Legislative Update: Where to Watch

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Legalization efforts (and victories) have continued to spread across the country in 2021. Over the last few months, we have seen New Jersey and, subsequently, New York legalize adult-use cannabis – programs that are expected to produce more than $4 billion in annual revenue within five years. Both the Virginia and New Mexico legislatures also legalized adult-use cannabis earlier this year – programs expected to generate about $2 billion in annual revenue within five years.  Now, industry experts are watching other east coast states like Connecticut, Delaware and Rhode Island for the next wave of pro-cannabis legislation.

Legislators around the country are feeling the economic pressure of the market as well as pressure from their respective voters. More than two-thirds of Americans are in support of adult-use legalization, and 40% of Americans now live in states where marijuana is recreationally legal. Just this week, the Louisiana House of Representatives approved a bill to expand the state’s current medical marijuana program by allowing patients to purchase whole-flower cannabis. The legislature also advanced another proposal to establish licensing fees for adult-use cannabis if the state decides to legalize it under separate legislation.

Several other states could legalize medical or adult-use cannabis during their 2021 legislative sessions.

Adult-Use Legislation

Rhode Island

  • Lawmakers have until June 30 to consider two competing bills: Gov. Dan McKee’s legalization plan and Senate bill 568. In both bills, municipalities may ban adult-use marijuana establishments through a voter referendum.
  • Senate Bill 568:
    • Would establish a range of cannabis business licenses, including “craft cultivation” permits.
    • A cannabis control commission would establish social equity policies to promote participation by individuals from communities that have been disproportionately harmed by the war on drugs.
    • Licensing and application fees would be pooled into a fund to provide no-interest loans to social equity businesses.
    • 10% excise tax, 7% sales tax, and municipalities have an optional 3% local sales tax.
  • The governor’s plan:
    • Regulators to issue 25 retail licenses per year for three years and may establish a license cap in the future. Licenses would be awarded through a lottery system.
    • 20% of retail licenses would be awarded to minority-owned businesses.
    • Existing medical cannabis operators may obtain a dual MMJ (medical marijuana) and adult-use license. Initially, only existing licensed MMJ operators may obtain an adult-use cultivation license.
    • Vertical integration would be prohibited except in the case of current vertically integrated MMJ operators.
    • 10% excise tax, 7% sales tax. Additionally, there would be a tax on cannabis sold by cultivators equal to $10 an ounce or $3 an ounce for trim.

Connecticut

    • Legislators have until June 9 to consider Senate Bill 888, proposed by Gov. Ned Lamont, which provides for vertically integrated microbusiness licenses and calls for an equity commission to craft a licensing program to social equity.
    • Medical dispensaries may convert to dual, co-located stores and commence sales on May 4, 2022.
    • The governor’s bill establishes wholesale taxes in addition to the state sales tax of 6.25%. However, a state House Finance Committee recently voted to back a measure that would establish a 20% sales tax and 3% local tax.
    • Experts have projected that the adult-use market in Connecticut could generate $725 million in sales within four years.

Medical Legislation

Alabama

    • Legislators have until May 30 to consider Senate Bill 46, which would establish a Medical Cannabis Commission to license up to five vertically integrated businesses: at least four cultivation licenses, no more than four processor licenses and no more than four dispensary licenses, each of which could have up to three locations in different counties. The vertical operators could each have up to five dispensaries in different counties.
    • The commission would determine the maximum daily dosage of THC that can be recommended for each qualifying condition.
    • Pills, gelatin cubes, lozenges, oils, suppositories, nebulizers and patches would be permitted.
    • Smokable flower, raw plant for vaping, candies and baked goods would be prohibited.
    • A 9% tax would be levied on medical cannabis retail sales.

North Carolina

    • Legislators have until July 2 to consider Senate Bill 711, which would establish a state Medical Care Commission to adopt rules no later than 120 days after the effective date of the act.
    • A Medical Cannabis Production Commission would work with the Medical Care Commission to establish licensing requirements and qualifications.
    • Doctors would be permitted to recommend medical cannabis for certain qualifying conditions such as cancer, epilepsy, glaucoma, Crohn’s disease, Parkinson’s disease and multiple sclerosis.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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