Amended Nebraska Bill Reduces Proposed Hemp And CBD Tax Rate From 100% Down To 25%

An amendment to a Nebraska tax bill on Wednesday reduced a proposed tax on hemp and CBD that was initially set at 100 percent. The new rate, 25 percent, is significantly lower but still far greater than sales tax rates that most states impose on the federally legal products.

The change to LB 388’s hemp tax rate was approved by the legislature as part of a broader amendment offered by the same lawmaker who first included the 100 percent provision, Sen. Lou Ann Linehan (R). It was adopted on a 28–6 vote.

The underlying tax bill as amended did not receive a vote this week, with a final reading and vote expected next Thursday.

Sen. Anna Wishart (D), who’s backed past efforts to end marijuana prohibition in the state, told Marijuana Moment in an email that the rate change was the result of negotiations between lawmakers and representatives of Nebraska’s CBD industry.

“The 100% tax was unworkable for CBD companies in our state. They were concerned it would drive them out of business,” Wishart said. “In talking with representatives from a group of CBD companies in the state, I worked with them and other senators to negotiate the tax down to 25%.”

Linehan’s office did not immediately respond on Thursday to Marijuana Moment’s request for comment about the change, although last month she had similarly told local media that the 100 percent hemp tax proposal was just a starting point for negotiations.

“Are we going to keep it 100 percent? No, we’re not,” the senator said at the time. “I’ve already had one of our members tell me that, you know, elderly people like lotions and creams, and it helps with pain. So like I said, we just have to look with it.”

Some lawmakers had said in n earlier debate on the proposal that the tax was out of step with rates set on CBD and hemp products in other states and that, if the goal of the bill was to raise revenue, Nebraska should consider legalizing and regulating marijuana.

“I looked around. I saw some statistics on other states—neighboring states—and it’s a lot lower. Definitely not 100 percent,” Sen. Terrell McKinney (D) said. “So we’re not going to be comparable to our neighboring states if we tax it at 100 percent.”

“Honestly speaking, what we really need to have a conversation about in our state, in the state of Nebraska, is our refusal to open ourselves up to other revenue streams,” he continued. “One revenue stream that we should open ourselves up to is the legalization of marijuana.”

Neither medical nor adult-use cannabis are legal in Nebraska, though activists are working to change that this year.

“We have a brain-drain issue,” said Sen. Jen Day (D), “and we refused to recognize that and address it from the other policy perspectives that caused the issues with brain drain—one of those being the fact that we have chosen year after year after year not to legalize even medical cannabis in the state.”

“Through the end of 2022, states have reported a combined total of more than $15 billion in tax revenue from legal adult-use cannabis sales,” she noted.

Adam Morfeld, a former Nebraska state senator who now co-chairs the advocacy group Nebraskans for Medical Marijuana, posted to social media ahead of this week’s amendment that the situation showed that the state’s “policies dealing with hemp, CBD and marijuana are so backwards.”

Shocker. Our policies dealing with hemp, CBD and marijuana are so backwards. https://t.co/VDQUIpNIUC

— Adam Morfeld (@Adam_Morfeld) April 10, 2024

The underlying sales tax bill is part of a broader debate on how lawmakers wanted to balance sources of state revenue. Residents, many lawmakers have argued, have complained that property taxes are too high, and proponents of the bill have said raising sales taxes would prevent further state reliance on property taxes to fund schools. Opponents, however, criticized the bill’s overall increase in taxes, with some Democrats noting that sales taxes in particular would hit poorer Nebraskans hardest.

Some lawmakers have lamented that the complex measure’s many provisions seemed to come out of nowhere, although sponsor Linehan and others said on the floor last month that the details were taken from other bills that lawmakers had introduced and debated. The hemp and CBD tax, for instance, ostensibly came out of LB 1341, introduced in January by Sen. Justin Wayne (D) and apparently never acted on by lawmakers.

That bill as introduced indeed would have increased taxes on consumable hemp, but only to 7.5 percent.

The proposal comes as the state, like many others across the country, witnesses an explosion of hemp-derived products, including intoxicating cannabinoids such as delta-8 THC. Late last year, the state’s attorney general, Mike Hilgers (R), filed suit against retailers in the state over their sale of delta-8 products.

Meanwhile, activists are hoping to qualify two medical cannabis initiatives for November’s ballot.

A recent poll by the campaign found 70 percent support in the state for legalizing medical marijuana.

Organizers at Nebraskans for Medical Marijuana (NMM) have been petitioning for the change since July, about two months after turning in a pair of complementary ballot proposals to the secretary of state’s office.

The governor has already voiced opposition to the reform effort, saying in September that legalization “poses demonstrated harms to our children,” and that medical cannabis should only be accessible if its approved by FDA.

Late last year, NMM told Marijuana Moment that the governor’s argument was a “cop out,” and she says the campaign will let voters decide for themselves.

One of NMM’s earlier campaigns gathered enough signatures for ballot placement in 2020, but the measure was invalidated by the state Supreme Court following a single-subject challenge. Supporters then came up short on signatures for revised petitions in 2022 due in large part to the loss of funding after one of their key donors died in a plane crash.

Nebraska lawmakers, including campaign co-chair Sen. Anna Wishart (D), have also attempted to enact the reform legislatively, but cannabis bills have consistently stalled out in the conservative legislature.

Wishart’s medical cannabis bill received a hearing in the unicameral Judiciary Committee in February, but it did not advance. She attributed the inaction to changes in committee membership. An earlier version of the measure ultimately stalled out in the GOP-controlled legislature amid a filibuster that supporters could not overcome.

FDA Head Says There’s ‘No Reason For DEA To Delay’ Rescheduling Marijuana

Photo courtesy of Kimzy Nanney.