Marijuana Moment: New Hampshire Panel Hears Testimony On Amendment To Pivot Marijuana Bill To Governor-Backed Franchise Model

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Lawmakers in New Hampshire on Tuesday heard public testimony on a newly proposed amendment to a marijuana legalization bill that that would transform the measure into a state-controlled franchise model of commercial sales, a novel framework that has the support of Gov. Chris Sununu (R).

The 38-page striking amendment from Rep. Dan McGuire (R) would replace the current text of HB 1633 from Rep. Erica Layon (R), who has warned that the franchise model—under which the state would oversee day-to-day operations of private licensees—could put New Hampshire at legal risk in the event of lawsuits or federal prosecution. The approach in her original bill would instead adopt a more traditional licensing approach and set strict limits on ads and marketing.

Since introducing the legislation in January, Layon has spent 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. She’s also reached out to Sununu’s office, though she told colleagues at a hearing earlier this month that she had yet to actually speak with the governor.

Sen. Darryl Abbas (R), who led the state study commission last year and previewed the shift to a franchise model at that hearing, has maintained that Layon’s bill won’t fly in the Senate—a criticism he repeated at Tuesday’s hearing.

Lawmakers have also stressed the importance of currying favor from the governor, who issued a set of requirements to the study commission late last year about components that a bill would need to include to win his support, including a 15-store limit on retailers statewide and a ban on all political lobbying by the industry. Some on the commission blamed the last-minute demands for the body’s failure to arrive at a consensus by its deadline, though members were already at odds before the governor’s office sent the memo.

At Tuesday’s hearing on his new amendment, McGuire told members of the House Finance Committee that he spoke with the governor’s office to get a sense of what Sununu would approve.

“I personally met with the governor’s representative,” McGuire said. “He gave me a list of things the governor has said would make such legislation acceptable. Number one on that list is what’s called the franchise model. That’s what this amendment represents.”

He likened the model to how McDonald’s works, with private operators running individual stores that together are overseen by the corporate entity itself. Under his striking amendment, New Hampshire’s Liquor Commission would run the state’s marijuana industry, with private operators responsible for day-to-day operations.

McGuire said the amendment would create 15 stores at first. That’s among the requirements set by Sununu, though McGuire said that “it’s clear that in the long run, there will have to be many, many more stores,” asserting that there are more than 70 retailers in Vermont and hundreds of stores in Maine.

Layon, for her part, for the first time indicated some openness to the franchise proposal, though she said she would introduce separate language ahead of a scheduled Wednesday committee meeting that is meant to divide the state’s handling of marijuana business and regulatory matters.

“We need to have the regulatory portion separate from the business model and liquor,” she told the committee. “I plan to come with language that will have franchise separate and compartmentalized from the whole rest of the implementation, so we can see if the franchise model does in fact work in the state of New Hampshire.”

Lawmakers have until April 4 to pass the measure out of committee.

Abbas, the senator, said at the hearing that he thinks the amendment represents “a fair compromise.”

“I believe it does have the support of the chamber that I sit in, and in meeting and having conversations with a lot of interested parties, this could actually become law,” he said.

A franchise model “really creates a partnership with the individual franchisees, and I think there’s a lot of benefits to that,” he added. “Every franchisee would be working together, putting forward this business model.”

While lawmakers’ top-level concern is around whether or not to adopt a franchise model, advocates worked to draw attention at Tuesday’s hearing to other provisions in the new amendment they say still need work.

Submitted testimony from the advocacy group Marijuana Policy Project (MPP), for example, called out a number of sections in the new amendment as problematic, including franchise fees—effectively a tax—on purchases by medical marijuana patients. Patients were exempt under Layon’s own bill.

“Almost no other adult-use state imposes a ‘sin tax’ on medical cannabis,” wrote Karen O’Keefe, MPP’s director of state policies. “There is no reason patients shouldn’t be able to buy cannabis without the added fee at the location closest to their home.”

O’Keefe also criticized the bill’s punishment for public consumption of marijuana, which could impose jail time for a second offense. She said it’s “a harsher penalty than the status quo” under the state’s existing decriminalization law, under which a second offense for possession or public use carries a $100 civil fine.

“There is no possible jail time now,” she said. “It would be wrong to start jailing cannabis consumers again as part of legalization.”

Some in the state’s existing medical marijuana industry, such as the alternative treatment center (ATC) GraniteLeaf Cannabis, have also criticized the new amendment.

Like MPP, one of GraniteLeaf’s complaints is the tax on medical marijuana. Unlike HB 1633 in its current form, which would exempt medical patients from its 10-percent agency fee surcharge, the amendment would set a 12.5 percent franchise fee that would also apply to patients.

Another complaint lodged by GraniteLeaf is the amendment’s lack of integration of the state’s therapeutic cannabis program (TCP) into an adult-use program.

“HB 1633 would create a path forward for the TCP by requiring that the Department of Health and Human Services and the Liquor Commission develop a plan and propose it to the legislature later this year,” the ATC said in a post about the proposed changes. “The proposed amendment does not attempt to align or integrate the TCP n any way. Instead, it would create a new system of franchise retail stores and put them into direct competition with the TCP.

Matt Simon, director of public and government relations at GraniteLeaf, told the panel the company can’t support the amendment as written.

“To be clear, we would be willing to go along with all of the requirements that have been clearly stated by the governor on this issue. Some of them we don’t necessarily agree with, but we’re willing to live with them,” he said.

(Disclosure: Simon supports Marijuana Moment’s work with a monthly Patreon pledge.)

Currently only seven ATCs exist across the state at which patients can obtain medical marijuana, Simon explained. “The vision for the franchise model, as I understand it, is that patients could buy cannabis at the franchise stores, which I think would be great,” he said. “Unfortunately, the amendment is completely silent on how those sales are supposed to take place, how they’re supposed to be regulated. There needs to be an integration with the current program for that to work at all.”

McGuire has said the amendment will likely receive further changes ahead of committee action on the bill.

Sununu, for his part, has said that while he believes legalization in the Granite State is “inevitable,” he’s also “not a huge believer” in the idea.

Last year the House Commerce and Consumer Affairs Committee, led by Rep. John Hunt (R), worked extensively on marijuana reform issues during the 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. But lawmakers reached an impasse on the complex legislation, which was being considered following Sununu’s surprise announcement that he backed state-run legalization.

Meanwhile the Senate defeated a more conventional legalization bill, HB 639, despite its bipartisan support.

In May, the House separately defeated a different marijuana legalization amendment that was being proposed as part of a Medicaid expansion bill.

After the Senate rejected 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.

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Photo courtesy of Chris Wallis // Side Pocket Images.

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