; 10 percent to drug and alcohol treatment programs, and the rest to first responders and behavioral health programs. 

“This is a win across the board for all the citizens of New Hampshire,” said Rep. Tim Lang, a Sanbornton Republican. “All advocacies are taken care of.” 

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And Sununu, a longtime opponent of marijuana legalization, has expressed some openness to the formulation of the bill, but said that it would depend on evaluating data, including the state’s opioid overdose death rate.

“I think the original bill was designed very well and I always give Daryl Abbas from Salem a lot of credit,” Sununu said at a March 23 press conference. “He worked very hard to design the right bill. If we’re ever going to do it, that’s probably the right structure to have. But at the end of the day, it’s got to be about the results.” 

Why cultivators aren’t thrilled

But stakeholders like Morrissette say that empowering the Liquor Commission to be the sole vendor in the state would be inefficient and could create headaches for cultivators. Because federal law prohibits cannabis from being transferred or sold across state lines, any supply for the state’s stores would need to come from start-up cultivators within the state. 

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Yet with only one buyer for their products – and no ability to sell across state lines – those businesses could be stuck with prices set by the state, Morrissette argued, a divergence from other states that allow competition to stabilize prices. The Liquor Commission has indicated that it would try to set low prices to compete with other states; Morrissette said that could mean growers being forced to operate at low levels of profits. 

“They’re going to set the price that they’re going to pay for that,” he said. “Not me. My cost doesn’t matter. My profit margin doesn’t matter. I got somebody coming in that wants to maximize profit in the retail stores, and the cheaper they buy it, the better off they are and the worse that I am.” 

The situation around cannabis differs from the Liquor Commission’s monopoly over hard alcohol sales, opponents of the bill also say, because multinational companies and brands cannot sell cannabis products. 

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Meanwhile, the single-vendor model could mean state products are slow to innovate, and that individual stores would not be flexible enough to respond to changes in cultivators’ supply, he said. 

“It ain’t like a tomato plant,” he said. “I can’t tell before I put the seed or the clone in the ground how much I’m going to get for weight off of that plant, and whether or not the state actually needs that in their store.” 

Inaccuracies around supply and demand with the state liquor stores could result in cultivators needing to destroy their products. 

Opponents have also taken issue with the bill’s exclusion of edible cannabis from the list of products that could be sold by the Liquor Commission. Sununu has expressed opposition to allowing edibles for sale in the state. Morrissette counters that edibles are popular among older buyers who prefer them as sleep aids over cannabis flowers that must be smoked, and he warned that buyers would simply cross state lines to buy the edibles where legal. 

A conflict with medical marijuana?

Meanwhile, therapeutic cannabis advocates argue that the state control over the market could undercut existing “alternative treatment centers,” which distribute medical cannabis.

“This creates a new separate system with no interaction with the therapeutic cannabis program,” said Matt Simon, director of public and government relations at Prime ATC, an alternative treatment center in the state. “They will lure patients away; they will disincentivize being a registered patient and buying from the ATCs.” 

Supporters of the bill have pushed back at the concerns, arguing the state-run system was the best way to maintain oversight, collect revenue, and keep the cannabis market under control in the state. And they’ve warned that the alternative – legalizing private retail sales of cannabis and taxing it – could lay the groundwork for a sales tax in the state. 

Abbas took to the floor to criticize a proposed amendment that would let private businesses sell cannabis and be taxed under the state’s meals and rooms tax. 

“By having cannabis be taxed under the rooms of meals tax, which is neither a room nor a meal, you are essentially starting to convert that rooms and meals tax into a full-on retail sales tax,” Abbas said. “This is the beginning.” 

Others said the Liquor Commission format, while not the ideal approach for all, was the best option for passage of cannabis in 2022, given Sununu’s comments. 

“Do I like the state involved in this here? Hell no, I don’t,” said Rep. Al Baldasaro, a Londonderry Republican, speaking to the House. “But you want to know something? You got no choice. Either you want marijuana or you don’t. You can’t have the whole pie. We have to take a little piece at a time.”

This story was originally published by New Hampshire Bulletin.