New Hampshire House Panel Rejects Franchise-Based Marijuana Legalization Amendment, Setting Up Showdown With Senate And Governor

A New Hampshire House subcommittee on Wednesday rejected a sweeping amendment to a marijuana legalization bill—declining to pivot to a franchise system that would be overseen by the state and which would bring the overall proposal more in line with the wishes of the governor, who reiterated this week that he views legalizing cannabis as “inevitable.”

Instead, the panel moved forward with a so-called agency store model—which would more closely resemble a typical commercial marketplace—despite warnings that the approach would doom the bill in the Senate.

The hearing of the House Finance subcommittee was one of the last stops for the bill in the House before a floor vote that would send it to Senate lawmakers. At issue was whether to accept a 38-page striking amendment from subcommittee vice chair Rep. Dan McGuire (R) that would more closely align the proposal with demands made by Gov. Chris Sununu (R) and certain senators or whether to stand by legislation already approved by House policy committees.

The full House has already gave initial approval to an earlier version of the legislation, HB 1633, from Rep. Erica Layon (R). But at various House committee hearings, lawmakers such as Sen. Darryl Abbas (R)—who chaired a failed state commission on legalization late last year—warned that the proposal wouldn’t fly in the Senate.

McGuire told the panel on Wednesday that even though he didn’t agree with everything in his amendment, it was necessary in order to get legalization across the finish line this year.

“We are told from the governor and from our contacts in the Senate that this is what they want: the franchise model,” McGuire said. “We are also told they will not vote for the version the House passed, and we are told that they are either unwilling or incapable of making significant changes in the Senate.”

“If we want to see a bill passed—and I’m not sure that everybody does, but for those of us who do—I think we should pass this amendment,” he urged colleagues.

But at the meeting, the subcommittee voted 6–3 to reject the franchise amendment, setting up a possible showdown with Senate lawmakers and the governor’s office.

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“I’m supporting the [House] Commerce Committee’s position on this,” said Rep. Chuck Grassie (D), referring to the separate panel that spent significant time in recent sessions crafting legalization legislation. “I mean, if the Senate has problems with passing a bill, I don’t see why we have to do their hard work here for them. I think they need to debate this. They need to make up their mind on a bill, and they need to send something back to us if we want to see cannabis legalization in the state of New Hampshire.”

While discussion on the McGuire amendment dominated the hearing, members of the House subcommittee in the back half of the meeting adopted two other amendments, one from the panel’s chair, Rep. Peter Leishman (D), and one from Layon, the bill’s sponsor.

Leishman’s amendment, according to his description, would do away with provision establishing a body to study substance use prevention, treatment and recovery. Instead it would leave that work to an existing governor’s commission on drug and alcohol abuse.

The amendment, which passed 8–1, also routes revenue from legal cannabis to the state’s general fund rather than a specified education trust fund, community investment fund and other specific earmarks, and it removes the underlying bill’s allowance for state Liquor Commission to move money without legislative oversight.

As for money needed to set up the market, those finances would come from the state Liquor Commission under Leishman’s amendment rather than from the state general fund.

The Liquor Commission would also need to send a report on its cannabis oversight and the launch of the legal market no later than three months after the bill’s effective date, with subsequent reports due every quarter thereafter.

A number of members of the panel also applauded the work of Layon, who’s spent recent weeks working to build consensus with Senate counterparts and members of a state study commission convened last year to propose legalization legislation of its own—a task the panel failed to complete before a deadline in December.

“I would just say, the wok that the [House] Commerce Committee did was basically a Herculean effort on the part of Rep. Layon to make the changes that were expressed to her were needed to get the governor and the Senate on board,” Grassie said. “And I think she pushed it as far as she could.”

Layon herself also offered changes to the underlying bill at Wednesday’s hearing, which the panel passed 8–1. One change would clarify that the state’s existing medical marijuana businesses, known as alternative treatment centers (ATCs), would be able to continue cultivating medical marijuana and could sell both medical and adult-use cannabis products at the same locations.

Another change would restructure the bill to separate what Layon calls “operational” control over stores from what she calls “regulatory” control.

Generally her bill would allow stores under a so-called agency store model, which she described as a system “where the state requires agreement and compliance from private businesses granted limited licenses by the Liquor Commission beyond the traditional health and safety regulatory role of government.”

Her amendment divides those two roles—regulation and broader operational control—and says that they’re severable. That means that if the federal government decides to go after the state for its day-to-day oversight of the industry, as Layon and others have warned could happen, the state could still preserve its regulatory authority over cannabis businesses. The change would also allow lawmakers in future years to shift away from the agency store model toward a more traditional private marketplace.

“At least if we have these clear lines between the operational control and the regulatory control, there’s an opportunity for the state to pivot if we’ve adopted the wrong model,” she said.

One additional change discussed toward the end of the subcommittee hearing was clarifying penalties for public use of marijuana. McGuire’s amendment, and some in the Senate, proposed penalizing a second offense of public consumption with possible jail time. Layon’s bill, meanwhile, failed to specify what kind of misdemeanor would apply to repeat public consumption offenses.

Devon Chaffee, executive director of ACLU of New Hampshire, urged the adoption of language specifying a Class B misdemeanor—which would entail up to a $1,200 fine but no possibility of jail time.

“With those two little words, you would no longer have to find public defenders for individuals caught smoking in public,” Chaffee told lawmakers. “You would bring the penalties to be much more in line with what the penalties are now currently if you possess less than three quarters of an ounce and are caught smoking in public, and also it would avoid the cost of potentially housing people convicted of this crime for up to a year in our county jails.”

Leishman, the panel’s chair, indicated that he’d intended to make that adjustment in his own amendment, though he’d overlooked it. And while members didn’t formally vote on the change, they appeared to agree to adopt the revision.

Committee staff will use the coming days to combine and incorporate the two amendments, along with the misdemeanor adjustment. The full House Finance Committee is set to return to the bill Monday and vote on the revised plan.

Layon told Marijuana Moment that despite pressure from the Senate to switch to a franchise model, she’s “hardlining on agency stores.”

“I think a lot of people see the window for legalization closing with the end of Sununu’s term as governor, and a lot of people are willing to do whatever is necessary to get something signed into law,” she said on Tuesday, following a preliminary hearing and public testimony on McGuire’s amendment. “I want it legalized, but I also want it to be a functional system. I’m very concerned that a franchise model will be stillborn, so I can’t support anything that will leave us in a limbo where penalties are higher yet legal cannabis is not available to purchase in the state.”

Whether the decision to steer clear of a franchise model will ultimately derail the proposal, however, is yet to be seen.

Meanwhile at an event this week, Sununu said he thinks legalization is “inevitable” in New Hampshire, adding that policymakers have “seen the mistakes other states have made so as not to walk down that path.”

He didn’t speak to the McGuire amendment or Layon’s agency store proposal, but he repeated that he’s willing to sign at least some version of legalization bill.

“People just want the accessibility for adults, keeping it away from kids,” the governor said, according to to the Concord Monitor. “If they can meet those rough stipulations, I would sign it, because I think that’s one of the safest systems you’re going to get.”

He added that as a legalization skeptic, he’s better positioned to consider a thoughtful bill.

“There’s no better person to help design a system that could be fraught with problems and risk specifically to kids than the guy that’s most scared of it,” he said.

Last year Sununu said he supported a system of state-run retail stores, but lawmakers on a state study commission last year instead pivoted to the idea of a franchise system, which Sununu has said he’s willing to entertain. Officials at the Liquor Commission have said it would be far less costly for private franchisees to build out a system of retail stores than to ask the Liquor Commission to take on that task itself.

Lawmakers took testimony on McGuire’s amendment a day before Wednesday’s hearing, at which some advocates took issue with certain provisions in the new proposal. Among them were that the plan’s 12.5 percent franchise fee on purchases—effectively a tax—would also apply to medical marijuana patients. Layon’s bill would establish a 10 percent charge and would exempt medical patients.

McGuire’s amendment also lacked any plan to integrate the state’s existing medical dispensaries, known as alternative treatment centers (ATCs), into the planned adult-use system.

Lawmakers worked extensively on marijuana reform issues last session and attempted to reach a compromise to enact legalization through a multi-tiered system that would include state-controlled shops, dual licensing for existing medical cannabis dispensaries and businesses privately licensed to individuals by state agencies. The legislature ultimately hit an impasse on the complex legislation.

Bicameral lawmakers also convened the state commission tasked with studying legalization and proposing a path forward last year, though the group ultimately failed to arrive at a consensus or propose final legislation.

The Senate defeated a more conventional House-passed legalization bill last year, HB 639, despite its bipartisan support.

Last May, the House separately defeated a different marijuana legalization amendment that was being proposed as part of a Medicaid expansion bill. The Senate also moved to table another piece of legislation that month that would have allowed patients and designated caregivers to cultivate up to three mature plants, three immature plants and 12 seedlings for personal therapeutic use.

After the Senate rejected the reform bills in 2022, the House included legalization language as an amendment to separate criminal justice-related legislation—but that was also struck down in the opposite chamber.

New Hampshire Lawmakers Vote To Expand Medical Marijuana Program With New Conditions And Higher Possession Limits

Photo courtesy of Philip Steffan.