New Hampshire House Subcommittee Tacks Toward More Traditional Marijuana Sales Model, Risking Pushback From Governor

The latest New Hampshire proposal to legalize marijuana debated by lawmakers on Tuesday takes a turn away from the strictly state-run model supported by Gov. Chris Sununu (R) and the franchise system contemplated by a state commission on legalization last year. Instead it would license private operators and set strict limits on stores’ appearance, marketing and advertising.

The plan’s sponsor, Rep. Erica Layon (R), says the proposal would meet Sununu’s concerns about health and safety while also avoiding legal risk to the state that could come with the government taking control of stores’ day-to-day operations.

But so far, she told Marijuana Moment, she’s been unable to secure a meeting with the governor to discuss the legislation.

Layon detailed the latest changes to the proposal in an amendment to her bill, HB 1633, which is currently before a House Commerce and Consumer Affairs subcommittee. At a meeting on Tuesday, she detailed the amendment’s changes, with lawmakers expected to take action on the measure next week.

In the meantime, Layon has pledged to work with others—including civil rights advocates, public safety officials, the state Department of Health and Human Services (DHHS) and fellow lawmakers—to hammer out compromises on remaining issues.

“I’m actually very hopeful that we’re going to be able to get something done,” she said, “but it’s in no way guaranteed.”

In recent legislative sessions, the House has repeatedly passed marijuana legalization bills only to see them fail in the Senate. Many who spoke at Tuesday’s meeting stressed that any plan approved by the House would need to be palatable to both the Senate as well as Sununu’s office.

Under Layon’s latest plan, 15 retail stores would open across the state about two years after the bill’s passage. That number was set in a directive from Sununu’s office to the state commission on legalization last year despite members’ objections.

After an initial 30-month period, regulators would then reassess on an annual basis whether more stores were needed.

Unlike in most states, general purpose advertising would be banned outright, including on billboards and social media. Layon said advertisements on marijuana-specific platforms like Weedmaps, however, would be allowed in order to allow consumers to find the stores.

“Let’s start small and let’s not start with an outreach of advertising,” she said. “That can always be dealt with in the future, once we understand what the market looks like.”

Companies could not use slang to promote marijuana or encourage overconsumption, for example through the use of a logo showing someone with bloodshot eyes, Layon explained. Regulators could also limit business names or other marketing.

The provisions would effectively prevent marketing to children or encouraging irresponsible use without the government actually running the businesses or demanding detailed operational control over franchisees.

“We don’t need to tell somebody how to operate their business if we can tell them that they can’t use, you know, crass or vulgar images that are displayed to people outside their stores,” Layon told the workgroup.

Layon has opposed the franchise model, warning that the construction of that system would expose the state to legal risk, either in the case of federal enforcement against marijuana or from third-party lawsuits against the state.

She told lawmakers the state is “allowed to have health and safety regulations and normal government regulations of a business without that falling under a franchise. It’s that operational control that is so dangerous.”

“That is why we have presented, instead of a franchise model, a cannabis retail outlet,” she said.

Members of the panel appeared receptive to the plan, though they raised a number of outstanding issues.

One was the annulment of criminal records, which under Layon’s proposal would allow people to petition to have records annulled if the charges were for possession of less than what’s legal after the change. Layon said she’s been in discussions with ACLU representatives on the issue.

Another matter arose around a provision that would require tracking of consumer trends and health outcomes, including at baseline levels ahead of legalization’s launch—which some state officials said was unrealistic given available data. Layon pledged to work with DHHS and the state Department of Public Safety to hammer out a fix there.

Some lawmakers also still oppose Sununu’s strict 15-store limit, worrying that the approach would fail to meet consumer demand and create incentives for underhanded business practices or corruption.

Rep. Jared Sullivan (D) likened the limit to a taxi medallion system and called the issue a “key sticking point,” but he said he was willing to compromise. He and Layon agreed to discuss possible alternatives, such as adding a specified number of available licenses every year.

Other changes under Layon’s proposed amendment include an allowance for larger “desktop vaporization devices,” though not smaller devices, she told the panel. Edibles and beverages would be limited to serving sizes of 5 milligrams of THC—down from 10 mg in some earlier proposals—though package limits would remain at 100 mg THC.

The bill contains no set limits on THC potency of cannabis products, but Layon said regulator could set caps through rulemaking. Poly-drug products—for example, combining marijuana and alcohol—would be illegal.

The latest proposal also nixes a provision permitting home cultivation for medical patients, with Layon noting that the issue has already been raised in a separate bill.

Intoxicating hemp products would also be regulated under the bill, which specifies that regulations must not be less restrictive than those around marijuana.

In response to a request that the legislation license cannabis distributors, Layon’s amendment would not create a standalone distribution license but instead allow other licensed businesses to distribute products as part of their business activity.

Current medical marijuana businesses, known in the state as alternative treatment centers (ATC), would be able to claim some of the limited adult-use licenses provided they meet all qualifications and filing deadlines.

Operators would also be encouraged to enter the market soon after receiving a license.

“Both the outlets and cultivators would need to either open or make significant progress and show why they haven’t yet opened within a certain time period for their license to remain in effect,” Layon said. “That’s to prevent anybody from getting a license and sitting on it.”

The amendment under consideration also aims to prevent people from obtaining licenses only to sell them, though Layon said that language might change if only 15 stores are allowed statewide.

Layon said that she didn’t initially intend to be the lead sponsor of a legalization proposal this year, instead thinking that members who served on a state commission on legalization would introduce a bill.

Led by Sen. Daryl Abbas (R), the state commission charged with studying how to legalize marijuana in New Hampshire issued its final report in December, capping off months of meetings at which members failed to agree on a way forward for cannabis policy in the state.

“Ultimately, the Commission voted not to recommend legislation for the 2024 Session,” the report said. “The Commission was unable to reach a consensus because of a large number of unresolved issues.”

Abbas appeared at the House hearing on Tuesday, warning that any departure from what Senate leadership and Sununu want to see in the measure would torpedo the bill.

“My understanding is that if you deviate from that,” he said, “this whole thing will fall apart.”

“We disagreed on a lot of things during that commission hearing,” he continued, “but ultimately we came to a consensus on what we’re going to go forward with.”

In fact, the commission explicitly said it did not reach consensus, which is part of what led to the current situation. The body failed at its charge of crafting recommended legislation that would legalize through a state-run model.

Among the issues the group failed to craft agreements on were the allowable THC levels in legal cannabis products, penalties for public consumption, rules around the operation of motor vehicles, the creation of an oversight body to approve Liquor Commission rulemaking, measures to prevent access by minors, the number of allowed retail stores statewide and whether to allow or prohibit home cultivation.

During the bulk of its hearings, the Commission to Study With the Purpose of Proposing Legalization, State Controlled Sales of Cannabis and Cannabis Products conducted a line-by-line review of draft legislation submitted by Abbas in October, which his staff emphasized was intended as a starting point. But after weeks of sometimes testy debate among members, the body voted against recommending the bill to lawmakers.

While the body was already at loggerheads going into its final meeting, a list of last-minute demands by Sununu was a dealbreaker for some of the committee. The governor said he would support no more than 15 licensed marijuana retailers statewide and wanted to include provisions specifying that cannabis businesses be barred from lobbying or making political contributions.

Under the legislation that created the legalization study group, commissioners were tasked with studying the feasibility of a state-run cannabis model and specifically drafting legislation that:

1.  Allows the state to control distribution and access
2. Keeps marijuana away from kids and out of schools
3. Controls the marketing and messaging of the sale of marijuana
4. Prohibits “marijuana miles” or the over-saturation of marijuana retail establishments
5. Empowers municipalities to choose to limit or prohibit marijuana retail establishments
6. Reduces instances of multi-drug use
7. Does not impose an additional tax so as to remain competitive

The Commerce and Consumer Affairs Committee, chaired by Rep. John Hunt (R), who served on the commission, worked extensively on marijuana reform issues last session and attempted to reach a compromise to enact legalization through a multi-tiered system that would include state-controlled shops, dual licensing for existing medical cannabis dispensaries and businesses privately licensed to individuals by state agencies.

The panel, however, reached an impasse on the complex legislation, which was being considered following Sununu’s surprise announcement that he backed state-run legalization. Meanwhile the Senate defeated a more conventional legalization bill, HB 639, despite its bipartisan support.

In May, the House separately defeated a different marijuana legalization amendment that was being proposed as part of a Medicaid expansion bill.

Also, the Senate moved to table another piece of legislation that month that would have allowed patients and designated caregivers to cultivate up to three mature plants, three immature plants and 12 seedlings for personal therapeutic use.

After the Senate rejected reform bills in 2022, the House included legalization language as an amendment to separate criminal justice-related legislation—but that was also struck down in the opposite chamber.

Read the full amendment offered to the working group Tuesday by Rep. Erica Layon:

Senators Tell DEA To Fully Legalize Marijuana, Demanding Answers On Rescheduling Process

Photo courtesy of Philip Steffan.