State-run cannabis stores proposal needs a plan B

Karen O’Keefe is director of states policies at the national Marijuana Policy Project. She has been involved in cannabis policy reform efforts in New Hampshire for many years.

As an advocate who has worked for nearly two decades to enact cannabis policy reforms, I’m thrilled Gov. Chris Sununu’s position on legalization has evolved. However, as an attorney, I’m concerned federal law may stand in the way of the state-run stores approach favored by the governor and some lawmakers.

Although 22 states have legalized cannabis, and 38 allow medical cannabis, cannabis possession and distribution remain federally illegal. The federal government hasn’t prosecuted individuals for selling cannabis in compliance with state laws since 2014. But federal law still presents huge obstacles.

The most glaring issue is federal preemption. The 10th Amendment gives states the autonomy to remove their own penalties for cannabis or anything else. But a state directing its employees to sell cannabis in violation of federal law is a very different matter, legally speaking. It would be impossible for state-run cannabis store employees to comply with both state and federal law, creating a “direct and positive conflict” and likely resulting in the state law being preempted — or nullified.

Even absent a preemption lawsuit, running a federally illegal business isn’t for the faint of heart. Retirement accounts and other businesses often refuse to serve the cannabis industry. Cannabis workers who are legal residents, but not U.S. citizens, can be denied citizenship or even entry into the country. Cannabis employees are often denied mortgages because their work is federally illegal. And some cannabis sellers have been subjected to RICO lawsuits from private individuals.

When push comes to shove, if federal law doesn’t change in the next year or two, the state could back out and not operate cannabis stores. We’ve seen that happen before. Utah’s medical cannabis law initially provided for state and county distribution of cannabis. But it never materialized. After several county attorneys explained the legal issues, all provisions involving the state “touching the plant” were removed from state law. Luckily, advocates ensured the law also included private, regulated distribution, so it did not delay access to regulated, lab-tested cannabis.

New Hampshire, too, may ultimately not direct its workers to commit multiple federal felonies every day. But, before getting to that point, millions of private and public dollars could be spent on a legalization model that doesn’t materialize. The initial version of last year’s state-run store bill allocated $14 million to the Liquor Commission for start-up costs. It involved state-run stores, but with private cultivation and product manufacturing.

In New York, state-licensed cannabis growers harvested hundreds of thousands of pounds of cannabis, expecting to have dozens or hundreds of retailers to sell it to. But the state has only licensed a handful of stores so far. Cannabis markets are all intra-state due to federal law, and many farmers are facing ruin because they cannot sell their product.

If a state-run model passes, the same scenario could play out in New Hampshire, but worse. There may be no market at all for the cultivators’ cannabis if the state pulls the plug before sales begin (but after initial implementation). This could happen due to a preemption case, a threat (even an empty one) from a new hostile attorney general, or a host of other reasons.

We’re glad Gov. Sununu understands the dangers of keeping cannabis unregulated and illegal. Illicit cannabis is often contaminated with hazardous pesticides, heavy metals, or molds, and is sometimes laced with other, far more dangerous drugs. And, like alcohol prohibition a century ago, cannabis prohibition breeds violence by pushing sales underground.

Let’s work together to make sure that the illicit market is displaced by a public health-centered regulatory approach, and to make sure it won’t turn into a costly boondoggle. At a minimum, New Hampshire’s legalization approach should include a safety valve to automatically allow private sales in case state-run stores ultimately do not open.

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