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Activists Accuse North Dakota of Misleading Voters About Cannabis Legalization Initiative

Activists supporting a North Dakota voter initiative to legalize marijuana are crying foul about a fiscal summary that will be included with the ballot measure, saying that is “incomplete” and “misleading” for voters. Voters will decide on the initiative from New Approach North Dakota, which would legalize pot for adults, in this November’s general election following an announcement last month from state officials that the measure had qualified for the ballot.

If the initiative is approved, voters will receive a brief fiscal summary. It includes a single sentence that estimates both the cost of implementation and the revenue it generates. The summary predicts that the costs of implementing the initiative will outweigh the revenue generated by the measure by $1.8 million over the five-year period.

“The estimated fiscal impact of this measure beginning in 2023 through the 2025-2027 Biennium is Revenue of $3,145,000 and Expenses of $4,985,000,” reads the fiscal summary.

However, the estimated revenue does not account for taxes from cannabis sales. In the event that the ballot measure is passed, sales of cannabis would be subject to the state sales tax rate at 5%. Additional local taxes up to 3 percent could be added. The lawmakers will likely increase the excise tax for cannabis to a level that is much higher.

Dave Owen, the chairman of New Approach North Dakota, said the fiscal note written for the ballot is “obviously incomplete” and “intentionally misleading” for voters, according to a report from the news website Inforum.

Brian Kroshus (Tax Commissioner) stated that there were unknown variables, such as the costs of cannabis products or the volume of sales by cannabis retailers. This prevented his office’s ability to estimate how much tax revenue could be generated in the event of a successful ballot measure and legalization of marijuana.

Another estimate projects up to $10,000,000 in annual weed taxes

However, others have also made estimates about the tax revenue generated from legal weed. Raymond March from North Dakota State University is an economist and projects that each year the state will receive approximately $6 million in tax revenues.

Dustin Gawrylow, a self-described fiscally conservative government watchdog and a member of the marijuana legalization measure’s sponsoring committee, said that revenue from legalization would far exceed the costs of implementing legal marijuana and failing to include estimated tax revenue in the fiscal summary is “not logical.” He estimates that state coffers would receive $8 million to $10 million each year if the ballot measure succeeds in November, based on legal marijuana sales in Montana this year, adjusted for the lower population in North Dakota.

When asked why the tax commissioner’s office could not develop an estimate of state revenue based on data from other states, Kroshus said that “Each (state) has their own unique tax and regulatory structure specific to them.”

This is the condensed version a three-page estimate that was compiled with input from many state agencies. It will be included at the bottom of all ballots. Jason Wahl, director of North Dakota Division of Medical Marijuana presented Monday’s complete estimate to legislative leaders. Wahl explained that $3.1million in state revenue would be derived mainly from the application and licensing fees imposed on marijuana producers and sellers.

The complete summary also notes that “additional revenue is anticipated to be collected on the sale of cannabis products,” but the tax commissioner’s office said it was unable to estimate the amount of taxes that would be collected.

According to the Department of Transportation, it will spend nearly $5 million on estimated expenses for hiring an additional employee and funding training. It also needs drug screening equipment, anti-impaired driving campaigns, as well as funds for training.

In addition to the hiring of four more employees, there would be expenditures for the medical marijuana division. Wahl projected that his agency would have to pay licensing and application fees. The complete fiscal note adds that the Highway Patrol, the attorney general’s office and the state’s 53 counties could also face additional unknown costs.

To give the voters an idea of what revenue and costs the state will face, the fiscal note is usually added to the ballot measures. Owen, who is a political consultant and critic, says the fiscal notes are manipulated by the state agencies in order to influence the election.

“It is a well-known fact that when certain agencies don’t want something (to pass), they put an absurd fiscal note on it to try to kill it,” Owen said.

Ballot Measure legalizes cannabis for adults

Voters in November’s general election would approve the ballot measure that legalizes possession up to an ounce of cannabis, and small amounts marijuana concentrates for adults over 21. The initiative also establishes a framework to regulate commercial cannabis production and sales, which would be administered by the state’s Department of Health and Human Services or another agency designated by lawmakers.

The deadline for regulators to prepare regulations regarding security, labeling, packaging, and testing for marijuana products is October 1, 2023. With a limit on licenses, the initiative will restrict the industry to only seven production plants and 18 retail cannabis shops.