June 19, 2017

Tax rate, retail bans differ in dueling pot bills

Neither branch has passed marijuana legislation yet, but all signs point to a conference committee eventually having to iron out details of the tax on marijuana sales, how a town can ban pot facilities and other issues, under the gun of a self-imposed June 30 deadline.

With just two weeks left before that deadline, Sen. Patricia Jehlen, Senate chair of the Marijuana Policy Committee, on Friday evening released a draft of the Senate's bill amending the marijuana legalization ballot law and it includes meaningful differences from the House's version of the legislation.

She said the bill will preserve main provisions of the ballot law, including the tax rate and the requirement that municipal bans on pot facilities be approved by town-wide referendum.

"We are not starting from scratch. We are starting from a law that was passed by the voters. It is law, it was passed in a high turnout election and we need to justify the amendments we make to it," Jehlen said at a press conference she called Friday.

The Yes on 4 Coalition, which worked to legalize marijuana at the ballot last fall, released a statement Friday afternoon making clear that it prefers both the Senate bill and the Senate's process.

"On taxes, local control and social justice, the Senate gets it right. The House bill, even with its most egregious flaws addressed, adopts a hostile approach that would not serve any system of commerce well, much less the fledgling legal marijuana market," coalition spokesman Jim Borghesani said in a statement. "We hope that the universal scorn directed at their process and bill this week will convince House leaders that the Senate approach is the right path forward."

Rep. Mark Cusack, the House co-chair of the Marijuana Policy Committee, said Friday that what the Senate proposed seemed like a workable bill, though he had only seen the bullet points Jehlen had shared with the media and other senators.

"For months now we've been in 80 percent agreement on the issues and we knew early on the major differences were on expungement, taxes and local control," he said. "That's why we needed to proceed, knowing we were not going to get consensus on everything it was important for the House to begin the process."

In a statement Friday afternoon, Speaker Robert DeLeo said the House is focused on passing a "comprehensive bill that addresses public health concerns, promotes public safety and protects our economy by ensuring that this new industry pays for itself."

"We will review any action the Senate takes on related legislation and we are pleased they are engaging in the legislative process," he said in the statement.

The House on Wednesday pulled a leadership-backed bill from consideration amid tepid support and a procedural snafu that could have delayed a debate Thursday on the bill regardless of its support. Cusack is expected to release a redrafted bill Monday, which the House plans to debate on Wednesday.

"We needed to go because of the timeline," he said, referring to the Legislature's self-imposed June 30 deadline to have a bill on the governor's desk. "So we'll be at conference with these major differences."

Chief among those major differences will likely be the tax rate levied on retail marijuana purchases. The current House marijuana law rewrite would increase total taxes on marijuana to 28 percent from the maximum of 12 percent in the ballot law, while the Senate's proposal would keep the tax rate at 12 percent.

If each branch adopts its bill without altering the proposed tax rates, a conference committee would have to compromise and settle on a single tax rate. Lawmakers often settle differences on numbers by compromising on a figure somewhere in the middle of proposals made by the branches.

Asked if the Senate bill does not adjust the ballot law's tax rate because doing so would make the legislation a "money bill" -- which must originate in the House -- Jehlen said no, she simply prefers a 12 percent tax rate.

"The price differential matters," she said, referring to the difference between the black market price and the legal retail price of cannabis. "People will drive to New Hampshire to save six-and-a-quarter percent on a purchase, you think they will walk past their neighborhood dealer that they've been buying from for years and drive two towns over to get to a market?"

Even if a marijuana user prefers to avoid the black market, Jehlen said, they could take a drive to Maine which recently legalized marijuana and has set an initial tax rate of 10 percent.

Jehlen borrowed a phrase a Colorado consumer group uses to caution people not accustomed to using marijuana to describe her approach to the marijuana tax rate.

"Start low and go slow," she said, adding that a low tax rate would undercut the illicit market and could be raised in the future once the legal market is established.

The taxation staredown developing between the House and Senate marks something of a role reversal for the branches. The Senate, which on the marijuana issue is pressing for a lower tax rate, is generally seen as the branch more eager or willing to raise taxes while the House is seen as a more conservative body.

The bill summary provided to reporters Friday says the Senate bill and its 12 percent tax rate would ensure that "all revenue collected on marijuana sales will first cover the full costs of the regulatory structure with the remaining funds available for public health and safety."

Local control is another issue the House and Senate remain at loggerheads over. The ballot law and Senate bill calls for municipal bans on marijuana facilities to be approved by a majority of voters casting ballots in a town referendum. The House plan would give the ability to ban pot facilities to the city or town governing body.

The third significant difference centers around expungement of records for things that are no longer crimes now that marijuana is legal. The Senate bill is expected to provide an avenue for individuals convicted of certain marijuana crimes in the past to have those records sealed.

The House bill does not speak to the expungement issue, but Cusack said Friday he does not disagree with Jehlen and the Senate on that issue. He said he would prefer that the expungement issue be dealt with by the Judiciary Committee, which this session is working on various criminal justice reforms.

Neither the House nor Senate bills propose changing the ballot law provisions around personal use, possession, or home growing cannabis.

Cusack told the News Service on Thursday night that he and his staff are working to redraft the legislation (H 3751) pulled from consideration this week with plans to release the new version of the bill from committee Monday and debate it in the House on Wednesday.

The Senate's timeline is less clear. Senators can review the draft bill over the weekend, and Jehlen will be available to answer questions and listen to concerns from Senate members on Monday. Senate President Stanley Rosenberg will talk to members about the bill Monday and Tuesday, Senate officials said.

Based on input and feedback from members, Jehlen and Rosenberg will determine how to proceed. Jehlen said she expects the Senate to vote on the legislation within "seven to ten days," though a tentative debate has been scheduled for next Thursday.

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