HOUSE OF REPRESENTATIVES

H.B. NO.

238

THIRTY-FIRST LEGISLATURE, 2021

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO cannabis.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


SECTION 1. The legislature finds that a growing number of jurisdictions have legalized the recreational use of non-medical marijuana or cannabis. The legislature also finds that laws criminalizing the possession of small amounts of cannabis are costly to enforce while having limited deterrent value.

The legislature further finds that a more effective use of public resources would be to allow the development of a lawful recreational cannabis industry that is regulated and taxed, thereby allowing law enforcement agencies to focus their efforts on more serious offenses. At the same time, limits on allowable quantities of cannabis for recreational use by persons twenty-one years of age and over must be enforced, and safeguards that restrict access to persons under twenty-one must be ensured -- similar to the manner in which state laws prohibit the sale of alcohol and tobacco products to persons under twenty-one.

The purpose of this Act is to:

(1) Authorize persons twenty-one years of age or older to possess or use limited amounts of cannabis for recreational purposes;

(2) Authorize the licensing, regulation, and taxation of cannabis cultivation, manufacturing, testing, and retail sales facilities;

(3) Specify that only existing medical cannabis dispensary licensees may apply for licensure as a cannabis establishment, but may be permitted to establish additional retail dispensing locations;

(4) Allocate an unspecified percentage of general excise tax revenues derived from retail cannabis sales transactions to the counties;

(5) Specify the application and non-application of the Internal Revenue Code to expenses related to the production and sale of cannabis and cannabis products for state income tax purposes;

(6) Amend certain provisions of the penal code relating to offenses involving marijuana and expand the affirmative defense to prosecution to include persons acting in accordance with the new part in Chapter 329, Hawaii Revised Statutes, created by Section 2 of this Act; and

(7) Repeal limitations on authorized sources of medical cannabis.

SECTION 2. Chapter 329, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"PART . RECREATIONAL USE OF CANNABIS

329-A Definitions. As used in this part, unless the context otherwise requires:

"Cannabis" shall have the same meaning as in section 329‑121.

"Cannabis accessories" means any equipment, products, or materials of any kind that are used, intended for use, or designed for use in planting, propagating, cultivating, growing, harvesting, composting, manufacturing, compounding, converting, producing, processing, preparing, testing, analyzing, packaging, repackaging, storing, vaporizing, or containing cannabis, or for ingesting, inhaling, or otherwise introducing cannabis into the human body.

"Cannabis cultivation facility" means an entity licensed to cultivate, prepare, and package cannabis and sell cannabis to retail cannabis stores, cannabis product manufacturing facilities, and other cannabis cultivation facilities, but not to consumers.

"Cannabis establishment" means a cannabis cultivation facility, a cannabis testing facility, a cannabis product manufacturing facility, or a retail cannabis store.

"Cannabis product manufacturing facility" means an entity licensed to purchase cannabis; manufacture, prepare, and package cannabis products; and sell cannabis and cannabis products to other cannabis product manufacturing facilities and to retail cannabis stores, but not to consumers.

"Cannabis products" means concentrated cannabis products and cannabis products that consist of cannabis and other ingredients and are intended for use or consumption, including edible products, ointments, and tinctures.

"Cannabis testing facility" means an entity licensed to analyze and certify the safety and potency of cannabis.

"Consumer" means a person twenty-one years of age or older who grows, possesses, or purchases cannabis or cannabis products for recreational use by persons twenty-one years of age or older, but not for resale to others.

"Department" means the department of health.

"Retail cannabis store" means an entity licensed to purchase cannabis from cannabis cultivation facilities and cannabis and cannabis products from cannabis product manufacturing facilities and to sell cannabis and cannabis products to consumers.

329-B Recreational use of cannabis. Notwithstanding any other provision of law, the following acts shall be lawful and shall not be an offense or a basis for seizure or forfeiture of assets for persons twenty-one years of age or older:

(1) Possessing, using, displaying, purchasing, or transporting cannabis accessories or one ounce or less of cannabis;

(2) Possessing, growing, processing, or transporting seven or fewer cannabis plants, and possession of the cannabis produced by the plants; provided that the cannabis is not made available for sale;

(3) Transfer of one ounce or less of cannabis without remuneration to a person who is twenty-one years of age or older;

(4) Consumption of cannabis; provided that nothing in this section shall permit consumption that is conducted openly and publicly or in a manner that endangers others; and

(5) Assisting another person who is twenty-one years of age or older in committing any of the acts described in this section.

329-C Lawful operation of cannabis establishments. Notwithstanding any other provision of law, the following acts shall be lawful and shall not be an offense or a basis for arrest, prosecution, or seizure or forfeiture of assets for persons twenty-one years of age or older:

(1) Manufacture, possession, or purchase of cannabis accessories or the sale of cannabis accessories to a person who is twenty-one years of age or older;

(2) Possessing, displaying, or transporting cannabis or cannabis products; purchase of cannabis from a cannabis cultivation facility; purchase of cannabis or cannabis products from a cannabis product manufacturing facility; or sale of cannabis or cannabis products to consumers, if the person conducting the activities described in this paragraph has obtained a current, valid license to operate a retail cannabis store or is acting in the person's capacity as an owner, employee, or agent of a licensed retail cannabis store;

(3) Cultivating, harvesting, processing, packaging, transporting, displaying, or possessing cannabis; delivery or transfer of cannabis to a cannabis testing facility; selling cannabis to a cannabis cultivation facility, a cannabis product manufacturing facility, or a retail cannabis store; or the purchase of cannabis from a cannabis cultivation facility, if the person conducting the activities described in this paragraph has obtained a current, valid license to operate a cannabis cultivation facility or is acting in the person's capacity as an owner, employee, or agent of a licensed cannabis cultivation facility;

(4) Packaging, processing, transporting, manufacturing, displaying, or possessing cannabis or cannabis products; delivery or transfer of cannabis or cannabis products to a cannabis testing facility; selling cannabis or cannabis products to a retail cannabis store or a cannabis product manufacturing facility; the purchase of cannabis from a cannabis cultivation facility; or the purchase of cannabis or cannabis products from a cannabis product manufacturing facility, if the person conducting the activities described in this paragraph has obtained a current, valid license to operate a cannabis product manufacturing facility or is acting in the person's capacity as an owner, employee, or agent of a licensed cannabis product manufacturing facility;

(5) Possessing, cultivating, processing, repackaging, storing, transporting, displaying, transferring, or delivering cannabis or cannabis products if the person has obtained a current, valid license to operate a cannabis testing facility or is acting in the person's capacity as an owner, employee, or agent of a licensed cannabis testing facility; and

(6) Leasing or otherwise allowing the use of property owned, occupied, or controlled by any person, corporation, or other entity for any of the activities conducted lawfully in accordance with this section.

329-D Department rules; cannabis establishments. (a) No later than July 1, 2022, the department shall adopt rules under chapter 91 necessary to implement this part, which shall at a minimum include:

(1) Procedures for the issuance, renewal, suspension, and revocation of a license to operate a cannabis establishment;

(2) A schedule of application, licensing, and renewal fees; provided that a fee of no less than $ shall be imposed upon the issuance of a one-year license to operate a cannabis establishment; provided further that          per cent of all fees collected under this paragraph shall be deposited into the cannabis establishment program sub-account of the cannabis registry and regulation special fund established under section 321-30.1(b)(3);

(3) Qualifications for licensure that are directly and demonstrably related to the operation of a cannabis establishment; provided that a qualification of licensure under this part shall include a requirement that an applicant or licensee is currently licensed to operate a medical cannabis dispensary under chapter 329D; provided further that the department may permit the applicant or licensee to establish additional retail dispensing locations for the purpose of operating a cannabis establishment in accordance with this part;

(4) Security requirements for cannabis establishments;

(5) Requirements to prevent the sale or diversion of cannabis and cannabis products to persons under the age of twenty-one;

(6) Labeling requirements for cannabis and cannabis products sold or distributed by a cannabis establishment;

(7) Health and safety requirements and standards for the manufacture of cannabis products and the cultivation of cannabis; provided that the standards shall be no less stringent than those applicable to medical cannabis under part IX of this chapter and chapter 329D;

(8) Restrictions on the advertising and display of cannabis and cannabis products; and

(9) Civil penalties for the failure to comply with any rule adopted pursuant to this section.

(b) For the purpose of ensuring that individual privacy is protected, notwithstanding subsection (a), the department shall not require a consumer to provide a retail cannabis store with personal information other than government-issued identification to determine the consumer's age, and a retail cannabis store shall not be required to acquire and record personal information about consumers other than information typically acquired in a financial transaction conducted at a retail liquor store.

329-E Cannabis establishments; licenses; procedures. (a) A license to operate a cannabis establishment shall be valid for one year and shall be renewable annually.

(b) Each applicant for a license to operate a cannabis establishment shall submit an application to the department, which shall process applications expeditiously and:

(1) Upon approval of an application, shall issue an annual license to the applicant; or

(2) Upon denial of an application, shall notify the applicant in writing of the specific reason for the denial,

within seven days of the approval or denial.

329-F Employers; driving; minors; control of property. Nothing in this part shall be construed to:

(1) Require an employer to permit or accommodate the use, consumption, possession, transfer, display, transportation, sale, or growing of cannabis in the workplace or to affect the ability of employers to establish policies restricting the use of cannabis by employees;

(2) Supersede any law relating to driving under the influence of cannabis or driving while impaired by cannabis;

(3) Permit the transfer of cannabis, with or without remuneration, to a person under the age of twenty-one or to allow a person under the age of twenty-one to purchase, possess, use, transport, grow, or consume cannabis; or

(4) Prohibit a person, employer, school, hospital, detention facility, corporation, or any other entity that occupies, owns, or controls property from prohibiting or otherwise regulating the possession, consumption, use, display, transfer, distribution, sale, transportation, or growing of cannabis on or in that property.

329-G Medical cannabis provisions unaffected. Nothing in this part shall be construed to limit any privileges or rights of a medical cannabis qualifying patient, primary caregiver, or registered entity as provided in part IX of this chapter.

329-H Severability; conflicting provisions. All provisions of this part are severable and, except where otherwise indicated, shall supersede conflicting state statutory, local charter, ordinance, or resolution, and other state and local provisions."

SECTION 3. Section 46-4, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows:

"(f) Neither this section nor any other law, county ordinance, or rule shall prohibit the use of land for medical cannabis production centers or medical cannabis dispensaries established and licensed pursuant to chapter 329D[;] or cannabis establishments established and licensed pursuant to part of chapter 329; provided that the land is otherwise zoned for agriculture, manufacturing, or retail purposes."

SECTION 4. Section 235-2.4, Hawaii Revised Statutes, is amended by amending subsection (v) to read as follows:

"(v) Section 280E (with respect to expenditures in connection with the illegal sale of drugs) of the Internal Revenue Code shall be operative for the purposes of this chapter, except that section 280E shall not be operative with respect to the production and sale of [medical]:

(1) Medical cannabis and manufactured cannabis products by dispensaries licensed under chapter 329D and their subcontractors, as defined in section 329D-1[.]; and

(2) Cannabis and cannabis products by cannabis establishments licensed under part of chapter 329."

SECTION 5. Section 237-31, Hawaii Revised Statutes, is amended to read as follows:

"237-31 Remittances. All remittances of taxes imposed by this chapter shall be made by money, bank draft, check, cashier's check, money order, or certificate of deposit to the office of the department of taxation to which the return was transmitted. The department shall issue its receipts therefor to the taxpayer and shall pay the moneys into the state treasury as a state realization, to be kept and accounted for as provided by law; provided that:

(1) A sum, not to exceed $5,000,000, from all general excise tax revenues realized by the State shall be deposited in the state treasury in each fiscal year to the credit of the compound interest bond reserve fund;

(2) A sum from all general excise tax revenues realized by the State that is equal to one-half of the total amount of funds appropriated or transferred out of the hurricane reserve trust fund under sections 4 and 5 of Act 62, Session Laws of Hawaii 2011, shall be deposited into the hurricane reserve trust fund in fiscal year 2013-2014 and in fiscal year 2014-2015; provided that the deposit required in each fiscal year shall be made by October 1 of that fiscal year; [and]

(3) A sum equal to per cent of any general excise tax revenues realized from retail cannabis sales transactions, conducted pursuant to and in compliance with part of chapter 329, shall be paid to the director of finance of the county in which the revenues were collected; and

[[(3)]] (4) Commencing with fiscal year 2018-2019, a sum from all general excise tax revenues realized by the State that represents the difference between the state public employer's annual required contribution for the separate trust fund established under section 87A-42 and the amount of the state public employer's contributions into that trust fund shall be deposited to the credit of the State's annual required contribution into that trust fund in each fiscal year, as provided in section 87A-42."

SECTION 6. Section 321-30.1, Hawaii Revised Statutes, is amended by amending its title and subsections (a) and (b) to read as follows:

"321-30.1 [Medical cannabis] Cannabis registry and regulation special fund; established. (a) There is established within the state treasury the [medical] cannabis registry and regulation special fund. The fund shall be expended at the discretion of the director of health:

(1) To establish and regulate a system of medical cannabis dispensaries in the State;

(2) To offset the cost of the processing and issuance of patient registry identification certificates and primary caregiver registration certificates;

(3) To fund positions and operating costs authorized by the legislature;

(4) To establish and manage a secure and confidential database;

(5) To fund public education as required by section 329D‑26;

(6) To fund substance abuse prevention and education programs; [and]

(7) To regulate cannabis establishments in the State pursuant to part of chapter 329; and

[(7)] (8) For any other expenditure necessary, consistent with this chapter [and], chapter 329D, and part of chapter 329, to implement medical cannabis registry and regulation programs[.] and cannabis establishment regulation programs.

(b) The fund shall consist of all moneys derived from fees collected pursuant to subsection (c) [and], section 329D-4[.], and part of chapter 329. There is established within the [medical] cannabis registry and regulation special fund:

(1) A medical cannabis registry program sub-account, into which shall be deposited all fees collected pursuant to subsection (c); [and]

(2) A medical cannabis dispensary program sub-account, into which shall be deposited all fees collected pursuant to section 329D-4[.]; and

(3) A cannabis establishment program sub-account, into which shall be deposited fees collected and allocated pursuant to part of chapter 329."

SECTION 7. Section 329-43.5, Hawaii Revised Statutes, is amended by amending subsection (e) to read as follows:

"(e) Subsections (a) and (b) shall not apply to a person who is authorized to:

(1) Acquire, possess, cultivate, use, distribute, or transport cannabis pursuant to the definition of "medical use" under section 329-121, while the person is facilitating the medical use of cannabis by a qualifying patient; [or]

(2) Dispense, manufacture, or produce cannabis or manufactured cannabis products pursuant to and in compliance with chapter 329D, while the person is facilitating the medical use of cannabis by a qualifying patient pursuant to part IX of chapter 329[.]; or

(3) Grow, process, possess, transfer, display, transport, or use cannabis or cannabis products pursuant to and in compliance with part of this chapter."

SECTION 8. Section 712-1240.1, Hawaii Revised Statutes, is amended by amending subsection (2) to read as follows:

"(2) It is an affirmative defense to prosecution for any marijuana-related offense defined in this part that the person who possessed or distributed the marijuana was authorized to possess or distribute the marijuana for medical purposes pursuant to part IX of chapter 329[.] or acted in accordance with part of that chapter."

SECTION 9. Section 712-1248, Hawaii Revised Statutes, is amended by amending subsection (1) to read as follows:

"(1) A person commits the offense of promoting a detrimental drug in the second degree if the person knowingly:

(a) Possesses fifty or more capsules or tablets containing one or more of the Schedule V substances;

(b) Possesses one or more preparations, compounds, mixtures, or substances, of an aggregate weight of one- eighth ounce or more, containing one or more of the Schedule V substances;

(c) Possesses one or more preparations, compounds, mixtures, or substances, of an aggregate weight of one ounce or more, containing any marijuana[; or], and the person is under the age of twenty-one;

(d) Possesses one or more preparations, compounds, mixtures, or substances, of an aggregate weight of more than one ounce, containing any marijuana, and the person is twenty-one years of age or older, except as provided under part of chapter 329; or

[(d)] (e) Distributes any marijuana or any Schedule V substance in any amount."

SECTION 10. Section 712-1249, Hawaii Revised Statutes, is amended by amending subsection (1) to read as follows:

"(1) A person commits the offense of promoting a detrimental drug in the third degree if the person knowingly possesses any marijuana or any Schedule V substance in any amount[.]; provided that, regarding marijuana, this subsection shall not apply to a person twenty-one years of age or older."

SECTION 11. Section 712-1249.5, Hawaii Revised Statutes, is amended by amending subsection (1) to read as follows:

"(1) A person commits the offense of commercial promotion of marijuana in the second degree if the person knowingly:

(a) Possesses marijuana having an aggregate weight of two pounds or more;

(b) Distributes marijuana having an aggregate weight of one pound or more;

(c) Possesses, cultivates, or has under the person's control fifty or more marijuana plants;

(d) Cultivates on land owned by another person, including land owned by the government or other legal entity, any marijuana plant, unless the person has the express permission from the owner of the land to cultivate the marijuana or the person has a legal or an equitable ownership interest in the land or the person has a legal right to occupy the land; [or]

(e) Sells or barters any [marijuana or any] Schedule V substance in any amount to a minor[.]; or

(f) Sells or barters any marijuana in any amount to a person under the age of twenty-one."

SECTION 12. Section 329-130, Hawaii Revised Statutes, is repealed.

["329-130 Authorized sources of medical cannabis. (a) After December 31, 2023, a qualifying patient shall obtain medical cannabis or manufactured cannabis products only:

(1) From a dispensary licensed pursuant to chapter 329D; provided that the cannabis shall be purchased and paid for at the time of purchase; or

(2) By cultivating cannabis in an amount that does not exceed an adequate supply for the qualifying patient, pursuant to section 329-122; provided that each location used to cultivate cannabis shall be used by no more than five qualifying patients.

After December 31, 2023, no primary caregiver shall be authorized to cultivate cannabis for any qualifying patient.

(b) This section shall not apply to:

(1) A qualifying patient who is a minor or an adult lacking legal capacity and the primary caregiver is the parent, guardian, or person having legal custody of a qualifying patient described in this paragraph; or

(2) A qualifying patient on any island on which there is no medical cannabis dispensary licensed pursuant to chapter 329D.

(c) A qualifying out-of-state patient and a caregiver of a qualifying out-of-state patient shall be authorized to obtain cannabis for medical use only from retail dispensing locations of dispensaries licensed pursuant to chapter 329D."]

SECTION 13. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 14. If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 15. In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 16. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 17. This Act shall take effect on January 1, 2022; provided that section 4 shall apply to taxable years beginning after December 31, 2021.

 

INTRODUCED BY:

_____________________________

 

 


 


 

Report Title:

Cannabis; Recreational Use; Legalization; Regulation; Taxation

 

Description:

Authorizes persons 21 years of age or older to possess or use limited amounts of cannabis for recreational purposes. Authorizes the licensing, regulation, and taxation of cannabis cultivation, manufacturing, testing, and retail sales facilities. Specifies that only existing medical cannabis dispensary licensees may apply for licensure as a cannabis establishment, but may be permitted to establish additional retail dispensing locations. Allocates an unspecified percentage of general excise tax revenues derived from retail cannabis sales transactions to the counties. Specifies the application and non-application of the Internal Revenue Code to expenses related to the production and sale of cannabis and cannabis products for state income tax purposes. Amends certain provisions of the penal code relating to offenses involving marijuana and expands the affirmative defense to prosecution to include persons acting in accordance with the new part in Chapter 329, HRS, created by Section 2 of this Act. Repeals limitations on authorized sources of medical cannabis.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.