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Estimated revenue from marijuana legalization increases to $58 million



Monitor staff
Monday, September 24, 2018

Legalizing marijuana could secure New Hampshire as much as $58 million a year, according to a Department of Revenue Administration analysis this week – the highest estimate yet.

But whether the Granite State would actually receive that much depends on a range of factors, including how high the tax is set in the first place.

If the state chose to tax cannabis at 15 percent, the revenue could veer from $26.7 million to $57.8 million a year, according to Melissa Rollins, a senior financial analyst at the department.

If the tax were lower – 7 percent – the yearly revenue could dip to between $15.3 million to $32.8 million, Rollins added.

Those estimates hang on a slew of uncertain variables, including how many people in the state use the drug, how many ounces a year the average user buys, what prices the licensed dispensaries charge, and how many Granite Staters stick to black market purchases – or venture out of state, Rollins said. Determining any of that definitively is near impossible, she added.

But the department’s study, which was modeled off a recent comprehensive study in New York provides higher revenue estimates than before. As recently as December, the high estimate for New Hampshire under a 15 percent tax proposal was $41.6 million.

Rollins said this month’s numbers are higher because the New York study provides a clearer sense of usage rate and prices on which to model New Hampshire’s study.

The department’s analysis was provided to the state’s Commission to Study the Legalization, Regulation, and Taxation of Marijuana as it races to complete a report by November outlining a potential path to legalization.

For Rep. Pat Abrami, the commission’s chairman, the key question is not whether legalization would generate revenue but whether it would generate enough. As part of the commission’s draft proposal, revenue from the tax must cover the cost of licensing and enforcing the dispensaries before it can head to the state’s general fund.

But Abrami said the new analysis indicates legalization would be more than sufficient.

“It gives us a sense of: Are we going to generate enough revenue to cover the cost of regulating?” the Stratham Republican said after a commission meeting Monday. “And the answer, I think, is going to be yes.”

The commission, which has been meeting regularly since last year, includes a broad cross-section of representatives, including legislators, medical groups, law enforcement and anti-marijuana advocacy organizations.

But despite entrenched disagreements, the group is moving toward agreeing on a framework that could be used should legislators decide to pass legalization next year, members say.

A draft report proposes the creation of a commission to oversee any legalization effort, modeled after the state’s Liquor and Lottery Commissions. Three commissioners – representing enforcement, licensing and research – would be overseen by an executive director; each would oversee their own staff, the draft proposal suggests.

Prospective dispensaries, meanwhile, would face $10,000 to $15,000 licensing fees and a range of additional restrictions. And users would not be given free reign either; the proposed law would cap possession of loose marijuana at one ounce, and concentrated marijuana at six grams.

The commission faced early criticism at its formation from legalization advocates, who argued its membership ensured a deck stacked against meaningful reform. But one longtime champion of the cause, Rep. Renny Cushing, D-Hampton, praised the panel’s efforts to reach consensus Monday.

“I think that they have drilled down on the topic, they have spoken to people from across the country, states that have gone through the process of legalization, regulation, you know, all the questions have been raised,” he said. “And it’s been open.”

The group has two more meetings before it must vote on a final report.

(Ethan DeWitt can be reached at edewitt@cmonitor.com, or on Twitter at @edewittNH.)