Politics
Proposed Hefty Levy On Hemp And CBD Products Removed From Nebraska Property Tax Relief Bill Ahead Of Final Passage
Lawmakers in Nebraska passed a revised version of a property tax relief bill on Tuesday after scrapping a number of provisions, including a proposed tax hike on consumable hemp products such as CBD.
The measure, LB 34, was approved 40–3 on Tuesday, the final day of the legislature’s special session. As passed, it does not include any additional taxes on consumable hemp products.
Only a week ago, a draft version of the proposal sought to levy a 30 percent tax on consumable hemp—a provision added by Revenue Committee chair Sen. Lou Ann Linehan (R), who played a central role in the tax discussion. A separate proposal introduced by Linehan during the regular legislative session would have taxed consumable hemp and CBD at 100 percent, but that rate was later reduced to 25 percent before the underlying bill fizzled out.
For now, the latest development means hemp-derived cannabinoid products will be subject only to the state’s 5.5 percent sales tax plus any applicable local taxes.
Gov. Jim Pillen (R), who called the special session last month to deal with the property tax issue, had hoped the new bill would cut property taxes in the state by about 50 percent. Lawmakers have said the approved version reduce taxes by closer to 20 percent, according to the Nebraska Examiner.
Overall, lawmakers described the newly passed package as a “skinnied-down” bill compared to earlier versions that increased taxes on a variety of products and services, the Examiner reported.
Over the course of the property tax debate, some lawmakers used the discussion as a springboard to push for broader cannabis legalization, which they say would bring in considerable state revenue.
“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,” Sen. Terrell McKinney (D) said during floor debate on the property tax bill earlier this year. “One revenue stream that we should open ourselves up to is the legalization of marijuana.”
“We have a brain-drain issue,” added Sen. Jen Day (D) at the time, “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.
As part of the special legislative session, lawmakers also held hearings earlier this month on a pair of adult-use marijuana legalization bills—LB 52 from Sen. Justin Wayne (D) and LB 71 from McKinney—though neither measure was voted on.
“One of the standout features of LB 71 is the potential to generate substantial tax revenue by legalizing marijuana and putting forth a well regulated tax framework,” McKinney told colleagues. “We can provide tax relief in our state. This revenue can also be allocated in our educational systems, helping children receive the education they deserve, and into businesses and community development initiatives.”
“If we are back for a special session because property taxes are so bad that we need to come back for two, three weeks of the summer to figure this out, and everything’s supposed to be put on the table,” he continued, “I don’t see how we can sit here and say no and ignore the potential revenue of $100-plus million.”
A fiscal note on McKinney’s bill estimates the measure would bring in $18.9 million in fiscal year 2025, which would increase over time to an estimated $98.0 million in fiscal 2028. Annual state expenses for operations, meanwhile, are expected to start at $1 million annually and rise to $2.5 million by fiscal year 2028.
Neither medical nor adult-use cannabis are legal in Nebraska, though activists are hoping to change that, working to qualify two prospective medical cannabis initiatives for November’s ballot. Activists last month turned in what they hope will be more than enough signatures to qualify the measures—the third time the campaign has sought to let voters decide on the reform in recent years.
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 of last year, about two months after turning in a pair of complementary ballot proposals to the secretary of state’s office.
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The governor has already voiced opposition to the reform effort, saying last 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,” saying the proposal 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 NMM 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.
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Photo courtesy of Kimzy Nanney.
