New Hampshire Legalization Bill Has Cannabis Growers Grumbling

A bill that would relegate cannabis sales to state liquor stores operated by the government of New Hampshire has raised the ire of legalization advocates and cannabis industry operators. House Bill 1598, which passed the New Hampshire House of Representatives by a vote of 169-156 in March, is seen as a potential chokepoint that could stifle the growth of the legal cannabis trade in the “Live Free or Die” state.

Sponsored by New Hampshire State Rep. Daryl Abbas (R), HB 1598 touts the advantages of projected annual revenue of US$30 million generated from cannabis sold at the New Hampshire Liquor Commission’s stores. But the real selling point for supporters of the bill is that allowing state-run stores to sell cannabis would keep New Hampshire’s cherished tax-free retail scheme securely in place.

New Hampshire doesn’t collect sales tax on goods or on liquor sold in its state stores, relying on the allure of its tax-free alcohol to generate profits from non-tax markups. Drawing heavy sales traffic from the neighboring states of Maine, Vermont and Massachusetts, tax-free liquor sales contribute a whooping 11% to the state’s budget. Rather than creating a sales tax structure to be levied on independent cannabis retailers, backers of HB 1598 say putting the state in control will prevent the introduction of any sales tax in New Hampshire.

Cannabis advocates counter that a state-run system would be a death nell for cannabis commercialization in New Hampshire. They point first to federal law which prohibits interstate shipments cannabis. Unlike alcoholic beverages, which can be supplied freely to New Hampshire by multinational distributors, cannabis products would have to be cultivated and produced solely within the state. To comply with federal restrictions, the bill allows the state “to regulate and administer the cultivation, manufacture, testing and retail sale of cannabis statewide.”

Critics of the legislation say a single-source sales and cultivation platform controlled by the state would result in a closed, stagnant market unfair to both consumers and cannabis companies. The New Hampshire Liquor Commission has stated it wants to set low cannabis prices, which consumers will surely like, but that also means cultivators could be locked into fixed margins determined by the state. Without the opportunity to export their product elsewhere, in-state producers could struggle to expand operations and allocate resources towards innovation, opponents of the bill said.

HB 1598 would legalize the possession and use of cannabis by those over the age of 21, but would still let local municipalities ban cannabis businesses from operating within their jurisdictions.

A noted opponent of cannabis legalization, New Hampshire Gov. Chris Sununu has called the effort to legalize marijuana one of the biggest fights of his administration and has previously urged the rejection of any legalization legislation. Opponents of HB 1598 have also noted the exclusion of edible cannabis as a legal product in the bill. Gov. Sununu has previously made it clear he is especially opposed to the sale of edibles in the state.