Activists accuse North Dakota of misleading voters about the cannabis legalization initiative

Activists supporting a North Dakota ballot initiative to legalize marijuana are shouting ill at a tax summary accompanying the ballot measure, saying it is “incomplete” and “misleading” to voters. Voters will decide New Approach North Dakota’s initiative that would legalize pot for adults in November’s general election, after state officials announced last month that the measure had qualified for voting.

When voters receive their ballots this fall, they will see a one-sentence tax summary estimating the cost of implementing the initiative and the revenue generated by the measure, should it be approved. Summary estimates project costs to exceed revenue by more than $1.8 million over the next five years.

“The estimated tax impact of this action from 2023 through the 2025-2027 biennium is $3,145,000 in income and $4,985,000 in expenses,” the financial summary reads.

However, the estimate does not include revenue from taxes on cannabis sales, despite the taxes that the proposal would generate. If the voting measure is successful, cannabis sales would be taxed at the state sales tax rate of 5%, and local taxes of up to 3% could also be added. Legislators would also likely add an excise tax on cannabis, which could be much higher.

New Approach North Dakota chairman Dave Owen said the tax memo written for the vote was “manifestly incomplete” and “deliberately misleading” to voters, according to a report by news website Inforum.

Tax Commissioner Brian Kroshus said unknown variables, including the cost of cannabis products and eventual sales volume at cannabis retailers, prevented his office from estimating how much tax revenue would be generated if the ballot were successful and marijuana legalized, according to media reports.

Other estimates put up to $10 million in annual weed taxes

However, others have already made estimates of the amount of tax revenue that legal weed would generate. Raymond March, an economics professor at North Dakota State University, predicted that the state would receive about $6 million in tax revenue each year.

Dustin Gawrylow, a self-proclaimed fiscally conservative government watchdog and a member of the sponsorship committee for the marijuana legalization measure, said the revenue from legalization would far exceed the cost of introducing legal marijuana and not including the estimated tax revenue in the tax summary “doesn’t Logical.” He estimates that the state coffers would receive $8 million to $10 million each year if the November ballot measure is successful, based on Montana’s legal marijuana sales that year, adjusted for North Dakota’s smaller population .

When asked why the tax commissioner’s office could not develop an estimate of government revenue based on data from other states, Kroshus said that “every[state]has its own unique tax and regulatory structure that is specific to it.”

The tax summary to be placed at the bottom of ballots is a condensed version of a three-page estimate developed with input from multiple government agencies. Jason Wahl, director of the North Dakota Division of Medical Marijuana, presented the full estimate to a panel of senior Legislature officials Monday. Wahl said the bulk of the projected $3.1 million in government revenue would come from application and licensing fees collected from cannabis producers and distributors.

The full summary also notes that “additional revenue is expected from the sale of cannabis products,” but the tax commissioner’s office said it was unable to estimate the amount of tax collected.

The Department of Transportation estimates that much of the estimated cost of nearly $5 million would be hiring an additional full-time employee, funding training, purchasing drug-screening equipment and launching a disabled-driving campaign.

The medical marijuana division would also see expenses for hiring four additional employees and managing the recreational marijuana program. Wahl estimated that the license and filing fees would cover his agency’s expenses. The full tax notice adds that the Highway Patrol, the attorney general’s office and the state’s 53 counties could also face additional unknown costs.

The tax note is added to voting measures to give voters an estimate of the cost and revenue the state would incur if an initiative were approved. But critics, including Owen, a political adviser, say the estimates were written by government agencies to influence the election.

“It’s a well-known fact that if certain agencies don’t want to[go through]something, they’ll put a preposterous tax note on it to try and kill it,” Owen said.

Ballot measure legalizes cannabis for adults

If the voting measure is passed by voters in November’s general election, possession of up to one ounce of cannabis and small amounts of marijuana concentrate would be legal for adults 21 and older. The initiative also creates a framework to regulate commercial cannabis production and sales that would be administered by the state Department of Health and Human Services or another agency designated by the legislature.

Regulators have until October 1, 2023 to draft regulations on marijuana facility safety, advertising and labeling, packaging and testing standards for cannabis products. The initiative limits the industry to seven manufacturing facilities and 18 cannabis retailers, with a cap on the number of licenses held by any one company.