FRANKFORT – Saying it’s past time for Kentucky to join the 11 other states that have legalized recreational cannabis for adults, state Rep. Cluster Howard has pre-filed legislation that would govern home use and commercial sales while dedicating a sizable portion of tax and license revenues to the state retirement systems’ unfunded liabilities. His bill would also decriminalize possession of less than one ounce of cannabis and provide free expungements for those convicted of a marijuana-related misdemeanor.
“Other states have shown that legalizing cannabis for adult use is a win-win situation for everyone involved,” said Rep. Howard, who represents Breathitt, Estill, Lee and Owsley counties and part of Madison County. “It’s a major revenue generator; it frees up critical jail and prison space; it helps counteract the deadly opioid epidemic; and it gives farmers a major new cash crop. The longer we wait, the more we miss out on these benefits.”
A sizable portion of taxes and fees raised by recreational sales would be dedicated to paying down billions of dollars in unfunded liabilities faced by the state’s two main state retirement systems.
Seventy-five percent of the license and wholesale tax fees would go to Kentucky Employees Retirement System, which is the nation’s lowest-funded; and 25 percent would be provided to the Kentucky Teachers Retirement System. Once funding levels for both systems reach 100 percent, future state license and wholesale tax revenues tied to cannabis would be split evenly among the two systems.
Rep. Howard noted that Michigan just reported that its first eight days of recreational cannabis sales totaled $1.6 million. Illinois, meanwhile, will begin recreational cannabis sales in January and is expecting purchases to be between $1.6 billion to $2.5 billion a year, with state revenues as high as $676 million dollars annually.
“Illinois is three times our size, so if we got a third of that, we could boost our budget by more than $200 million a year,” Rep. Howard said. “Putting that money toward public pensions would free up other state revenues for things like our public schools and universities, and we would see even more money from related economic development and reduced prison, court and drug-treatment costs.”
A fiscal note prepared by the Legislative Research Commission says that it would be difficult to gauge the financial impact of adult cannabis sales in Kentucky, since there were too many indeterminate factors.
Rep. Howard’s bill calls for the state Alcoholic Beverage Control Board to oversee four types of licensing – cultivator, processor, tester, and retailer – and each license would have to be renewed annually. Those possessing one type of license could not hold a license from another category, although those with a retail license could have, with some restrictions, multiple locations in the state.
“We’ve seen a similar separation work well for decades in the alcohol industry,” Rep. Howard said. “That approach keeps any company from monopolizing the market and artificially raising prices.”
Home growers would have to pay $250 for a permit, which would allow them to have up to five mature plants and five immature ones. All other licensees would have to pay fees based in part on their size.
Anyone with a prior misdemeanor marijuana conviction that hasn’t been expunged, or who has been convicted of a felony in the last five years or other controlled-substance crime within the past two years, would be barred from purchasing a license.
Under his legislation, each county would have the chance to have at least two retailers selling cannabis and related products, but larger counties would be barred from having more than one per 2,300 people. Retailers would only be able to sell marijuana-related products.
Sales would be limited to those 21 and older, and smoking cannabis in public would be prohibited.
“Although my bill is focused on future sales, it is important to point out that it also benefits those convicted of misdemeanor cannabis charges in the past,” Rep. Howard said. “I believe they should have access to a free expungement, which in turn will help them when it comes to such things as getting a job. I also think we need to stop prosecuting those possessing small amounts of cannabis. With our crowded jails, my bill is a sensible step we need to take.”
Rep. Howard’s legislation will be considered during the General Assembly’s 2020 session, which starts in January.