Committee reviews amended H.321: shifts retail rulemaking, new license types and budget timing debated

The Government Operations & Military Affairs committee on March 11 reviewed draft 2.2 of H.321, a miscellaneous cannabis bill that makes a series of regulatory and fiscal changes including expanded agency rulemaking for retail siting, creation of a trim-and-harvest service license, and a contested provision that would delay the transfer of cannabis excise tax revenue back to the general fund.

Michelle Childs, Office of Legislative Council, opened the committee briefing by walking members through the committee "strike-all" amendment. She said the draft adds administrative-rule violations to the list of grounds on which cannabis can be seized, clarifies the board’s authority to run fingerprint-based national criminal history record checks for establishment identification cards, and updates the hemp-product definitions to match changes previously made in Title 6. "If you violate statute or rule, then your cannabis can be seized," Childs said.

The amendment replaces a moratorium provision from the introduced bill with a broader rulemaking mandate directing the Cannabis Control Board to adopt siting rules for retailers that consider regional population, market needs and community input, rather than focusing solely on individual municipalities. Gabe Gilman, general counsel for the Cannabis Control Board, said the added direction will require substantial analysis and will likely delay adoption of the rule. "It is gonna make it a practical certainty that the board will not be able to adopt the rule for 18, possibly 24 months," Gilman said, citing required notice, comment and administrative processes.

Draft 2.2 also adds a new trim-and-harvest service license intended for seasonal workers who provide maintenance services across cultivators, allows the board to issue temporary employee cards while background checks are completed, and clarifies product-labeling requirements (changing a "produced on" date to a "harvested on" date and adding a "packed on" date for packaged product). Fee provisions allow businesses to opt for one- or two-year employee registrations (a two-year employee registration at $100 is referenced) and leave the product-registration schedule in an annual renewal format while permitting longer registrations for shelf-stable products on a prorated basis. The board anticipates fewer than 10 establishments will seek the new trim-and-harvest license, the committee was told.

A new receivership and special-permit process in section 7 would authorize the board to issue temporary special permits to enable qualified persons or entities to operate an establishment or to possess, transport or dispose of cannabis in cases of owner incapacity, abrupt closure or judicial receivership. The draft includes explicit immunity language for persons acting within the scope of a board-issued special permit.

The bill’s fiscal sections prompted extended discussion. A Joint Fiscal Office analyst told the committee that the consensus revenue forecast places fiscal-year-25 cannabis excise collections at about $20.8 million and described a mechanism in the draft that would retain a portion of FY25 excise revenue in the cannabis regulation fund to cover board expenses and delay the transfer of remaining excise revenue to the general fund until FY27. The analyst said that, under the draft’s mechanics, a residual amount of roughly $8.4 million would be allocated under the statutory 70%/30% split (general fund/substance-misuse programming), but that delaying the transfer would reduce the amount available to the general fund in FY26 and complicate appropriators’ planning.

Committee members asked whether the added enforcement attorney position (described as an exempt position to begin in FY26) would be funded by fees, the regulation fund, or require an appropriation. Gabe Gilman and other Cannabis Control Board staff said the $150,000 figure for that attorney was provided by the board and that funding might be offset in part by enforcement fines but would require an appropriation or use of existing spending authority; the Joint Fiscal Office did not estimate revenue offsets from fines.

Near the close of the discussion the committee agreed to shift the bill to the Joint Fiscal Office for fiscal review and signaled support for removing sections 14 and 15 from the draft so that appropriators and the fiscal committees can address the excise-tax timing and allocation questions.

The committee did not take a formal recorded vote on final passage during this hearing. Members asked staff to follow up on specific drafting items (including a date inconsistency flagged in section 14) and to provide additional budget detail before the next stop in the process.

The committee’s review of H.321 folded several distinct changes — criminal-background-check authority, new license types (including propagation and trim-and-harvest), temporary employee cards and permits, updated labeling rules, a special-permit/receivership process, fee-structure adjustments and fiscal timing mechanics — into one amendment. The board warned the siting-rule change will be administratively complex and time-consuming; the Joint Fiscal Office warned the fiscal timing change could reduce funds available to the general fund in FY26 and complicate budget planning. Staff committed to follow-up on the drafting dates and funding sources for the enforcement attorney position.

The committee scheduled follow-up work and indicated the bill will go to additional committees (including appropriations) for further review of the fiscal mechanics and the proposed staff position.