Thank you, Mister Speaker. Good afternoon colleagues.…
Rep. Stephen Pearson (R - Rock 6)Thank you, Mister Speaker. Good afternoon colleagues. As many of you know, my father, the Representative from Hampstead is a clergyman, so I have a lot of experience listening to speeches that have a little bit of fire in them so I'm going to try to refrain from the fire. It is time for a reality check on the financial promises made in promoting legalization of marijuana. The only way to get a worthwhile data pool is to look at the West Coast that has had a legal market for a few years now. Legalization was sold to New Hampshire as it has been in other states under the promises of big revenue, but after the money was counted, reality showed the first states had nowhere near the promised intake. According to news release from the California State Department of Tax and Fee Administration, the 2018 revenue from marijuana sales was $300 million short the promised amount. In Washington state and Oregon, overproduction has led to market saturation and rock bottom wholesale prices in the legal market. Prices have fallen in the legal market from over $3,300 a pound to $330 a pound. These numbers come from the Oregon Liquor Control Commission which oversees Oregon's legal recreation marijuana program. It is estimated that the surplus of marijuana has now exceeding 2 million pounds. Now you understand why the prices plummeted. Remember, New Hampshire's tax revenue in this bill is based on a retail sales tax price of around $5,500 a pound. A drop in retail value reduces the tax revenue generated from legal sales. Since the commission was formed, prices have fallen dramatically on the West Coast. This means the projected revenue in New Hampshire is going to be way off. Again, the promised revenue stream from this bill is based on $5,500 a pound and the surplus on the West Coast has dropped it to $300 a pound. Not a single state that has legalized has met revenue projections. Not a single one. If you look at the projections in the New Hampshire commission, the expected revenue is between $19 and $28 million. This is based on a market price that no longer holds true and this was before all of the operational costs have been taken out. Assuming that the state actually makes the projection range, 5% of that money is earmarked for law enforcement and EMS, but if you look at real numbers and not just percentages, this equates to $650,000 towards law enforcement for the entire state. We have 234 cities and towns in New Hampshire. If you divide that out evenly, your town that you represent here will only receive $2,750. I can tell you right now that Nashua and Manchester are going to be demanding a bigger piece of this money. I want you to fully understand that the best-case scenario your town is looking at is a whopping $2,700 to deal with all of the problems associated with legalization. This barely covers two cops on overtime for one weekend. Your communities are going to be picking up the tab for the increase demands on law enforcement and EMS. Now we've been told time and time again that legalization will get rid of the black market and bring big money into the state rather than the street corner dealers, but reality paints a different picture. As much as 80% of the marijuana sold in California comes from the black market. According to an estimate by New Frontier Data Analysts who job it is to track sales. They also found that California's elicit pot market was valued at more than 4 times the legal market, but this isn't limited to California. The Governor of Colorado stated that the black market there is worth more than $50 and $75 million with zero tax money coming in. One year into the legalization of recreational marijuana in Nevada, more than half the states pot sales are taking place in the illegal market. This is according to the President of the state's leading cannabis advocacy commission. Oregon law enforcement authorities intercepted $48 million worth of
black-market marijuana according to their liquor commission. With more $2 million pounds of excess cannabis logged into the Oregon cannabis tracking system, the street corner retail prices are far below legal blackmarket sales. Prices have fallen again in the legal market from $3,300 a pound to just over $300. In Jackson County, Oregon, law enforcement destroyed thousands of marijuana plants following a 2-month investigation into the black-market sales. In just one raid they seized 6,000 marijuana plants weighing just under 3 tons with an estimated street value of $7.8 million. Please understand the New Hampshire consumption in this commission is only 24 tons. Closer to home, according to research by the Boston Globe, more than two years after Massachusetts voters legalized marijuana the illegal market remains vibrant. Seventy-five percent of the pot sold in Massachusetts in 2019 will be under the table with zero tax money coming in. We've been told that the war on drugs cost too much and legalization of marijuana will save New Hampshire millions in wasted drug enforcement, but reality sings a different tune. Lori Ajax, the head of California's Bureau of Cannabis Control described how bad 2008 was. The State of California is now creating an expensive public information campaign to try to persuade consumers to stop buying illegal pot. Legalization was promoted as helping to end the war on drugs, but Miss Ajax says California has no choice now but to step up enforcement of cannabis laws. A new report from the California Cannabis Advisory Committee on the first year of legal pot sales in California says there is a problem that requires urgent action. Fragmented and uncoordinated enforcement has allowed the black market to flourish threatening licensed businesses with unfair competition. In February, the Governor of California announced expansion of efforts by the California National Guard to work with federal officials to target the black market. The Governor proposed that at least 150 National Guard troops would be redeployed to join the counter drug task force. In Colorado, the state has spent millions in marketing keeping marijuana away from children. According to reporting by NPR, last November law enforcement on the Washington coast said they discovered a large network of illegal marijuana grow operations run by Chinese nationals. Police in three counties served 50 search warrants and confiscated 32,000 pot plants. The black market has not been reduced. It has exploded. In conclusion, with the supply of marijuana now massively overrunning demand, the price of retail pot has plummeted. Having a revenue system in New Hampshire based on retail sales cannot now meet the projections and fund the various earmarked demands found in this bill. The black market has expanded so fast after legalization that law enforcement cannot keep up with maintaining the laws that govern this practice. The New Hampshire commission warned of these problems and has been ignored in this bill. New Hampshire will not be different. Legalization has not saved the states on the West Coast anything when it comes to the war on drugs. If anything, it has changed that war to fight the unintended consequences that we all warned about. The fact that California is now looking for assistance from the National Guard should be screaming in your ears that this claim of a reduction and a savings on the war on drugs is completely bogus. The fact is that you were told you were getting the world's best designer weed, but all you're left with was a bag full of seeds and grass clippings. I urge you to vote no on this bill. The balance sheet demands it.
Speaker ShurtleffThe question before the House is the recommendation that the bill Ought to Pass as Amended. The Chair recognizes the member from Portsmouth, Rep. Pantelakos, to speak against the recommendation.
Rep. Laura Pantelakos (D - Rock 25)Thank you, Mister Speaker. I rise to speak in opposition to the Ways and Means Committee recommendation of Ought to Pass with Amendment on HB 481. We know that the states of Colorado, Washington, Oregon and California that have commercialized marijuana have seen increased costs for unintended consequences, such as emergency room visits due to poisonings from marijuana brownies and candies and increased drugged driving. I would like to remind everyone there is no road test for marijuana impairment. The sponsor of HB 481 has said that a significant amount of revenue will be used to help fight the drug crisis in New Hampshire. The Ways and Means Committee amended HB 481 to limit how much of this revenue will actually be spent on substance misuse. May I remind members that we have an Alcohol Fund law on the books that requires 5% profit from the sales of liquor be spent on prevention, treatment and recovery. That has happened only once in the 15 years since that law was created. Let's not make that same mistake twice. Most of the individuals who testified in support of this bill were owners of marijuana stores in other states who see New Hampshire as a new market to move into. If we pass HB 481, those are the people that will get rich, while our citizens suffer the consequences. I urge you to vote no on HB 481. Thank you.
Speaker ShurtleffWill the member yield to a question? The member does not yield. Quite definitely does not yield. The question before the House is the recommendation that the bill Ought to Pass as Amended. The Chair recognizes the member from Jaffrey, Rep. Ames, to speak in support of the recommendation.
Rep. Dick Ames (D - Ches 9)Thank you, Mister Speaker. Just five weeks ago this House voted 209-147 to approve HB 481. This was an emphatic vote in favor of legalizing, regulating and taxing cannabis and cannabis products for use by adults aged 21 and over. The policy adopted by the House with this strong endorsement of HB 481 as I understand it, is to bring marijuana out of the shadows to regulate it, to label it, to track it, to study it, to tax it, to shut down the black market and to enable much needed substance misuse, education, prevention, treatment and recovery programming. Acting as a 2nd committee with the responsibility for reviewing the bills revenue related components, Ways and Means worked hard under extreme time pressure and across partisan lines to develop the majority amendment that is now before us. Said simply, the purpose of this amended bill is to strengthen the original HB 481. The amendment removes the original bills weight-based excise tax that was to be levied at the cultivator wholesale level. Instead or in its place, the amended bill levies a 5% tax on the price paid by buyers at the wholesale cultivator level and a 9% tax on the price paid by the buyers at retail cannabis stores. This product or category specific tax is similar in kind to the 65.03% tax that we currently levy on the wholesale sales price of pipe tobacco, regular cigars and various other noncigarette tobacco products. It is also similar in kind to the 9% tax that we currently levy on the retail price of meals. These are not general sales taxes. These are not broad-based sales taxes, but they are precisely the kind of product specific tax levied at a percent of price and paid by buyers that enjoys a time-honored place in New Hampshire's tax system. The amended bills cannabis tax rates, which add to about 14% when taken together with all other HB 481 fees and fines, will be below comparable rates in other competing states. For example, Massachusetts, which piles a state level cannabis specific retail tax on top of both its broad-based states sales tax and locally imposed cannabis taxes effectively taxes legal cannabis and cannabis products at rates that range from a low of 17% to a high of 20% of price paid by retail buyers. The amended bill requires presentation of annual tax and fee reports by the new Cannabis Control Commission to the legislature. This will ensure timely review of the continuing viability of the HB 481 tax and fee system. The price sensitivity of the proposed HB 481 tax system and the relatively low rates are designed the enable the legal market to compete with, shrink and eventually displace the black market, a principle goal of the bill. The majority expects that this tax plan will produce more revenue in the startup years than would be generated by the original bills' proposal. Given market and start up uncertainties however, the majority believes that the fiscal note estimate attached to the original HB 481 and taking into account the experiences of the other states which projected a starting revenue range per year of about $19.7 million to $31.2 million should continue to be used for budgeting purposes. The majority amendment requires that all revenues flow into a new cannabis control fund and subjects all expenditures from the fund to the regular appropriation process. For amounts above what is required for administration, the amended bill identifies funding priorities, including for substance misuse programming while recognizing the reality that each new legislature must do the hard work, guided by those priorities of determining in the biennial budget the precise allocation by appropriation of the available funds. The amended bill also provides start up appropriations for the new Cannabis Control Commission and for the Department of Revenue Administration. In closing, I hope you will agree with me and the Ways and Means majority prohibition has not and does not work. It has fostered an illegal and profoundly harmful black market. The original HB 481 was a good bill. It is a better bill with the Ways and Means majority amendment. I hope you will join me in approving this amended bill. Thank you.
Speaker ShurtleffWill the member yield to a question? The member does not yield. The Chair recognizes the member from Sandown, Rep. True to speak against the recommendation.
Rep. Chris True (R - Rock 9)Thank you, Mister Speaker. I was a yes vote on the first vote on HB 481 because, in the words of one of the greatest disco singers of all time, Frank Sinatra, I had high hopes that Ways and Means could fix this bill for me, but now I see that they could not. In closing, don't you just love hearing those words? In closing, please allow me to quote from one of our country's greatest acid rock groups all time. Now I know, I know, a lot of you are probably sitting there saying to yourselves oh great. So, what is this going to be? Just some cheap trick? Please allow me to paraphrase. You've got motion, motion, motion. I've got motion. Yes, my friends, we have the motion and it is a motion that ought not to pass. I say that this is a bill that ought not to pass because it violates my basic promise to fight against the expansion of government. I support smaller state government every time and every vote. This bill expands government. I say that this is a bill that ought not to pass because I promised to fight against a sales tax with my every vote. And this bill creates a sales tax. And to all my friends who say well, but technically it's not a sales tax. I hear you and a tax on income is not technically an income tax. I hear you, I just can't believe that you are saying it. I support allowing law enforcement to focus on violent and property crimes. I support making marijuana legal for a person 21 years of age or older. Hey, what did you expect? I am a child of the 60's. In fact, it was 1973 before I even knew that the 60's were over. But I can't support this bill which would have me abandon my principles and promises to achieve the legalization of marijuana. I believe it is wrong for me to promise to stand strong against a sales tax and then vote for a sales tax. I believe that it is wrong for me to promise that I support efforts for smaller government and then to vote to expand government. I believe that it is wrong for the state of New Hampshire to facilitate the growing, purchasing, and consumption of marijuana and then to proclaim that we need to spend more money on drug prevention and drug treatment and more money on educational campaigns to educate people on the health and safety risks of marijuana. Weighing the benefits against cost is the way most people make decisions. It seems that only in government is any benefit, however small, considered to be worth the cost, however large. Voting for this bill would have me abandon my core principles of smaller government and no sales tax and that is just too much of a cost for me to bear. Please join with me and vote no on HB 481. Thank you, Mister Speaker.
Speaker ShurtleffWill the member yield to a question? The member does not yield. He is leaving on a high note. The question before the House is the recommendation that the bill Ought to Pass as Amended. The Chair recognizes the member from Seabrook, Rep. Abramson to speak in support of the recommendation.
Rep. Max Abramson (R - Rock 40)Thank you, Mister Speaker. Mister Speaker, I rise in support of the committee motion on HB 481, but to answer the criticism of my colleagues who claim that this is a tax. Yes, it is a tax, but it is not a new tax. It is an excise tax that simply replaces and effectively reduces one of the worst taxes of them all, jail, fines and legal fees and other court costs. Taxes that must be paid through lawyers, judges, parole officers, court clerks, and others, but a tax nonetheless. If our colleagues who campaigned in their districts as fiscal conservatives as I did and I'm almost sure most all of us did, will see HB 481 as it is, a tax cut and a great reduction in spending on the criminal justice bureaucracy. They will see as I do that the current regime is the most onerous system of taxation of them all. One so draconian that it adds jail time and even the extra burden of prison construction onto other taxpayers. Why should those who refrain from marijuana pay for the cost of its use? Let the users pay their own way. Green button.
Speaker ShurtleffThe question before the House is the recommendation that the bill Ought to Pass as Amended. The Chair recognizes the member from Greenland, Rep. Malloy, to speak against the recommendation.
Rep. Dennis Malloy (D - Rock 23)Thank you, Mister Speaker. I rise today to speak against the Ought to Pass as Amended motion on HB 481. The bill in front of us does not include revenue estimates for the State of New Hampshire. While the commission did consider estimates of between $19 to $31-$32 million, those estimates have been eliminated from the amended bill. That alone should concern this body. Our decisions should be based on the best evidence and research and in this case, we simply don't have it. I believe to support this without at least a range of revenue numbers is not fiscally responsible. But for now, let's assume that the revenues are good. I moved here 20 years ago from a state that decided after much debate to allow another controversial revenue source, casino gambling. Initially the revenue was a boon but tinkering with the law made it difficult for some operators to make all the money they wanted to, so some left. Initially the new revenues were used for education, but soon lawmakers began diverting revenue to balance the state budget. Eventually the wild fluctuations in gambling revenue from year to year gave the legislature fits in terms of setting the budgets and the officials soon realized they were in part, working for out of state interests. Finally, the state could not afford to back out of the casino gambling arrangement and ended up with more forms of gambling than was found in Las Vegas. The market became saturated, plans were scrapped to build more casinos and two existing ones eventually wanted greater tax breaks. Today we are being asked to vote on an untested and controversial revenue source, one that we probably won't be able to undo once it starts and the revenue models will either have no material effect on the state or force New Hampshire to grapple with how to manage not only the business itself, but its effect on our ability to project an accurate and meaningful state budget every two years. Members of the House, I believe we are making a worrisome fiscal decision, and one that future legislatures will have to live with. Thank you.
Speaker ShurtleffThe question before the House is the recommendation that the bill Ought to Pass as Amended. The Chair recognizes the member from Milford, Rep. Burns, to speak against the recommendation.
Rep. Charles Burns (R - Hills 23)The good news is I can't sing. I don't even know the words to any songs except God Bless American and the National Anthem. Thank you, Mister Speaker. Mister Speaker, colleagues and, although I see they are gone, the delightful pages that we had today from Milford High School representing our best and brightest. I rise, which is a pretty good feat for me, in opposition to HB 481. So, tax wise, we'll get 33% of the profits to the state, 33% to municipalities and 29% will go to education and rehabilitation. I get it. In a perfect world, the State would legalize marijuana, regulate and restrict sales to adults, destroy the black market and create a wonderful new source of revenue, but guess what? We don't live in a perfect world. I oppose this bill on several main points: The message we send and the health impact on our kids, the mental health and financial costs to society and the taxation and allocation of tax revenue. First let's take the kids. What kind of message are we sending to them? We have a huge opioid crisis on the one hand and we are raising funds for the state by selling drugs with the other. Of course, this bill legalizes marijuana use for adults only, but the reality is, it will become so much more available in its many forms to those under the age of 21. Young people will have no problem at all obtaining marijuana and marijuana products and the stuff that they grow in their backyard, they won't be paying taxes on. It is well documented, that modest and especially chronic pot smoking is especially dangerous for children as their brains develop. The financial and societal costs in terms of productivity, motivation, initiative, memory, thinking and problem solving are very real. I also firmly believe that today's powerful marijuana is a gateway drug, particularly for those young people who easily succumb to peer pressure or are predisposed to addiction. In just a few short years, vaping in our schools has become rampant. It will not take long for vaping THC products in schools will become a major problem. It isn't a giant leap for a student involved in this behavior to take a pill of unknown origin at a party or engage in other drug use. So, what is our plan to combat this looming reality? Are we prepared with the education and rehabilitation costs that this will entail? I believe the 29% profit allocation this bill provides will be wholly inadequate. To the parents and grandparents in this body, if marijuana is legalized, competition will make it far more accessible for all the children. There is no such thing as getting rid of the black market. Marijuana will now be available to smoke, vape or ingest in all forms of candy, food and drink. Do you really think that will not have an impact on them? Is this any kind of legacy that we want to leave for our kids as far as the work we do here? The competition between the black market, legal home-grown pot and state sanctioned sales will drive the price so low that the revenue to the state will be minimized while the problems and costs associated with health and addiction will grow like a weed. Education and recovery programs only receive 29% of the profits of a smaller and smaller profit margin. This is not going to be sufficient to remediate the problem, while the lion's share of the costs will go to the state and municipal coffers. Proponents have made a claim that a main purpose of the bill is to rid ourselves of the black market, but I claim that this is wishful thinking. We will now have an oversupply of pot, at a lower cost, continuously available from competing sources. After all, pot is just a weed and the margins are incredibly high. Black marketers don't have a 5% grower's tax or a 9% sales tax. They will compete and compete fiercely. Finally, in what may be the biggest addiction problem of them all will be our states addiction to the revenue derived from the sales of marijuana and related products. Once this revenue starts rolling in, there will be no shortage of ideas on how to spend it. Right now, the plan calls for 33% of the profits to go to general fund and 33% to municipalities. It would seem to me, all profits beyond administration and law enforcement costs should go to drug education and awareness. If we must pass the bill, let the money fund a necessary state of the art mental hospital, rehabilitation network and drug abuse education program. If money is diverted to the general fund, it is only a question of time before future legislators vote to retain more and more of the dollars, increasing the taxes and fees and reducing the contributions to education, recovery programs and municipalities. History shows us that this is true. I urge you, my fellow Representatives, fellow parents and grandparents, vote no on HB 481. Thank you.
Speaker ShurtleffThe question before the House is the recommendation that the bill Ought to Pass as Amended. The Chair recognizes the member from Lincoln, Rep. Stringham, to speak in support of the recommendation.
Rep. Jerry Stringham (D - Graf 5)Thank you, Mister Speaker. I want to share a perspective that emerged from the outstanding and non-partisan testimony and deliberations on the Ways and Means Committee. The decisions we make about whether to allow legal sales of cannabis as well as today's tax and fee schedule will profoundly impact what the industry looks like 20 years, 50 years from now. If 481 passes, entirely new New Hampshire businesses and retailers will have to buy their products from only New Hampshire growers and only New Hampshire product producers. Today, they have the opportunity to learn and succeed because they will have an instate monopoly. They have an exclusive market because of federal law. They can't sell their cannabis out of state and out of state producers can't sell them here. If, however, the first legal New Hampshire recreational sales do not occur until the products are legal nationally, companies outside of New Hampshire will have the production, management and distribution systems in place and will quickly take control of the business aspects of the New Hampshire cannabis businesses. We will be left with cashiers and line managers running retail stores and consumers sending portions of their money to out of state businesses, perhaps ordering by mail. Our principal goal for the 9 % tax, the same is charged in New Hampshire for a tuna fish sandwich, wasn't to make money. The goal was to cripple the black market, the only true competition that is hurting us now and allow an infrastructure to develop that speaks to the future. I think 50 years from now it is likely that cannabis will be a mature profitable business. For the cannabis business, we have to think about the day when the federal government allows interstate cannabis commerce. Our ability to have a meaningful business at that point years from now will depend on the progress legitimate, in-state businesses make between now and then when New Hampshire state cultivators and retailers have the advantage of the statewide monopoly. I know there are issues that dwarf the business issues and I respect those with strong non-business reasons to vote against legalization, but if you believe a form of national legalization is coming, at some point in the future, then a favorable vote now speaks better to the future. A no vote at this time may cripple New Hampshire growers, cultivators and producers permanently. Thank you.
Speaker ShurtleffThe question before the House is the recommendation that the bill Ought to Pass. Will the member yield to a question? Rep. Pearson, you are the first one I saw. You are recognized for your question.
Rep. Stephen Pearson (R - Rock 6)Thank you and I thank you for taking my question. Are the Governors of Washington, Oregon, California, Nevada all wrong when they say that the black market has exploded in their states after legalization?
Rep. Jerry Stringham (D - Graf 5)Thank you for the question. I think the process to get rid of the black market is not something we should expect to take a day, a week, a month or even a year. Steps like one of the other speakers talked about, what's going on in California, is a natural part of the progress and how a legal market could develop. Thank you.
Speaker ShurtleffThe question before the House is the recommendation that the bill Ought to Pass as Amended. The Chair recognizes the member from Stratham, Rep. Abrami, to speak against the recommendation.
Rep. Patrick Abrami (R - Rock 12)Thank you, Mister Speaker. As most of you know, I have been living with this for the last year and a half, chairing the commission. To answer that last question, when the commission heard from California they said to us don't do it the way we did it. Please don't do it the way we did it. The black market will never go away, and the black market has not gone away in California or all those other states. I'm just going to try to summarize five things that have been said so far and I have three new points that have not been made. One about the commission. The one thing that the commission did say was don't do this for the money. Please, don't do this for the money. We all agreed on that. Don't try to pad the general fund with marijuana
money, but we did want enough money to pay for regulation and for addiction treatment and prevention. So, and also understand that the commission understood this, and I said this on the floor a couple of weeks ago or a month ago. This isn't your grandpa's marijuana anymore and I'm going to say it again. It's 15-30% THC. Sixties, seventies and eighties, when we were all younger, lot of grey hair in this room, was 3% THC plus the edibles are at high concentrations and the extracts that are up to 94% THC now. It all puts a burden on the need for prevention and education about the potencies of these products. The second point we've heard is that Ways and Means did change the formula from a tax of $30 per ounce at the grower level to a 5% tax at the grower level and a 9% tax at the retail level. The commission kind of recommended that we do it at the wholesale level against an ounce just like our gasoline tax, which we do at the gallon level. There is a reason for that. We know about gasoline prices go up and down, they fluctuate, there is volatility. The same thing with this. There is going to be volatility in the marijuana price and what we think we are going to get for revenue, we're not. It is definitely true what you have heard before from the other speakers that these prices are dropping in every state right now thus revenues are dropping in every state. It's also true, my third point, is that when it comes to this amended bill, the Department of Revenue did not give us an estimate of what the revenues would be. They said there is no way we could figure that out, so we are running blind on that. But, I know when they did the work for the commission, they did not factor in the fact that the black market will still be around. They assumed that the black market would disappear and that, remember in this bill there is still homegrown in this bill, okay so that some of the product is going to be grown at home. There will be no taxes on that. Now, I want to talk about the cascading and the way the money is allocated. I'm skipping over my normal speech. I'm just touching on points here. So, I think it was kind of talked about. Let's go through it one more time. So, what happens, the money comes in and we have administrative cost for enforcement and for the licensing and all that and for the DRA. So that comes right off the top. Then, there is $100,000 that goes to the, every year, there is $100,000 that goes to the Department of Safety for the information and analysis center, drug monitor initiative. That's fine, $100,000. Then the rest of the money is allocated 29% for drug prevention programs, 33% to municipalities, 5% to public safety and then 33% for the general fund. The problem there is that if what some of my colleagues have been saying and from what we are hearing from other states is that if we don't hit our revenue marks, I feel that the revenue that's needed for drug prevention, addiction prevention and treatment aren't going to be there. Of course, they are wrapped up, they are going to get a small percent like everybody else. So, that's a problem that has to be addressed and that a problem with the bill. We also know that we have an opioid crisis and that we currently spend $2.36 billion on this a year in our state. About $21,000 annually for all kinds of addiction, not just the opioids. Okay, but so those are the points that have already been made. So, let's talk about some three final thoughts. There is no opt-in provision in this bill. No one has mentioned that yet. Like lottery or just passed Keno bill. So, a town could be asleep at the switch and the next thing you know there is a marijuana store opened on the street corner and people in the town are going to wonder how'd that happen. So that's number one. Two, and this has to do with revenues. Being illegal federally, still illegal federally, we have been told by the New Hampshire Banking Commission that this will be a cash business in our state, including taxes being paid in cash. So, remember that. This is going to be a cash business. And the third thing and this is important. It's important to remember and I'm going to read this. It is important to remember that it will be illegal per federal law to purchase marijuana products in New Hampshire and transport them to neighboring states. So, unlike alcohol and tobacco, which people come and buy them and transport them to neighboring states. So, unlike alcohol and tobacco, in which lost cost product pricing and low taxes attract cross border sales and thus revenue to the state they state cannot promote and will not promote and will not benefit from cross boarder sales. So, Mister Speaker, if I know all of this and I also know that we do not have to follow the lead of other New England states, just as we have not followed the lead of the other New England states in terms of casino gambling. And know that it is also being resisted and well over the majority of the state's marijuana legalization is still being resisted and just last week in New Jersey they did not have enough votes in the Senate, so they put off a vote on marijuana legalization in New Jersey. Please note that we do not need to pass this bill and certainly not for general funds spending unrelated to addiction, prevention and treatment. Thank you.
Speaker ShurtleffWill the member yield to a question? The Chair recognizes Rep. Alexander. You may inquire.
Rep. Joe Alexander (R - Hills 6)Thank you, Mister Speaker. Thank you, Representative, for taking my question. Has the Ways and Means Committee considered the impact to New Hampshire's energy infrastructure that will result with legalization? Just for context, I ask that question because I look at some of the statistics here with marijuana production and it looks like the energy it takes to run a four-plant lighting module is the same amount of energy it takes to run 29 refrigerators. Thank you.
Rep. Patrick Abrami (R - Rock 12)That is true. The one thing you've got to understand, and this more comes from the commission, we looked at this, is that most marijuana will be grown indoors. It's not going to be, you're not going to have fields of marijuana and they grow them under lights. The reason they do that is they get more crops in a year, especially in a Northern state like us and it is a more consistent crop. What the gentleman just mentioned is true that actually we heard testimony from Colorado in the commission that 1% of all energy consumption in Colorado now is for the production of marijuana. So, this is not a green bill if you're a green person. Just so you know.
Speaker ShurtleffWill the member yield to another question? Rep. Berrien, you are recognized for a question.
Rep. Skip Berrien (D - Rock 18)Thank you, Mister Speaker. Thank you, my colleague from Stratham. As the chair of the commission and a longstanding member of Ways and Means, I have a question about revenues related to the sale of marijuana products in particular edible products. I'm not sure if you are aware of a report that was published on March 19 by the annuls of internal medicine in which they looked at the incidents of marijuana associated emergency room visits which tripled once they had legalized marijuana in Colorado. In addition, they cited that there were 3 fatalities associated with the edible products of marijuana. So, my question to you is given the state of uncertainty about revenues and the potential cost of these heath care expenses, could you please comment on that? Thank you.
Rep. Patrick Abrami (R - Rock 12)Thank you, my friend from Exeter. Yes, I am familiar with that study. Colorado, which was one of the first states, had a big problem initially and still does, but had a big problem initially with edibles, especially with children. The parents would leave a marijuana cookie out and they would eat it and their small bodies just couldn't take that, but I've been seeing research and continued reporting that the ER visits are still up in Colorado for adults as well. That's why it's so important and if this bill passes that there be enough money not only for addiction prevention but also for education of the public on the amount of how potent some of these edibles are. So, I appreciate the comment and I am aware of the tests that are taking place. It is my understanding that most of them are people really high on these high potency products doing things like jumping off buildings and shooting other people. Those are the two that I think were cited in the study, well two of the three that were cited in the study you are talking about. Thank you.
Speaker ShurtleffWill the member yield to another question? Rep. Stephen Pearson is recognized for a question.
Rep. Stephen Pearson (R - Rock 6)Thank you, Mister Speaker. Thank you for taking my question. As the chair of the commission, you've studied this better than anybody and I just want to make sure that what I said was factual. The commission based the revenue on $5,500 a pound and we are now seeing West Coast numbers at $300 a pound. My question is, now that the price has plummeted, would that not be devastating now that we are using a sales price-based methodology for revenue?
Rep. Patrick Abrami (R - Rock 12)Yes, thank you for the question my friend from Derry. Absolutely true that the commission had a range from low to high and those were based on an estimate of number of people that were going to smoke marijuana. The amount they would smoke in a year and the retail price and that retail price is so volatile that even in a year those prices have come down. So, I know that even the report that we had published you know maybe four or five months ago that those prices would come down and that revenues will definitely be lower than everybody thinks. Thank you.
Speaker ShurtleffThe question before the House is the recommendation that the bill Ought to Pass as Amended. The Chair recognizes the member from Salem, Rep. Doucette, to speak against the recommendation.
Rep. Fred Doucette (R - Rock 25)Thank you, Mister Speaker. Please forgive the surgical mask. I mean no disrespect. I'm in a unique position here speaking today and I'm going to speak to one issue and one issue only as this House to quote my colleague from Jaffrey, this House had an emphatic vote and I might add bipartisan vote to legalize marijuana. I'm not here to argue merits. Those arguments have been made for years and continue and will continue for years. What I'm here to lay out to all of us as members of this House no matter what side of the aisle you are on, no matter what political affiliation you are with, what special interest group, whatever your affiliation is in your community, the fact remains for the first time in the 200 year history of this House that we are celebrating this year, I view this as a very, and this word is used all too often, bipartisan issue because I don't think I would be overstating the fact that whether you are a first year Representative or a ten year Representative in this House, each and every one of us has been asked a specific question and that question is this. Will you support in any way a sales or income tax? It's been asserted that this is a consumption tax, that it mimics meals and rooms, that we tax alcohol, that we tax tobacco, but all I ask you to do is this and I may not be standing in front of you at this well right now had not these words presented in this legislation in the fiscal end of this when it came to my committee, when it came to Ways and Means, the words and you can find it in the calendar on page 30, a clear, concise, not gray, black and white, black and white. A tax shall be levied at the rate of 9%. The total price received by cannabis retail store as consideration for the sale of cannabis or cannabis products and it also has similar language that I won't drag through for the cultivation end of this. So, I guess my question to you is, my honorable colleagues is this. Can you stand and vote for this issue, specific issue, the fiscal end of this bill? I'm not here to argue whether I am a pro legalization person or an anti-legalization person. I am a person who answers to his constituency. My constituency has told me time and time again in my three terms here in the House you do not support a sales or income tax. Those are my marching orders and I intend to march by them. I suspect many of you with very few exceptions have gotten those same orders. This isn't about killing a bill, or killing this, It's about a legacy. This sitting House of Representatives will be the first in its history to institute a sales tax. Black and white again, no gray area. Please understand this is a sales tax. If that is your singular consideration on this, you should be pushing the
red button on this simply on that issue alone. I'm not here to argue the pros and cons of legalization. We could go on for years and the eventuality is it will happen. I am a realist like that and I know there are revenues to be had, but don't be confused by the rhetoric of this is an excise tax. This is coupled with alcohol. This is coupled with tobacco. This is the same as rooms and meals. It is not. It's in black and white. It will be law. This will be the first legislature to pass a sales tax. Let your legacy be that you kept the New Hampshire tradition. You kept the New Hampshire advantage and you kept to the live free or die model of this state. There is another day to argue legalization, but it's just not this fashion and had this bill came out with the cultivation portion of it at $30 an ounce or $10 an ounce, I probably would not be standing at this well, but these simply words. They are engrained into our law after we take this vote on something you all need to take personally and seriously because this is your legacy. You have to go back to your cities and towns and tell your constituents that you voted for a sales tax. Period. I thank you for your time.
Speaker ShurtleffWill the member yield to a question? The member does not yield. The question before the House is the recommendation that the bill Ought to Pass as Amended. The Chair recognizes our last speaker, Rep. Bershtein.
Rep. Alan Bershtein (R - Rock 2)Thank you, Mister Speaker. Esteemed colleagues, I stand before you today in support of HB 481, the legalization of cannabis. As you know, New Hampshire, like the rest of the country has serious issues regarding cannabis. Let's be honest. We are not going to kid around here. This bill is not a panacea. Similar to alcohol, problems will persist whether this is illegal or legal. The issue before us is one of harm reduction. As Ways and Means began to study this bill, there was bipartisan consensus that prohibition of cannabis has not only failed to work but has actually made the problems worse. Like alcohol prohibition, cannabis prohibition spawned a thriving black market and the amended bill is everything about the black market.
Speaker ShurtleffWill the member suspend for just a moment? The Chair asks that members in the body please keep your conversations, bring them outside. The member has a right to be heard. He has waited patiently to speak, and he deserves that as all members do. You may proceed and thank you.
Rep. Alan Bershtein (R - Rock 2)Thank you, Mister Speaker. Prohibition attempts to reduce supply and does not address demand. If prohibition is successful and supply is decreased while demand stays constant, the result is in increase in price, which in turn incentivizes suppliers to supply more. This economic game of whack a mole can never be won which is why cannabis prohibition has not worked for the past 82 years. This bill uses economics, not guns and prisons to address the problem. For example, one of the many lessons learned from other states that have legalized is the higher the tax, the more opportunity there is for the black market. This is why the tax imposed by this bill will be the lowest such tax in the nation. Dissipate the profits, dissipate the black market. Let's recall this isn't about revenue, this is about the black market. In the 1920's there were marches on Washington by such groups as Mothers for the Repeal of Prohibition and the Women's Organization for National Prohibition Reform. Groups such as these were comprised of mostly the same folks who ten years earlier were marching in support of prohibition. These women understood that repeal would protect families from crime, corruption and the drinking that prohibition had created. By the time prohibition was repealed in 1933, 74% of Americans were for it. 2011 was the first year more than 50% of Americans favored legalization of cannabis. Today the percentage of Americans who favor legalization is somewhere between 60 and 70%. These 60% of Americans understand that repeal will better protect families than prohibition. Those who oppose this bill are using the same tired arguments that have been used since 1937, 82 years ago, to justify prohibition, but more of the same will result in more of the same. Let us learn from the lessons of history. Let's treat this problem as a public health matter, not a criminal justice matter. Please join me, join the majority of Americans and join the majority of Granite Staters and support legalization. Thank you.
Rep. Alan Bershtein (R - Rock 2)I didn't know that was permitted from this microphone, but of course.
Speaker ShurtleffYou will. Rep. Abramson is recognized for a question.
Rep. Max Abramson (R - Rock 40)How do I follow that one? Thank you, Mister Speaker. Thank you for taking my question. So, we already have excise taxes on alcohol, tobacco, gasoline, car registration, other individual line items. None of those are considered a state sales tax, are they?
Rep. Alan Bershtein (R - Rock 2)Thank you for the question. No, none of those are considered a state sales tax and look I'm a fiscal conservative. If I believe this was a sales tax or a new tax, there is no way that myself and the other members of the Ways and Means Committee who supported this, there is no way we would have voted yes for that.
Speaker ShurtleffWill the member yield to a follow up question? You may inquire.
Rep. Max Abramson (R - Rock 40)So, if HB 481 passes and we all press that bright green, shiny button and pass this bill, would that so-called excise tax on marijuana, would that effectively now apply a sales tax on all retail items throughout the state?
Rep. Alan Bershtein (R - Rock 2)Absolutely not. This is specific to a product.
Speaker ShurtleffWill the member yield to another question? Rep. Baldasaro, you may inquire.
Rep. Al Baldasaro (R - Rock 5)Thank you, Mister Speaker. Representative, I'm glad you spoke there because my question to you is, I'm a smoker. I pay a sin tax. I don't mind. I don't call it a sales tax, but people in this House voted for this here. The tax on this new product and I've never touched it in my life, but the tax is this a sin tax pretty much or a users tax? Where is this sales tax garbage coming in? Rep. Bershtein: It's clearly not a sales tax. I would classify it as an excise tax, but I just want to remind you one more time that this wasn't about revenue, this isn't a tax grab. The revenue raised from this bill goes to administer the regulation and we believe that by administering the regulation, by repealing prohibition, we can get rid of the worst tax of all and that's the tax of a black market.
Speaker ShurtleffWill the member yield to another question? Rep. Verville, you may inquire.
Rep. Kevin Verville (R - Rock 2)Thank you, Mister Speaker and thank you, Representative, for taking my question. Would you believe and agree that taxation is theft, yet I am going to support the bill because of the promise of previous speakers that the market prices will plummet therefore tax revenue will be reduced making this bill a winwin for both taxpayers and consumers?
Rep. Alan Bershtein (R - Rock 2)The answer to your two-part question is yes and yes.
Speaker ShurtleffWill the member yield for another question? Rep. Stephen Pearson, you may inquire.
Rep. Stephen Pearson (R - Rock 6)I thank the Representative for taking my question. As a historian I appreciate your acknowledgement of history. I just ask that we look at the history of, the modern history of legalization that has occurred in the last four years. My question to you is since you have stated that prohibition didn't work in the 1930's, can you now acknowledge the Western states that have all come out to say legalization here has been a disaster to us?
Rep. Alan Bershtein (R - Rock 2)That's a great question, thank you. Ways and Means looked at the practices of other states and the lessons we learned from the mistakes of other states was that they set the tax too high. It was a revenue grab. This was supposed to solve budgetary problems. Again, Ways and Means goal with this bill was to diminish or to cripple the black market. It's not about raising revenues.
Speaker ShurtleffWill the member yield to another question? It's up to you entirely. Rep. Torosian, you may inquire.
Rep. Peter Torosian (R - Rock 14)Thank you, Mister Speaker and thank you to the member for taking my question. Help me understand because I am a little confused here. If you are going to buy a marijuana product and you don't consume it onsite, you take it home to use it, how is that not a sales tax?
Rep. Alan Bershtein (R - Rock 2)When you purchase alcohol or tobacco and you don't consume it in the retail establishment that you purchased it in, it's analogies to that. So, it's not a sales tax. That's my answer. Out of respect for everyone's time, I will cease on any further questions.
Speaker ShurtleffThe member will take no more questions. The question before the House is the recommendation that the bill Ought to Pass as Amended. A roll call has been requested. Is that sufficiently seconded? It is sufficiently seconded. Members will kindly take their seats. The question before the House is the recommendation that the bill Ought to Pass as Amended. The Chair recognizes Rep. Schamberg for a parliamentary inquiry. The House will be in order. Please allow the member to be heard.
Rep. Thomas Schamberg (D - Merr 4)Thank you, Mister Speaker. If I know from my 30 years of public education teaching experience in the fields of health and physical education, that the teenage brain continues to develop until the mid-20's, not stopping at the age of 21. And, if I believe that HB 481 as introduced and as further amended would permit full commercialization of marijuana and allow a major industry to manufacture, sell and market an addictive product to young people in New Hampshire just as big tobacco has done in the past. And, if I know from what we've seen from other states that have legalized marijuana, the black market will not go away as they will continue to undercut the price on the legal market. And, if I know, as pointed out by Ways and Means Committee and the DRA, that we really don't know how much revenue will be generated by marijuana sales for the State of New Hampshire, but we do know very little of it will likely go to fight the substance misuse epidemic in our state. And, finally, if I know the legalization study commission said any bill that commercializes marijuana should have a provision for municipalities to opt-in to ensure that those residents of a town or city should have a say whether they want such stores and this provision is not in HB 481, would I vote no and push the red button?
Speaker ShurtleffThe question before the House is the recommendation that the bill Ought to Pass as Amended. The Chair recognizes Rep. Ames for a parliamentary inquiry.
Rep. Dick Ames (D - Ches 9)If I know that cannabis prohibition has fostered an illegal and profoundly harmful black market. And, if I believe that HB 481 as amended will bring cannabis out of the shadows and provide for its appropriate taxation, regulation and legal use by adults and will provide additional appropriate support for substance misuse treatment and research. And, if I know that a cannabis specific tax is similar to our rooms and meals tax and is neither a general sales tax nor a broad-based sales tax, would I now press the green button to pass HB 482 as amended? Thank you.
Speaker ShurtleffThis will be a roll call vote. The question before the House is the recommendation that the bill Ought to Pass as Amended. If you are in favor, you'll press the green button. If you are opposed, you'll press the red button. Voting stations will be open for 30 seconds. Have all members present had an opportunity to vote? The House will be attentive to the state of the vote. With 200 members voting Yea and 163 voting Nay, the recommendation is adopted.