STAND. COM. REP. NO. 2150

Honolulu, Hawaii

RE: S.B. No. 2926

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-First State Legislature

Regular Session of 2022

State of Hawaii

Sir:

Your Committee on Energy, Economic Development, and Tourism, to which was referred S.B. No. 2926 entitled:

"A BILL FOR AN ACT RELATING TO MARIJUANA,"

begs leave to report as follows:

The purpose and intent of this measure is to require the Department of Business, Economic Development, and Tourism to study the potential tax revenues to be generated for the State through the legalization of recreational marijuana if it were taxed at a rate equal to the existing general excise tax rate.

Your Committee received testimony in support of this measure from the Education Caucus of the Democratic Party of Hawai‘i, Imua Alliance, Hawaii Cannabis Industry Association, and one individual. Your Committee received comments on this measure from the Department of Taxation; Department of Transportation; Department of Business, Economic Development, and Tourism; and Akamai Cannabis Clinic.

Your Committee finds that the Marijuana Policy Project, the largest cannabis policy reform group in the United States, reported that, as of December 2021, states that regulate cannabis for adult use have generated a combined total of $10,400,000,000 in sales tax revenue. Your Committee notes that because the State has an anticipated budget shortfall of $1,400,000,000 per year for the next three years resulting from the coronavirus disease 2019 pandemic, it is necessary to create new sources of revenue to allow the State to meet its strategic goals, preserve essential services, and prevent program cuts and pay reductions for working families. According to testimony from the Department of Business, Economic Development, and Tourism (DBEDT), additional time may be needed after the release of funds to prepare the procurement solicitation, conduct ten thousand surveys, and perform the data analysis needed to submit a comprehensive report to the Legislature.

Accordingly, your Committee has amended this measure by delaying the submission deadline for the study for one year.

Your Committee further notes that although the Department of Taxation indicated in its testimony that it was willing and able to perform the study, your Committee believes that DBEDT may be better suited to report on both the potential economic and non-economic side effects on the legalization of recreational marijuana if it were taxed at a rate equal to the existing general excise tax rate.

As affirmed by the record of votes of the members of your Committee on Energy, Economic Development, and Tourism that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2926, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2926, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Energy, Economic Development, and Tourism,

________________________________

GLENN WAKAI, Chair