New Hampshire’s Plan for State-Run Marijuana Shops Could Create Federal Liability

New Hampshire finds itself in a unique position. It is the only state left in the New England area without meaningful cannabis reform legislation on the books. Although Governor Chris Sununu signed legislation decriminalizing small amounts of marijuana in the state, he has persistently resisted enacting recreational cannabis reform. Additionally, there have been stumbling blocks in getting bipartisan legislation involving recreational cannabis reform to the governor’s desk.

However, Republican Governor Sununu recently signed a measure allowing a commission to prepare legislation that could legalize marijuana through a system of state-run retailers. Sununu says state-run cannabis stores could solve many of the commonly cited problems with recreational cannabis, such as ensuring the safety of the products and keeping the drug away from children. Unfortunately, the commission’s solution for a state-run recreational cannabis solution may be up against a harsh critic: Uncle Sam.

What Is New Hampshire’s State-Run Cannabis Plan?

New Hampshire Governor Chris Sununu has long been against enacting meaningful cannabis reform policies in his state. He has long denounced plans to legalize adult-use recreational cannabis and called on lawmakers to withdraw support from proposed measures to legalize the substance. However, in a surprising reversal, he recently announced his support for legalizing recreational marijuana in New Hampshire, but with specific stipulations.

The plan? To allow a specialized commission to investigate the merits of legislation meant to establish state-run cannabis shops. One entity, the New Hampshire Liquor Commission, could oversee products, marketing, and the layout of all state-run cannabis retailers. Stores could only sell products tested and approved by New Hampshire state officials. However, like a business franchise system, retailers would be run by individual owners who can hire and train their employees.

Under the proposed plan, the commission says up to 65 cannabis retail establishments could operate statewide. That is the same number of liquor outlets operated or licensed by the state. The plan is a novel approach to cannabis sales, considering no other U.S. state has enacted a state-controlled controlled-retail sales model.

The commission’s suggestions for the state-run cannabis program are not legally binding. Instead, the suggestions are compiled into a legislative model that must pass both legislative chambers in 2024 before reaching the governor’s desk for his signature.

What Problems Does the State-Run Model Face?

Recently, the commission investigating the possibility of enacting a state-run cannabis system heard from a representative from the state attorney general’s office. Myles Matteson, a senior assistant attorney general, told commission members they are navigating uncharted waters. There are no other state-controlled cannabis retail models in the county. Although all states that enact recreational cannabis measures face some federal scrutiny, New Hampshire’s state-run system may draw more heat from federal criminal prosecutors and civil lawsuits.

The problem with a “franchise” retail system like McDonald’s is that franchise models must conform to federal laws since franchises are federally regulated. The same state versus federal problems that prevent cannabis companies from accessing financial services from regulated banks could hinder New Hampshire’s ability to run state-controlled retail marijuana operations effectively.

Rep. Jared Sullivan (D), a member of the commission investigating the state-run option, says he can see how there may be significant conflicts between federal regulators and state officials over a state-controlled marijuana operation. He recommends further discussion about the potential conflicts and possible solutions. There are also fears that state revenue generated from state-run retailers could be seized by the U.S. Department of Justice if the agency decided to prosecute New Hampshire. The same may be true if a private entity decides to sue New Hampshire over state-run retailers.

What Do Members of the Cannabis Industry Think About the Plan?

Cannabis advocates and those in the marijuana industry are also hesitant about moving forward with a state-controlled recreational marijuana model. Some worry that if the state controls marketing and branding, does that undercut a franchise owner’s ability to differentiate themselves from the competition? How do you stand out in the crowd if the same entity, the state of New Hampshire, owns the crowd?

Many New Hampshire cultivators and farmers are also wary of the state-controlled marijuana plan. A Cannabis Association poll finds 87 percent of farmers support legalization, and 78 percent of farmers are interested in growing cannabis. However, only 11 percent of those polled support the state-run model. Many farmers are skeptical that they would financially benefit from a state-controlled cannabis system and worry that the state could micromanage their farming operations. That could be a problem for an emerging cannabis market. Federal law classifies marijuana as a Schedule I illegal substance, meaning New Hampshire couldn’t secure cannabis from surrounding states to supply its retail market.

The Future of Cannabis Reform

In addition to the state-run cannabis model, the commission is also examining how the state can control access and distribution of cannabis to adults, how to keep marijuana away from children and schools, how to reduce the instances of multi-drug use, and giving municipalities the power to limit or prevent marijuana retail establishments from setting up shop in their communities.

At present, many commission members say their recommendations stand the best chance of securing bipartisan support and changing the cannabis landscape in New Hampshire. Over the years, numerous recreational legalization measures failed to gain the support needed to pass both legislative chambers. The commission members hope the compromises to a state-run model can meet the demands of the public, legislators, and the governor. The commission continues to craft and refine its legislative recommendation and has until December 1st to submit its final proposal. Lawmakers could then consider the measure during the upcoming 2024 legislative session.

Are you eager to see where New Hampshire cannabis reform laws go from here? Cannabutter Digest keeps you up-to-date on all cannabis-related news and events. Check out Cannabutter Digest for more news, recipes, and product reviews.