Delaware could see tens of millions of dollars in tax revenue every year if it moves to legalize marijuana, a top statewide elected official said in a new report released on Monday.
The analysis from State Auditor Kathy McGuiness (D) found that Delaware could generate upwards of $43 million annually in revenue from taxing and regulating cannabis. The legal market could also create more than 1,000 new jobs over five years if the policy is enacted, according to the report.
“Forty-three million dollars in state tax revenue would be a boon to Delaware’s coffers,” McGuiness said in a press release. “That money could be used to plug budget holes in the short term and would continue to provide revenue for all kinds of important initiatives in the long term.”
Delaware is potentially missing out on more than $43 million in annual tax revenue by not legalizing recreational marijuana.
See how I got to that figure here:https://t.co/3xj5iOF0w4
— State Auditor McGuiness (@DEAuditor1) January 25, 2021
To come up with these estimates, the state auditor’s office looked at publicly available data and concluded that a regulated marijuana industry would grow to be a $215 million enterprise. And assuming marijuana is taxed at 20 percent, that would translate into $43 million in tax revenue.
“While our report focuses on the economic implications of legalization, such a move would surely be a positive step forward in reforming our criminal justice system,” the report states. “However, choosing instead to allow the sale of marijuana on the black market to go unregulated will mean Delaware will be left behind as other states realize the important economic, public health and social equity advantages that legalization provides. Now is the time for Delaware to legalize marijuana.”
“It’s our view that the action taken by other states to legalize the recreational sale of marijuana puts Delaware at a competitive disadvantage if we continue to ignore the economic potential that this could yield,” it continues. “No Delaware taxpayer wants to see cuts in essential services nor see the door closed to economic growth and good jobs when revenue options like this exist.”
Legalizing advocates welcomed the auditor’s report as more evidence that lawmakers should enact the policy change.
“The General Assembly should seriously consider legalizing and regulating cannabis for adults this year. Delaware’s neighbor, New Jersey, and 14 other states have already moved forward with this more sensible policy,” Olivia Naugle, a legislative analyst with the Marijuana Policy Project, told Marijuana Moment. “The longer Delaware waits, the state will continue to miss out on a new source of jobs and revenue. It is past time to end prohibition in the First State.”
NORML Deputy Director Paul Armentano said that legalization “will disrupt the illicit marijuana market, end low-level marijuana arrests, and create jobs and new revenue.”
“This has been the experience in other jurisdictions that have enacted legalization—none of which have ever repealed or even seriously considered rolling back their policies,” he said. “That is because these legalization laws are operating largely as voters and politicians intended and in a manner that the public finds preferable to the failed policies associated with criminal prohibition.”
The new state report also notes growing public support for legalization and the bipartisan nature of that trend.
“Statistics show that public opinion on allowing recreational marijuana for adult use has changed dramatically in the last few years, with a majority of Delawareans now supporting it,” McGuiness said. “The prohibition on marijuana has only led to a robust black market, which could be minimized by responsible and thoughtful legalization.”
The auditor’s estimate for job creation is based on an analysis completed in Virginia last year, which was required as part of a cannabis decriminalization bill that passed and is also being used to inform the state’s approach to adult-use legalization.
“Regulation is a key toward controlling commercially legalized marijuana for production, sale and consumption,” the report concludes. “Legalization done right in our view would allow Delaware to establish a policy framework to suppress the black market, curb usage through regulation for minors and collect revenue on a market demand that seems only to be increasing. It would also provide a new revenue stream and new potential for economic growth.”
“Each year that we fail to capitalize on this opportunity means more money could flow to neighboring states instead of being invested here. It is time Delaware pursue legalizing marijuana,” it says.
In 2019, a Delaware House committee approved a bill to legalize marijuana for adult use in the state, but it did not advance before the end of the session. Rep. Ed Osienski (D), sponsor of the measure, plans to reintroduced it in 2021.
Legalization legislation previously received majority support on the House floor in 2018, but procedural rules required a supermajority for it to pass and it didn’t meet that threshold.
While Gov. John Carney (D) is not in favor of legalization, he did sign two pieces of marijuana expungement legislation in recent years. In 2017 and 2018, a state task force met to discuss issues related to legalization, and the governor hosted a series of roundtable meetings about cannabis.
Carney’s predecessor approved a measure to decriminalize simple possession of cannabis in 2015.
As in other states without legalization on the books in the Northeast, regional pressures could come into play in 2021. Delaware borders New Jersey, where voters opted to legalize in November, as well as two other states where cannabis reform could shortly advance: Pennsylvania and Maryland.
“With neighboring states either legalizing it or considering doing so, taking action now is the only way to prevent Delaware from being at a competitive disadvantage in the future,” McGuiness said. “The First State cannot and should not be the last state to approve legalization in the region.”
Separately, in an effort to mitigate the spread of coronavirus, Delaware regulators announced in April that medical cannabis patients could access delivery services under an emergency program.
Read the new report on marijuana tax revenue in Delaware below:
Disagreements Threaten Virginia Marijuana Legalization Deal As Deadline Approaches
Conference committee members are divided over a proposed delay in regulatory decisions until next session, but have reportedly settled on delaying legalization of cannabis possession in any case.
By Ned Oliver, Virginia Mercury
With a Saturday deadline approaching, state lawmakers in the House and Senate are still working to resolve differences over landmark legislation that would legalize recreational marijuana in Virginia.
As of Thursday evening, it was unclear whether the two chambers would be able to reach an agreement on the bill, which Gov. Ralph Northam (D) has made a priority in his final year in office.
At least one lawmaker privately doubted the legislation would pass. Others, however, remained optimistic even as they acknowledged negotiations had grown tense, suggesting a vote was possible as early as Friday.
According to five sources familiar with the talks, the primary point of contention is language sought by the Senate that would delay decisions about how the new market is regulated until next year. Members of the chamber said during hearings last month they felt the legislation was too expansive and complex to complete work on during the 45-day session.
Lawmakers in the House have resisted, arguing the delay is unnecessary, citing in-depth studies conducted by legislative analysts and Northam’s administration. House lawmakers have also expressed discomfort about voting to legalize the drug without finalizing plans for a legal marketplace, according to the sources, who spoke on the condition of anonymity to discuss ongoing negotiations.
If a bill does emerge from the conference negotiations, it’s likely to disappoint civil rights advocates who have been pushing for an immediate end to criminal penalties related to the drug.
Both the House and Senate passed legalization bills that wouldn’t allow sales of recreational marijuana to begin until January 1, 2024—time both sides agree they need to set up a new cannabis authority to regulate the industry.
But they have differed over whether criminal penalties related to the drug should stay in place until legal sales begin. The House advanced legislation that wouldn’t end prohibition until 2024 while the Senate proposed legalizing possession of an ounce or less of marijuana beginning July 1 of this year.
The House, whose members worried that repealing criminal penalties before legal sales are permitted would encourage the black market, appear to have won the debate, with Senate negotiators agreeing to maintain existing criminal penalties until 2024, according to the sources.
The approach stands in contrast to a legalization bill signed by New Jersey’s governor on Monday, which immediately ended criminal penalties for possession of up to six ounces even though retail sales aren’t expected to begin until 2022 at the earliest.
Advocates had called the Senate’s position the minimum the legislature could do to address criminal penalties before the retail marketplace opens. Sen. Jennifer McClellan, D-Richmond, who proposed it, said it didn’t make sense to continue prosecuting people for something lawmakers had voted to legalize.
“We can’t risk more people being caught in the system for acting in ways that will soon be legal,” wrote a coalition of 25 advocacy organizations led by the ACLU of Virginia and the reform group Marijuana Justice.
Lawmakers skeptical of repealing criminal penalties before there are legal avenues to buy the drug have said they view the decriminalization legislation they passed last year, which reduced penalties for simple possession to a $25 civil fine, an adequate interim step.
Chelsea Higgs Wise, director of Marijuana Justice, countered that the approach unnecessarily allows the disproportionate enforcement of marijuana laws against Black Virginians to continue for three years. She said court data obtained by advocates shows that even with reduced fines, Black people are four times more likely than White people to face citations despite using the drug at the same rate.
“The commonwealth’s ‘decriminalization’ enforcement maintains Virginia’s racial disparities and goes against Governor Northam’s stated commitment to social equity, racial equity, and economic equity for marijuana legislation,” she wrote in a statement.
The two chambers are continuing to debate another focus for advocacy groups: how to treat people under 21 caught with the drug. As drafted, the Senate’s version would dramatically increase penalties for underage users caught with the drug, increasing the civil penalty for possession from $25 to $250 for people ages 18 to 20. Minors would face a $200 civil penalty for a first offense.
Valerie Slater, the director of RISE for Youth, which advocates for reforming the state’s juvenile justice system, said she favors the House’s approach, which would also increase penalties for underage possession, but only on subsequent offenses.
But she pointed to New Jersey’s new law as a better alternative, which calls for a written warning for a first offense, a call to parents for a second offense and referral to community services for a third offense. Members of the state’s Black Legislative Caucus opposed fines, worrying “police would continue to stop and fine minority youth more frequently than White people under 21,” according to The Star-Ledger.
“At no point should this be a crime for kids,” she said. “Can we just take New Jersey’s language and drop it into ours? It would be ideal.”
Kansas Governor’s Medical Marijuana Bill Introduced As Lawmakers Take Up Separate Legalization Proposal
A bill championed by the governor of Kansas to legalize medical marijuana and use the resulting revenue to expand healthcare was officially introduced on Wednesday. The move comes as lawmakers held back-to-back hearings on separate reform legislation this week.
Gov. Laura Kelly (D) has pushed for legalizing medical cannabis and using that revenue to support Medicaid expansion, and now Rep. Brandon Woodard (D) has filed a measure to do just that. He introduced it in the House Federal & State Affairs Committee, where members heard testimony on the separate legalization bill on Wednesday and Thursday.
“By combining broadly popular, commonsense medical marijuana policy that will generate significant revenue with Medicaid expansion, all logical opposition to expansion is eliminated,” Kelly said at a press briefing on Wednesday. “This bill just makes sense.”
Watch the governor discuss the medical cannabis and Medicare expansion bill, starting around 6:16 in the video below:
“In the face of the worst public health crisis our country has seen in a century, I’m even more committed to delivering healthcare and jobs and support for our hospitals through Medicaid expansion,” she said. “I urge the legislature to take Representative Woodard’s proposal seriously and to also consider the implications if they should fail to pass expansion yet again.”
Under Woodard’s bill, a draft version of which was shared with Marijuana Moment, there would be 21 medical conditions that qualify patients for cannabis—including cancer, multiple sclerosis, post-traumatic stress disorder and chronic or intractable pain—and regulators would be able to add additional conditions later.
— Brandon Woodard (@Woodard4Kansas) February 24, 2021
The secretary of the Kansas Department of Health and Environment would be responsible for developing regulations for the program by July 1, 2023. That includes setting a standard for a 90-day supply of cannabis that a registered patient could possess. It would then be tasked with issuing patient and caregiver registrations and identification cards.
The director of Alcoholic Beverage Control would have its own role in the program, issuing licenses for marijuana “cultivators, laboratories, processors, distributors and retail dispensaries.”
“For too long, the Kansas Legislature has ducked the topic of legalizing medical cannabis. An overwhelming, bipartisan majority of Kansans support medical marijuana, as well as Medicaid expansion,” Woodard told Marijuana Moment. “It’s time to expand healthcare coverage to more than 100,000 Kansans, while giving Kansans the opportunity to use a legal, compassionate therapy to treat a variety of conditions.”
“Whether Kansas chooses the path of legalization of medical, recreational, or something in between, I’m glad that the conversation is finally happening and the people of Kansas are watching,” he said.
While the representative’s bill would make it so Kansas would join the vast majority of states that have legal medical marijuana markets, it is restrictive as far as advocates are concerned. It would, for example, prohibit smoking or vaping cannabis. And it sets a 35 percent THC limit for marijuana flower. Home cultivation by patients would not be allowed.
Marijuana Moment is already tracking more than 700 cannabis, psychedelics and drug policy bills in state legislatures and Congress this year. Patreon supporters pledging at least $25/month get access to our interactive maps, charts and hearing calendar so they don’t miss any developments.
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The governor first announced a plan at the beginning of the month to enact medical marijuana legalization and use cannabis tax revenue to fund Medicaid expansion. And she said more recently that she wants voters to put pressure on their representatives to get the reform passed.
The Federal & State Affairs panel started debate this week on a separate medical marijuana legalization bill that’s been introduced this session, sponsored by the committee itself. Supporters and opponents of the reform testified on the proposal on Wednesday and Thursday, and advocates anticipate it will get a vote in the next 10 days before heading to the floor.
The first hearing consisted of those who favor the policy change, including a veteran, health care worker and former state lawmaker. The second involved testimony from neutral or opposing parties.
Former state Rep. Willie Dove (R) urged the committee not to “take this for granted.”
“We’re not talking about hippies from the 60s. You’re talking about individuals, law-abiding citizens, that really want to make something happened for their families,” he said. “And I would like to say that the revenue generated from this will be greatly appreciated in Kansas because it does help our bottom line.”
Like the Kelly bill, the committee-sponsored legislation lists 21 conditions that would qualify patients for the program, including chronic pain, HIV and post-traumatic stress disorder. Smoking and vaping products would be prohibited, however. It would also not provide for home growing.
“Veterans of all ages and ideologies are in favor of medical cannabis more than any other demographic,” George Hanna, codirector of Kansas NORML and a veteran, said. “Every veteran’s organization, representing every generation and political perspective, has overwhelmingly come out in support of safe access. I personally have had several physicians, within the VA itself, privately support medical cannabis.”
The opposing testimony on Thursday touched on a variety of talking points—that the scope of the qualifying conditions for medical marijuana is too large, legalization would increase youth access to cannabis, THC concentration levels are too high and ingestion by pregnant women or adolescents is dangerous.
But industry stakeholders with the Kansas Cannabis Business Association (KCBA) told Marijuana Moment that the testimony, particularly from law enforcement representatives, was notably “negligent and dispassionate, with most of their concerns rebutted by [Chairman John Barker (R)] on the spot.”
“Essentially the message was, ‘if 30 other states have found solutions to those problems, you can too,” KCBA’s Erin Montroy said.
A separate medical cannabis legalization bill was introduced by the Senate Commerce Commerce this month, though it has not seen action.
The measure’s language largely reflects legislation that was introduced in the House last year. Patients would be eligible for medical cannabis with a doctor’s recommendation if they have a condition that significantly inhibits their ability to conduct daily activities or if the lack of treatment would pose serious physical or mental harm.
Registered patients would be allowed to grow and possess at least four ounces of marijuana. The bill would also establish a Kansas Medical Cannabis Agency to oversee the program.
Read the draft text of Woodard’s medical cannabis legalization bill that he’s carrying for the governor below:
Montana Lawmakers Weigh Bill To Limit Marijuana Businesses
The committee also considered legislation on employment protections for medical cannabis patients.
By Keila Szpaller, The Daily Montanan
Glenn Broughton grew his medical marijuana business from a small storage shed to an operation that employees nearly 30 people, and if he’s shut down, he said he’ll go bankrupt.
“I’ve never been so scared in my life of what is going to happen to me at a pen-stroke,” said Broughton, who operates in Missoula, Lolo and St. Regis.
The business owner testified Wednesday before the House Business and Labor Committee against House Bill 568. The bill would allow roughly 115 marijuana dispensaries in the state—or not more than one per 10,000 people in a county, but 10 maximum—compared to the 355 medical dispensaries that are currently open.
No members of the public spoke in favor of the legislation.
In November, voters passed an initiative that legalizes recreational marijuana by 57 percent, and the Montana Department of Revenue anticipates accepting license applications in October.
Sponsored by Rep. Lola Sheldon-Galloway, R-Great Falls, the bill would limit dispensaries to be no closer than 1,000 feet from a school, daycare, place of worship, park or playground. It also would limit dispensaries to one per 10,000 residents in a county or up to 10 dispensaries maximum in one county.
“The people of Montana have asked us to have recreational marijuana in our state,” Sheldon-Galloway said. “My bill is just asking for some sideboards.”
Opponents, though, argued the sideboards would “squash the little guy” and favor massive operations flush with cash over smaller homegrown businesses. They also said the prohibitions go too far to realistically implement.
Sam Belanger, who said he read Montana’s marijuana legalization bill from cover to cover, told the committee he didn’t think the location restriction of 1,000 feet as the crow flies—rather than 500 feet and on the same street—would work in cities and towns.
“It eliminates almost all viable options for any dispensary in the state inside municipalities,” said Belanger, of Ronan.
Kate Cholewa, a cannabis advocate who has worked on related legislation in Montana, said the math simply doesn’t pencil out. When medical users were “tethered,” or tied to a specific provider, she said a business with 200 customers could make a good living.
With proposed limits, providers would have six times those customers. She also wondered who would be deciding who gets the the small number of licenses that would be available if the bill is enacted.
“This is just an invitation to problems and corruption,” Cholewa said.
Pepper Petersen, president of the Montana Cannabis Guild, said one of the reasons he helped draft Initiative-190, the legalization bill, is that recreational marijuana can generate tax revenue for the state.
“Most of that coal economy is gone. We need a replacement for that money,” Petersen said.
He estimated the revenue for state coffers could hit nearly $100 million a year for both recreational and medical marijuana. A study from the Bureau of Business and Economic Research at the University of Montana estimated a 20 percent tax on recreational marijuana could result in $43.4 million to $52.0 million a year from 2022 to 2026.
As part of her argument in favor of the bill, Rep. Sheldon-Galloway pointed to the relatively high use of marijuana among Great Falls middle and high school students compared to the state average. In Alaska, she said school suspensions for marijuana increased 141 percent after legalization.
Chuck Holman, though, said Montanans don’t want more regulations, and Cascade County needs to deal with its own problems.
“That county needs to address it themselves,” Holman said.
Wednesday, the committee heard a separate bill related to medical marijuana, House Bill 582.
Sponsor Rep. Robert Farris-Olsen, D-Helena, said he brought the bill forward because one of his constituents told him she lost her job because of her use of medical marijuana for a debilitating condition.
He said the bill wouldn’t allow the use of medical marijuana on the job, but it would prevent an employer from barring a person from using medical marijuana off the job for a medical condition.
Several opponents argued the bill wouldn’t make sense for industries where employees operate heavy equipment or must have a CDL, a commercial driver’s license. Jason Todhunter, with the Montana Logging Association, said logging is a highly hazardous industry, and some employers choose to conduct drug testing.
“This would muddy the waters on what we could check for,” Todhunter said.
The committee did not take action on either bill on Wednesday.