Nathaniel Gurien, CAMS, CCBP, CPP, CBR
Cannabis Commission Collapse
Sometime after the “franchise model” was proposed by the Marijuana Study Commission, the Governor realized that he could bend it further to his political advantage by refusing to agree to establishment of more than 15 statewide retail dispensaries. These could then be primarily if not entirely awarded to his well-connected and wealthy cronies who would in turn be grateful for their exclusive, lucrative monopoly control and generously express that gratitude during the Governor’s next political campaign.
The Governor insisted that the primary motivation in now supporting cannabis legalization was “harm reduction” but not financial profit and building a new industry in New Hampshire that would bring considerable prosperity to its residents and encourage our young people to stay here after graduation and grow their professional careers and families in New Hampshire. The hypocrisy is if harm reduction is one’s primary purpose, why then insist that the Program will be limited to just 15 statewide retail locations? Clearly that would incentivize 90% of cannabis consumers to continue to buy wherever they currently do, mostly from the black market. He further insisted that each retail licensee be permitted up to 5 locations which encourages corruption by awarding monopoly licenses to as few as three political allies and excluding everyone else.
I emailed a copy of my November 14, 2023 newspaper column entitled “Cannabis and Hamburgers”. highlighting many of the foregoing points, along with additional related material to all roughly 500 New Hampshire policymakers (House and Senate), Governor’s Executive Council, AGs office, senior leadership of the NH Liquor Commission and the Bedford police chief (who was also a member of the Marijuana (Kangaroo) Study Commission). About 75% of the recipients returned ‘read receipts’ showing they opened the email.
The email highlighted the key takeaway from the column: “Let this column serve as a public notice to those who participate in enacting this legislation that they are exposing themselves and our state to potentially crippling and multiple criminal and civil penalties up to and including RICO charges and the federal seizure of state property and pension funds.”
On Monday, November 29th the 14 members present at the final meeting of the Study Commission which was charged by the Legislature to study and report out state-monopoly model legislation voted 7-2 to not report out or recommend any legislation. Subsequently one New Hampshire Senator confirmed to me off-the-record that my email influenced the ultimate vote.
Apparently after reading the email, none of the Commission members wanted their fingerprints on this reckless, ill-conceived hot mess and they ran for cover. Unfortunately for Republican leadership, their scheme to insulate likely gubernatorial candidates Kelly Ayotte and Chuck Morse from the political liability of their opposition to cannabis legalization may have just gone up in smoke.
They would now be faced with the unattractive choice to either approve a common-sense, private enterprise-based legalization model as soon as the Legislature re-convened in early Spring 2024, hopefully defusing the issue for the next election cycle, or face their nightmare election scenario of the strong headwinds of New Hampshire voters overwhelming approval of full commercial legalization with Democratic gubernatorial candidates in favor of legalization and Republican gubernatorial candidates against.
The Governor and his leadership team’s primary miscalculation was in not understanding the unique challenges of the cannabis industry that has no modern equivalent. As a result of the tension between states’ legalization and prevailing federal prohibition, there are innumerable loose ends and foreseeable as well as unforeseeable consequences that arise constantly to bedevil even the savviest industry pioneers and insiders, specific examples of which I provided in the aforementioned email. Even as thoughtful and experienced as I and many of my colleagues are in this field, we are still often blindsided by unforeseen obstacles and restrictions that subvert otherwise well-considered plans. Our political leaders are utterly ill-equipped to enact cannabis industry policies that tread into such uncharted territory beyond the narrow legal path charted by other states that have implemented sustainable cannabis programs. The Study Commission also never called the New Hampshire Cannabis Association to testify or any of its available experts in regulation, business & finance (as the Commission bill required) so it’s hardly surprising there was no consensus built. This is further evidence there was never any intention to do so from its inception.
Frankly, a hybrid state monopoly commercial cannabis model with both state-owned and private enterprises operating side-by-side may be a pioneering and smart option and should perhaps be ultimately given some consideration but only following the end of federal prohibition. Requiring state employees to violate current federal law is reckless and thoughtless and effectively a non-starter, a truth which obviously was known from the outset by the Republican leaders who originally hatched this scheme.
New Hampshire House Makes Political Sausage
The full New Hampshire House voted on February 22, 2024 on a heavily compromised cannabis legalization bill intended to satisfy as closely as legally viable the Governor’s stated conditions for approval. It passed the House by a wide margin.
The legislation incorporated many of the restrictive, counterproductive conditions that both the Governor and some Senators had insisted upon, but it had also been frameworked to permit substantial flexibility over the next few years for reasonable improvement in formulating rules and regulations in line with market conditions. If passed by the Senate, it could be considered a modest first step towards common-sense cannabis commercial legalization.
The original plan from the Governor was for the State to exclusively sell cannabis in stores owned and operated by the NH Liquor Commission under a division titled NH Cannabis Commission. Both Liquor and Marijuana Study Commissions quickly realized that requiring state employees to violate Federal law by selling cannabis would subject both the Commission and the State to a wide range of potential legal and criminal risks that would render the program legally unviable and dead-on-arrival. Therefore, it proposed franchising third-party operators to run their stores for them, presuming that such would sufficiently distance themselves and the State from liability. Based upon many practical examples over the last decade of similar cannabis industry workaround schemes, such as the instance of numerous often clever attempts to circumvent MasterCard and Visa’s prohibition on the use of the products and systems for cannabis sales, this one had likewise no chance of even being implemented let alone being sustainable and additionally carried with it risks of endless private and public litigation, RICO lawsuits and criminal prosecutions.
As previously mentioned, I published a column in the Conway Daily Sun local newspaper in November 2023 entitled “Cannabis & Hamburgers” which pointed this out, then emailed all our legislators and other stakeholders both the article and additional materials warning against approving this proposal. This led to the Cannabis Study Commission promoted by the Governor to adjourn on November 29th without producing any result, partly due to the uncertainty generated by the alarms I raised.
Both I and my colleagues continued to repeat this alarm in committee testimony, documents and white papers submitted and meetings with policymakers such that finally it began to sink in that the franchise model, and any level of state control that mimicked a franchise model was legally unviable. The House Commerce committee now hit a brick wall and a devil’s choice – either pass the pending common-sense private enterprise bill co-sponsored by my local state rep Anita Burroughs certain in the knowledge that it would be again rejected by the Senate, or revise the bill along the lines of the discredited franchise model that would pass and be both worthless and dangerous but permit everyone to make the election claim that they approved cannabis legalization consistent with the opinion of 74% of NH residents, when in fact they had done nothing of the sort.
To break this impasse, I proposed we simply rename retail operators from “franchisees” to “licensed agents” or the equivalent, and reduce the day-to-day operational control envisioned by the franchise model sufficiently below its legal definition so as to avoid the attendant legal liabilities, while retaining as much of the state control as would pass legal muster. This simple solution was embraced by nearly all stakeholders and permitted the current revised version to go forward in the House Commerce committee by a vote of 17-3.
The bottom line was that proponents of the private enterprise model had acceded to every condition required by the Governor and conservative Senators that was legally viable.
It included immediately legalizing adults 21 years or older to possess, consume, use, display, obtain, purchase, process, produce, transport, or transfer to another adult without renumeration up to four ounces of cannabis flower or trim, ten grams of concentrate, including pre-filled vape cartridges and no more than 2000 mg of other cannabis concentrates.
Additionally, although this bill did not legalize home cultivation, purchase and possession of cannabis seeds will be legal.
Possession or transfer to minors as well as use while operating a motor vehicle and DWIs remained illegal and subject to substantial penalties. Public consumption was also prohibited, but the House Finance Committee accepted the ACLU’s suggestion that jail time should not be a penalty even for repeat offenders of the prohibition against public consumption.
After a New Hampshire Senate or House committee conducts hearings, meetings and modifies and reviews legislation, they vote to recommend to the full House or Senate that the bill either “Ought to Pass” (OTP) or is “Inexpedient to Legislate” (ITL). Neither the House nor Senate is obliged to follow this recommendation but in practice they generally do.
The House Commerce Committee rejected the discredited franchise model overwhelmingly OTP in favor of the more realistic and legally viable alternative model of ‘licensed agency’ retail stores.
Then the full House voted to approve the bill and send it to the House Finance Committee to finalize issues like taxes, fees, and allocation of funds to specific purposes and agencies, such as education, the state pension fund, drug and alcohol recovery, reduction of property taxes, etc. The Finance Committee then voted 6-3 ITL to again reject the franchise model.
However, advocates were now faced with the prospect of the House sending a non-franchise model bill to the Senate where public statements from several senators flatly stated it would be DOA. Faced with this impasse, the prime House sponsor of the agency store bill, Rep Erica Layon (R-Derry) burned the midnight oil and devised an inspired, last-minute amendment acceptable to the Senate.
Now if the Senate re-inserted the franchise model when it came to them for consideration, but if it could not be legally or practically implemented within two years of the bill’s passage, the newly established NH Cannabis Commission would automatically default to the original “licensed agency store” model so legalization would still be on track.
This amendment was then voted 8-1 OTP by the Finance I sub-committee, 19-6 OTP by the full Finance Committee, passed 239-136 by the full House on the following Thursday and headed over to the Senate.
Cannabis legalization proponents were cautiously optimistic that this bill now met all the Governor’s demands so New Hampshire could turn the corner and finally join the rest of New England in implementing a safe and prosperous legal cannabis market. Comment from key players at the time:
“Quite frankly I think it is time to vote on this bill and let the other body deal with it.”
–Rep. Erica Layon, prime sponsor of the House cannabis legalization bill
“The legislation passed today doesn’t get us there, but the Governor looks forward to working with the Senate to see if we can get it done.” –Gov. Chris Sununu’s office urging the Senate to work on the cannabis bill instead of declaring it “Dead on Arrival.”
About The Author: Nathaniel is the owner of NH Cannabis,LLC. From the past couple of years, he has been building a robust, sustainable cannabis industry in NH emphasizing wellness, lifestyle & community. This Newsletter series will put a light on his ongoing, multi-year campaign to favorably update New Hampshire’s therapeutic cannabis regulatory and legal framework.
