House Regulated Industries Committee approves substitute to HB 254 to let package stores sell hemp-based drinks; excise-tax review deferred to summer study

The House Regulated Industries Committee voted to approve a substitute to House Bill 254 on a voice vote, giving the Department of Revenue authority to promulgate rules allowing package stores to sell certain hemp-based beverage products while deferring any decision on excise taxes to a summer study.

The substitute to House Bill 254 (document cited as LC 28069S) was presented at the committee meeting by the chair, Representative Tier, who said the measure "does one thing only": it authorizes the Department of Revenue to write rules and regulations to allow sale of the products through package stores. Representative Tier said package stores "check IDs" and therefore are an appropriate retail channel.

The committee’s action follows prior hearings and testimony about hemp-derived products. Representative Tier said the issue first arose after last year’s hemp bill and related Department of Agriculture rulemaking, and described the products under discussion as a "new type of drink" that some consumers use for a "tranquil effect." He said the committee will study safety, testing and tax treatment over the summer.

Committee members asked several clarifying questions during the discussion. A member asked whether the substitute would allow the state to collect excise taxes on the products; Representative Tier replied that excise taxation would require changes across multiple code sections and therefore will be addressed in the summer study, not in the current substitute. Another member asked about an age limit; Representative Tier said, "It has to be 21 years of age." He also clarified that existing licensed sellers under the Department of Agriculture remain licensed and that selling through package stores would require both Department of Agriculture licensing (for hemp products) and Department of Revenue licensing (for alcoholic beverage retailers) where applicable.

Member Miss Bennett confirmed that any move to levy excise taxes would be considered after the summer study and the next legislative session. Representative Tier said the committee had consulted with the Department of Agriculture and named staff member Catherine Russell as having provided assistance to the committee’s work.

A motion to pass the substitute was made, seconded and approved by voice vote. The chair noted the meeting had received an unusually high volume of written comments and emails; he said the committee was not "banning the product" but intended to study online sales and other issues during the interim. The chair closed the meeting by offering samples of the product to attendees but asked that they not be opened in the hearing room.

Discussion points: committee members and the chair emphasized (1) that the substitute delegates rulemaking authority to the Department of Revenue to permit sales in package stores; (2) that product safety, testing and labeling questions still rest with the Department of Agriculture’s existing licensing and regulations; and (3) that excise taxation and additional regulatory details will be examined in a summer study and addressed in future legislation if needed.

The committee did not record a roll-call tally. The motion to approve the substitute carried on a voice vote and was announced as approved by the chair.

Looking ahead, the committee expects to hold summer study meetings to hear from laboratory operators and other technical witnesses about testing and safety, and to consult with the Department of Revenue about the statutory changes that would be required to impose excise taxes.