A model for how recreational marijuana would be sold if it is legalized in New Hampshire was approved in the House Finance Committee on April 2, but the conflict over it is far from resolved.
The committee voted in favor of an agency model, where the state would have influence over marijuana businesses but not full control. It would also allow stores to have unique interior features.
But the legislation faces an uncertain future in the state Senate, which appears to prefer a franchise model, giving the state full control over the industry. Under this model, stores would be identical, like a fast-food chain, but owned by individual franchisees who would be responsible for running the actual businesses. The franchisor, in this model, would be the NH Liquor Commission.
House Bill 1633, sponsored by Rep. Erica Layon, R-Derry, would allow anyone 21 and older to possess and consume marijuana in New Hampshire. The bill sets up guidelines for the regulation and sale of the drug.
Under this bill, consumers could buy cannabis legally at 15 retail locations authorized by the NH Liquor Commission. The stores would be run under an agency model in which the state would hold significant power over businesses without it being a state-run industry.
However, New Hampshire Gov. Chris Sununu as well as members of the Senate have voiced their preference for the state-run franchise model.
Layon’s model ultimately won out in the House when the Finance Committee voted 19-6 on Tuesday to approve HB 1633 with her amendment that made clear the use of the agency model.
The committee had earlier rejected an amendment from Rep. Dan McGuire, R-Epsom, which was influenced by language from Sen. Daryl Abbas, R-Salem, and other senators, that would’ve replaced Layon’s bill with the franchise model.
The agency model’s victory in the House committee is likely to set up a fight with the Senate and governor if it passed the full House on April 11.
The bill also passed with other changes included in Layon’s amendment and another from Rep. Peter Leishman, D-Peterborough.
Under the agency model, Layon said the state would not be “going into business” with the retailers that would own individual stores, meaning the state would not be setting things like wages or prices.
Layon said the agency model is better because with the franchise model, promoted by Sen. Abbas, the state’s Liquor Commission would set the prices at all levels, from the grower to the manufacturer and up. She says this wouldn’t allow for a “functional market” and could lead to predatory pricing.
Abbas told WMUR the agency model is too similar to the retail model that he said has failed in other states.
The franchise model, he said, “offers the market protection so a larger company or a larger operation can’t oversaturate the market and manipulate the sale price, causing the smaller places to go under.”
Layon said that her model is more restrictive than anything that’s passed in other states. She thinks the franchise model would be too risky.
Layon included separating operational control and regulatory oversight of cannabis shops in her amendment due to fears they would not be able to implement the agency or franchise model the legislature is suggesting because of federal government rules.
“It might technically be legal but not actually be legal,” she said. While states have been legalizing recreational use of cannabis since 2012, it is still illegal under federal law, and she thinks the government could go after the state for having too much oversight of the industry.
If that were to happen, having a separate operational control would allow the state to pivot to a different model that would be allowed.
Layon said separating the two is also “good practice.”
“You also don’t want somebody who’s a business partner overseeing regulatory compliance,” she said.
Issues over criminal charges still in place for cannabis consumption were brought up by representatives and the ACLU of New Hampshire.
“This bill not only keeps the current misdemeanor charges for people smoking in public, but it also increases the second-violation fines,” said Rep. Heath Howard, D-Strafford.
To address this, Rep. Peter Leishman amendment, 1339H, changes the unspecified “misdemeanor” charge for the third offense of smoking or vaporizing cannabis in a public place (which could be charged as a Class A misdemeanor and lead to jail time) to a Class B misdemeanor, which would impose a $1,200 fine but no jail time.
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