SECTION 1. The legislature finds that the legal history of cannabis or marijuana in the United States primarily addresses the regulation of cannabis for medical use, and secondarily the use of cannabis for personal or recreational purposes. By the mid-1930s, cannabis was regulated as a drug in every state, including thirty-five states that adopted the Uniform State Narcotic Drug Act, which was subsequently replaced in 1970 with the federal Uniform Controlled Substances Act. Under the federal Uniform Controlled Substances Act, marijuana and tetrahydrocannabinol, the primary psychoactive compound in cannabis, are classified as schedule I controlled substances.

Notwithstanding the prospect of federal prosecution, several states, including Hawaii, enacted medical cannabis laws. Chapter 329, part IX, Hawaii Revised Statutes, was enacted to create a medical use of cannabis exemption from criminal sanctions. As of November 4, 2020, thirty-six states and four U.S. territories also allow the use of cannabis for medicinal purposes. Furthermore, chapter 329D, Hawaii Revised Statutes, was enacted to establish medical cannabis dispensaries authorized to operate beginning in July 2016. As Hawaii expands its medical cannabis program through the use of highly regulated and monitored dispensaries, more patients are anticipated to consider medical cannabis as a viable treatment.

In addition to medical cannabis laws, some states have legalized or decriminalized cannabis. The jurisdictions of Alaska, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Carolina, North Dakota, Ohio, Oregon, Rhode Island, South Dakota, Vermont, Virginia, and Washington have all decriminalized cannabis in small amounts. In each state, cannabis users no longer face jail time for the possession or use of cannabis in the amount permitted by statute. Most places that decriminalized small amounts of cannabis replaced incarceration or criminal charges with civil fines, confiscation, drug education, or drug treatment, or made various cannabis offenses the lowest priority for law enforcement.

In addition to the majority of states that have decriminalized possession of cannabis, the federal government has also signaled its approval of decriminalization at the federal level. On December 4, 2020, the U.S. House of Representatives passed the Marijuana Opportunity Reinvestment and Expungement Act, or MORE Act, which removes cannabis from the list of federally controlled substances and facilitates cancelling low-level federal convictions and arrests related to cannabis. This is the first time Congress has acted on the issue of decriminalizing cannabis.

In 2012, voters in Colorado and Washington voted to legalize and regulate the production, possession, and distribution of cannabis for persons age twenty-one and older. Following Colorado and Washington's lead, Alaska, California, District of Columbia, Maine, Massachusetts, Michigan, Nevada, Oregon, and Vermont also legalized small amounts of cannabis for adult recreational use. As of 2020, fifteen states and three U.S. territories have legalized recreational cannabis.

Colorado was the first state to remove the prohibition on commercial production of cannabis for general use. During the first year of legal cannabis sales in 2014, Colorado collected $67,594,323 in taxes and fees from medical and retail cannabis. As of November 2020, Colorado has collected $1,563,063,859 in total revenue from cannabis taxes and fees.

The legislature finds that the legalization of cannabis for personal or recreational use is a natural, logical, and reasonable outgrowth of the current science of cannabis and attitude toward cannabis.

The legislature further finds that cannabis cultivation and sales hold potential for economic development, increased tax revenues, and reduction in crime.

The purpose of this Act is to:

(1) Decriminalize and regulate small amounts of cannabis for personal use;

(2) Establish regulations for the cultivation, sale, and personal use of small amounts of cannabis;

(3) Tax cannabis sales in the same manner as state excise taxes; and

(4) Subject income derived from cannabis sales to state income taxes.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

LEGALIZATION OF CANNABIS FOR PERSONAL USE

§ -1 Definitions. As used in this chapter:

"Cannabis" means all parts of the plant of the genus cannabis, whether growing or not; the seeds thereof; the resin extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or its resin, including cannabis concentrate. "Cannabis" does not include industrial hemp; fiber produced from the stalks, oil, or cake made from the seeds of the plant; sterilized seed of the plant which is incapable of germination; or the weight of any other ingredient combined with cannabis to prepare topical or oral administrations, food, drink, or other product. For purposes of this definition, "industrial hemp" means the plant of the genus cannabis and any part of such plant, whether growing or not, with a delta-9 tetrahydrocannabinol concentration that does not exceed 0.3 per cent on a dry weight basis.

"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, cannabis testing facility, cannabis product manufacturing facility, or 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 retail cannabis stores, but not to consumers.

"Cannabis products" means cannabis concentrate products and products that comprise cannabis and other ingredients intended for use or consumption and include but are not limited to edible products, ointments, and tinctures.

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

"Department" means the department of taxation.

"License" means a license issued by the department to authorize the operation of a cannabis establishment.

"Personal use" means an amount of cannabis not exceeding one ounce that is used for private, personal, or recreational purposes by persons age twenty-one years or older. The term personal use includes display, possession, sale, transport, transfer, or processing of cannabis or cannabis products.

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

§ -2 Personal use of cannabis. (a) Notwithstanding any law to the contrary, the personal use of cannabis is permitted.

(b) Personal use of cannabis shall not be the basis for arrest, seizure, or forfeiture of assets.

(c) The possession, use, display, purchase, transfer, or transport of cannabis, cannabis accessories, or cannabis paraphernalia for personal use shall be immune from criminal prosecution.

(d) The possession, growing, processing, or transporting of not more than six cannabis plants, with three or fewer being mature, flowering plants, and possession of the cannabis produced by the plants on the premises where the plants are grown shall not be subject to criminal prosecution; provided that the growing takes place in an enclosed and locked space and is not conducted openly or publicly, and that the plants are not made available for sale.

(e) The transfer or sale of one ounce or less of cannabis with or without remuneration to a person who is twenty-one years of age or older is permitted.

(f) The consumption of cannabis products is permitted; provided that consumption of flavored e-liquids and juices containing cannabis for vaporizing devices is prohibited.

(g) Assisting, advising, or abetting another person who is twenty-one years of age or older in any actions described in this section is permitted.

(h) Personal use of cannabis shall be prohibited on public highways, public sidewalks, and federal property.

§ -3 Lawful operation of cannabis establishments; license required. (a) Notwithstanding any law to the contrary, the following acts are permitted and shall not constitute a criminal offense or be the basis for search, seizure, or forfeiture of assets of a person age twenty-one years or older:

(1) Manufacturing, possessing, or purchasing cannabis accessories or selling cannabis accessories to a person who is twenty-one years of age or older;

(2) Possessing, displaying, or transporting cannabis or cannabis products; purchasing cannabis from a cannabis cultivation facility; purchasing cannabis or cannabis products from a cannabis product manufacturing facility; or selling cannabis or cannabis products to consumers; provided that 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 capacity of an owner, employee, or agent of a licensed retail cannabis store;

(3) Cultivating, harvesting, processing, packaging, transporting, displaying, or possessing cannabis; delivering or transferring cannabis to a cannabis testing facility; selling cannabis to a cannabis cultivation facility, cannabis product manufacturing facility, or retail cannabis store; or purchasing cannabis from a cannabis cultivation facility; provided that 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 capacity of an owner, employee, or agent of a licensed cannabis cultivation facility;

(4) Packaging, processing, transporting, manufacturing, displaying, or possessing cannabis or cannabis products; delivering or transferring cannabis or cannabis products to a cannabis testing facility; selling cannabis or cannabis products to a retail cannabis store or cannabis product manufacturing facility; purchasing cannabis from a cannabis cultivation facility; or purchasing cannabis or cannabis products from a cannabis product manufacturing facility; provided that 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 capacity as an owner, employee, or agent of a licensed cannabis product manufacturing facility;

(5) Possessing, processing, repackaging, storing, transporting, displaying, transferring, or delivering cannabis or cannabis products; provided that the person has obtained a current, valid license to operate a cannabis testing facility or is acting in the 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.

(b) Cannabis products shall be contained in generic packaging that uses only black lettering and contain no colors, pictures, cartoons, or images that may appeal to children and youth; provided that the department shall adopt rules pursuant to section -4 to implement restrictions on labeling requirements for cannabis and cannabis products sold or distributed by a cannabis establishment.

(1) State and private parks;

(2) Schools;

(3) Recreational facilities;

(4) Public transit stations; and

(5) Bus stops;

provided that the department shall adopt rules pursuant to section -4 to implement restrictions on the advertising and display of cannabis and cannabis products.

§ -4 Regulation of cannabis; rules. (a) No later than July 1, 2021, the department shall adopt rules, pursuant to chapter 91, necessary for implementation of this chapter. The rules shall not require such a high investment of risk, money, time, or any other resource or asset that the operation of a cannabis establishment is not worthy of being carried out in practice by a reasonably prudent business person. The rules shall include:

(1) Procedures for the application, issuance, renewal, suspension, and revocation of a license to operate a cannabis establishment; provided that any license to be issued shall be issued no later than ninety days after receipt of an application;

(2) A schedule of application, licensing, and renewal fees; provided that application fees shall not exceed $5,000, adjusted annually for inflation, unless the department determines a greater fee is necessary to carry out its responsibilities under this section;

(3) Qualifications for licensure that are directly and demonstrably related to the operation of a cannabis establishment;

(4) Security requirements for the premises of 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 regulations and standards for the manufacture of cannabis products and the cultivation of cannabis;

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

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

(b) In order to ensure that individual privacy is protected, 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. A retail cannabis store shall not be required to acquire and record personal information about consumers.

(c) If an application for a license under this section is denied, the applicant shall be notified in writing of the specific reason for the denial. The applicant may be entitled to resubmit the application at any time after denial of the initial application.

§ -5 Effect on employers. This chapter shall not be construed to:

(1) Require an employer to permit or accommodate the use, consumption, possession, transfer, display, transport, sale, or growing of cannabis in the workplace; or

(2) Affect the ability of an employer to have policies restricting the use of cannabis by employees.

§ -6 Effect on intoxicated driving laws. This chapter shall not be construed as a defense, exemption, or immunity from chapter 291E.

§ -7 Effect on medical cannabis law. This chapter shall not be construed to affect medical use of cannabis as provided in chapter 329 and shall not be deemed to expand the medical use of cannabis beyond the uses provided in chapter 329.

§ -8 Effect on medical cannabis dispensary law. This chapter shall not be construed to affect the dispensing of medical cannabis as provided in chapter 329D and shall not be deemed to expand the dispensing of medical cannabis beyond the uses provided in chapter 329D.

§ -9 Effect on property rights. This chapter shall not be construed to prohibit a person, employer, school, hospital, detention facility, corporation, or any other entity who occupies, owns, or controls a property from prohibiting or otherwise regulating the possession, consumption, use, display, transfer, distribution, sale, transportation, or growing of cannabis on or in that property.

§ -10 Taxes. A cannabis establishment shall be subject to payment of income taxes on gross receipts under chapter 235 and payment of excise taxes under chapter 237 for each transaction conducted by the cannabis establishment."

SECTION 3. Chapter 712, Hawaii Revised Statutes, is amended by adding a new section to part IV to be appropriately designated and to read as follows:

"§712- Legalization of marijuana. The following acts shall be exempt from arrest, prosecution, and criminal culpability under this part:

(a) Any act permitted under section ‑2;

(b) Any act permitted under section ‑3; and

SECTION 4. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 5. New statutory material is underscored.

SECTION 6. This Act shall take effect upon its approval.

THE SENATE	S.B. NO.	767
THIRTY-FIRST LEGISLATURE, 2021		S.D. 1
STATE OF HAWAII