Recreational cannabis remains unlikely in NC
In recent years, more and more states have made the decision to legalize, regulate and tax recreational cannabis products — despite federal prohibition — but North Carolina isn’t one of them, and the General Assembly doesn’t appear to be favorably inclined to support such measures despite the filing of a House effort last year.
“I don’t know for sure why the bill hasn’t moved, but I have some theories. Frankly, a bill without Republican co-sponsors isn’t going to pass in the legislature at this time,” said Rep. Lindsey Prather (D-Buncombe), one of 14 sponsors of the bill. “But also, cannabis is not an issue that N.C. Republicans have shown interest in giving much attention.”
Rep. Lindsey Prather. File photo
Cannabis laws have changed rapidly, with recreational use now fully permitted in 24 states and Washington, D.C. A ballot initiative in Florida in November will settle the issue there.
Six states have permitted various forms of medical cannabis use with a further seven permitting CBD use. Two states, Nebraska and North Carolina, offer no legal uses for cannabis products but have decriminalized possession — which doesn’t mean it’s legal, but rather that penalties for simple possession have been drastically reduced. Only four states, — Idaho, Wyoming, South Dakota and South Carolina — continue to hold cannabis as totally illegal.
The states where recreational cannabis products are legal have seen revenues associated with its taxation grow to hundreds of millions of dollars each year. Financial advice website Motley Fool said in November 2023 that were North Carolina to adopt an average cannabis taxation structure, it would see revenues of more than $182 million a year within three years of establishment.
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On April 17, 2023, a group of 14 Democratic House representatives in the General Assembly filed H626, which would not only legalize recreational cannabis but also foster social equity by directing the proceeds of an excise tax towards affordable housing and home ownership programs, industry-specific entrepreneurial training, scholarships, low-interest loans and grants to community organizations.
The next day, the bill went to the rules committee. It hasn’t moved since. It does, however, lay out a detailed regulatory plan for what recreational cannabis in North Carolina might look like.
“H626 is more of a messaging bill than one that we expect to move during this session,” Prather said. “We use it to guide the conversation about what our state could look like with a more forward-thinking legislature.”
The bill’s legislative findings state that the prohibition of cannabis, “like alcohol before it, has been a wasteful and destructive failure” because half of all Americans admit to having used cannabis despite more than eight decades of prohibition. Regulating cannabis like alcohol, the bill continues, would replace an “uncontrolled, illicit market with a well-regulated system.”
Prohibition also “deprives the state of thousands of legal jobs and hundreds of millions of dollars in tax revenue,” while also diverting law enforcement resources from violent crimes and property crimes, according to the findings.
Findings also acknowledge the disparate impact prohibition has had on people of color, citing a 2020 report by the American Civil Liberties Union that found Black people 3.6 times as likely to be arrested for cannabis possession despite usage rates that are nearly identical to those of Whites.
Starting at the top, the bill would establish the Office of Social Equity under the purview of the North Carolina Department of Public Safety and led by a governor-appointed executive director with experience in civil rights advocacy, litigation or social justice.
One of the OSE’s first jobs would be to define “social equity applicant,” a special class of people who would qualify for preferential treatment in starting cannabis-related businesses. The definition would likely include people with cannabis-related convictions as well as racial and ethnic minorities that have been disproportionately affected by cannabis prohibition.
Among other duties, the OSE would also create procedures for the registration, inspection and license renewal of cultivation and testing facilities, as well as retail outlets. Fees would be capped at $5,000 but adjust for inflation each year.
A scoring system would be used to evaluate a business expanding to more than two cannabis facilities, based on the establishment’s contributions to equity, including but not limited to minority participation, employee-ownership, establishment in economically disadvantaged areas and environmental responsibility and sustainability.
As with recent legislation permitting social districts, local governments would need to specifically allow by ordinance the operation of cannabis-related businesses within their territorial limits before those businesses could begin operating.
Local governments could also expressly prohibit them, but could not prohibit the transportation of cannabis products through their jurisdiction.
Likewise, on-site consumption could be permitted or prohibited by ordinance, and local governments could also regulate the time, place and manner of sales and levy an optional 2% tax on the sale price of cannabis products.
The OSE would administer proceeds from a 30% excise tax which, first and foremost, would pay for regulation and enforcement in the marketplace.
Beyond those costs, the OSE then contributes to three separate funds created to boost industry participation by people from marginalized communities and mitigate some of the harmful effects of prohibition on those communities.
The Community Reinvestment and Repair Fund would receive 25% of the net tax revenue to promote job placement, training and reentry programs, scholarships for low-income students, violence prevention grants for community organizations and home ownership among members of underrepresented minority groups.
The Social Equity Fund would receive 10% of the net and use it to provide zero-interest loans or grants to social equity applicants and the cannabis establishments they own and operate.
The Cannabis Education and Technical Assistance Fund would receive 3% and fund free or low-cost training to people working in the cannabis industry.
North Carolina’s Department of Health and Human Services would end up with 11% for substance abuse treatment, for an awareness campaign focused on impaired driving and for scientific studies exploring the benefits of cannabis.
DPS is in line for 1% to conduct advanced training on impaired driving.
Whatever’s left of the excise tax revenue after that would go straight into the state’s general fund.
Consumers and customers wouldn’t likely notice all the behind-the-scenes regulation and reinvestment, but would need to be aware of the rights and obligations that come with recreational cannabis.
Were it ever enacted, the bill would legalize paraphernalia as well as “possession and use of cannabis for personal use by persons at least 21 years of age,” with a possession limit of two ounces, 15 grams of concentrated cannabis like waxes and oils, edibles totaling less than 2,000 milligrams of THC and up to six plants. If the plants produce more than two ounces of cannabis, the excess must remain on the premises.
Advertising would be restricted in similar fashion to tobacco. Products would need child-proof packaging with clear labeling and, in the case of edibles, nutrition facts.
Purchase and consumption of cannabis would be regulated much like alcohol. Age verification would take place at the point of purchase. Courts could order substance abuse treatment for persons under 21 found possessing or consuming cannabis products, while those who utilize false identification to purchase it could be subject to a fine of $125 and up to 15 hours community service.
Smoking in public would constitute an infraction, with a $50 fine and community service. Operating a motor vehicle or motorized device would also be an infraction, with a $250 fine, 25 hours community service and/or a six-month license suspension and increasing penalties for repeat offenders.
Importantly, the bill prohibits discrimination against consumers while upholding private property rights.
Property owners, managers or landlords wouldn’t have to allow the cultivation, sale, transfer or use of cannabis products on their properties, whether commercial, industrial or residential in nature, although they couldn’t discriminate against tenants on the basis of a past cannabis conviction and cannot prohibit the possession or use of non-smoked cannabis on residential properties.
Business owners would not be prevented from disciplining employees or contractors for consumption in the workplace, or for working while impaired, but employers could not penalize an employee solely for cultivating, selling, transferring or using recreational cannabis products outside of work unless it would constitute negligence or professional malpractice.
Courts and government agencies would be prohibited from discriminating against those who cultivate, sell, transfer or use cannabis products when considering matters of professional licensure, public assistance benefits, child custody or visitation, medical care or conditions of pretrial release.
The bill also provides for the automatic expunction of convictions for offenses involving cannabis or hashish and prohibits law enforcement resources from being used when their sole basis regards a violation of federal law.
Western legislators remain opposed to any form of recreational cannabis legalization.
Rep. Mark Pless. File photo
Rep. Mark Pless (R-Haywood) specifically cited the federal prohibition as a big reason why he’s opposed, however, even if cannabis was rescheduled federally, he’d still oppose recreational legalization in the state.
Rep. Chuck Edwards. File photo
As one of the foremost regional crusaders against impaired driving, Rep. Mike Clampitt (R-Swain) opposes recreational cannabis on those grounds.
“We’ve got enough issues with people impaired on our highways, byways and waterways,” Clampitt said. “We don’t need to add to that.”
Rep. Chuck Edwards (R-Henderson) recently attacked the sovereignty of the Eastern Band of Cherokee Indians by threatening to withhold federal highway funding ahead of the tribe’s vote on a referendum to legalize the adult recreational use of cannabis. That referendum passed with about 70% of the vote.
Edwards’ General Election opponent, Buncombe County Democratic Rep. Caleb Rudow was one of the co-sponsors of H626. If he defeats Edwards, Rudow said he’d continue his fight on the federal level.
Rep. Caleb Rudow. File photo
“An overwhelming majority of Americans support legalization and I was proud to co-sponsor a bill to legalize cannabis in the NC House,” Rudow said. “In Congress, I would push for de-scheduling cannabis at the federal level so states have the freedo m to make their own choices on the issue.”
