Members of the New Hampshire Commission, which is tasked with developing legislation to legalize cannabis through a novel state-run store system, considered Monday an alternative proposal. This would establish instead a franchise model of cannabis sales.
Joseph Mollica told the panel that “the model we are looking at putting in place is that the Liquor Commission will be the franchisor, and the franchisee will be the retailer.”
Mollica explained that the scheme would let the state handle administration and marketing for adult-use marijuana, while private owners are responsible for retail operations. Mollica compared the model with what is in place at national chains such as McDonald’s and Dunkin Donuts.
He said, “There would be a certain feel and look.” “We would organize and oversee that look and feeling as well as the safety aspects for selling the product.”
Under the proposed proposal, retail operators would be required to submit 15% of their gross monthly sales.
Mollica stated that the agency has already notified Gov. Chris Sununu, a Republican, was informed of the plan. He also said that the New Hampshire Liquor Commission would be testifying on the matter today.
Mollica testified before the “Commission to Study with the Goal of Proposing Legislation for State-Controlled Sale of Cannabis and Cannabis Products,” that has until 1 December to evaluate possible approaches to cannabis regulation and to draft a adult-use legalization law to be considered next year by legislators.
The commission is composed of 17 members, including five representatives from each chamber, five senators, and professionals from banking, health care, law enforcement, and civil rights. Last month, the governor created the commission following an agreement reached by bipartisan and bicameral legislators to implement the incremental reform at a conference committee in June.
The group was asked to look at the feasibility of legislation that would:
- Controls distribution and access
- Keep marijuana out of the schools and away from children
- Controls the marketing of marijuana
- Prohibit “marijuana Miles” or oversaturation in marijuana retail establishments
- Municipalities can choose whether to restrict or prohibit marijuana retail establishments
- Multi-drug abuse is reduced
- Has no additional tax to stay competitive
During this panel’s first session, earlier this month members were given a paper that compared two state-run bills for legalization. This could be used to create legislative models as commission continues its work. Sen. Daryl Abbas, who sponsored previous state-run legalization bills, was appointed chairman. Pro-legalization Sen. Becky Whitley was appointed clerk. Whitley, however, ceded her clerk position to Sen. Timothy Lang, R., at Monday’s second session.
The next meeting of the body is scheduled for 5 October. At this time, officials from the Department of Health and Human Services and the Attorney General’s Office are expected to discuss the franchise proposal and its potential impact on the existing medical marijuana program in the state as well the liability of the state under federal prohibition.
Observers in New Hampshire and advocates described Monday’s announcement of the franchise-based model as a significant departure from the current plan to sell marijuana exclusively through state stores. Sununu publicly stated that this would be the only option he could endorse.
Matt Simon, director of public relations and government affairs at GraniteLeaf Cannabis (a medical marijuana provider), told Marijuana Moment that it was a “significant development” to see state-run shops no longer in the spotlight. “The franchise concept that was presented today differs from anything we have heard before, and we look forward in discussing it further.”
(Disclosure – Simon supports Marijuana Moment through a Patreon monthly pledge.
According to the new plan, marijuana processors and growers would be licensed private entities by the state. They could self-distribute their products to retailers. However, all products must be tested for contamination and potency first by a third party testing laboratory.
State would be in charge of enforcement, marketing, and other administrative tasks.
Mollica and the members of the commission discussed the potential regulatory scheme for nearly two hours on Monday. They asked questions about the way the system would operate. A common question asked was whether the franchise system would be compatible with federal law where marijuana is still illegal.
Mollica appeared to believe that the franchise system would insulate New Hampshire further from liability, if the federal government decided to enforce prohibition. He said that the state attorney general wouldn’t have to defend retail workers if they are indicted for federal charges if the franchise system is used.
Karen O’Keefe, director of state policies at the Marijuana Policy Project, told Marijuana Moment that “selling cannabis is a federal crime” and that a state-run industry would mean a New Hampshire agency openly committing “dozens of federal felonies each day.” She was referring to an a href=”https://www.concordmonitor.com/My-Turn-State Run Cannabis Stores Proposal Needs a Plan Karen O’Keefe is the director of state policy at the Marijuana Policy Project. She told Marijuana Moment, “selling cannabis” was a federal offense, and a state-run system would result in a New Hampshire state agency committing “dozens federal felonies every day”, referring to an opinion that she wrote for the Concord Monitor back in May.
O’Keefe stated that she had not yet reviewed the proposed franchise, but added, “Legally, the main question is whether the state, its workers, and the federal government are committing federal crimes by selling and/or distributing marijuana, or if they’re just removing the penalties of the state.”
She added that the word “franchise” implies the stores will be under the supervision and direction by the state, not that they are a private company simply regulated or supervised by the government. The details of the model’s operation will determine how vulnerable it is.
Mollica responded that it was premature to ask the question. The commission member who asked the question, Bedford Police Chief John Bryfonski, had been asking about the possible costs of the program. He suggested that the answer would depend on which legislation is passed by the commission before its deadline in December.
Mollica explained that once the legislation is in place, we will be able to calculate the costs. Mollica said, “Our purpose today is to explain a unique model–and that would be unique to New Hampshire– that we, as businesspeople, feel would be profitable for the state.”
Sununu, who has previously expressed his reluctance to legalize marijuana, came out in support of a reform model that is run by the government in May. He concluded that legalization was “inevitable” but said that a government-run system is the best solution to his health and safety concerns.
Legislation that created the commission originally only required that members study the idea of state-run shops. However, lawmakers amended the bill prior to final passage in order to include a directive for the body to use its findings to draft a state-run legalization proposal that legislators could consider when they reconvene next January.
John Hunt, the chairman of the House Commerce and Consumer Affairs Committee (R), and a member on the commission, have worked on marijuana reform issues extensively this year. This included trying to reach a consensus on legislation that would legalize marijuana this year using a multi-tiered approach, which includes state-controlled shops and dual licensing for medical cannabis dispensaries already in place, as well as businesses licensed privately to individuals by agencies within state.
Hunt’s panel reached a deadlock on the complex legislation. This was after Sununu announced that he supported state-run legalization, and the Senate rejected a more conventional legalization bill passed by the House’s bipartisan leaders.
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The underlying legislation, which the Governor signed into law along with the provisions of the Legalization Study Commission, would also remove the requirement that patients in pain first try opioid-based treatment before they receive a recommendation for medical cannabis.
The law also clarifies that it is not intended for the state to allow the sale of intoxicating hemp-derived products such as delta-8THC.
In May, a separate marijuana legalization bill that was proposed in conjunction with a Medicaid expansion measure was defeated by the House.
The Senate also moved to introduce another piece of legislation in the same month, which would have allowed designated caregivers and patients to grow up to 12 seedlings, 3 immature plants, and three mature plants for their own therapeutic use.
After rejecting reform bills in 2022 by the Senate, the House added legalization language to separate criminal justice legislation. But this was also rejected in the opposing chamber .
Below is the 21 page handout Mollica presented to the Commission detailing the franchise model.
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Photo by Philip Steffan.
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