| 47 | | - | PART I SECTION 1. The legislature finds that the legal history of cannabis or marijuana in the United States primarily addresses the regulation of cannabis for medical use, and secondarily the use of cannabis for personal or recreational purposes. By the mid-1930's, cannabis was regulated as a drug in every state, including thirty-five states that adopted the Uniform State Narcotic Drug Act, which was subsequently replaced in 1970 with the federal Uniform Controlled Substances Act. Under the federal Uniform Controlled Substances Act, marijuana and tetrahydrocannabinol, the primary psychoactive compound in cannabis, are classified as schedule I controlled substances. Notwithstanding the prospect of federal prosecution, several states, including Hawaii, enacted medical cannabis laws. Chapter 329, part IX, Hawaii Revised Statutes, was enacted to create a medical use of cannabis exemption from criminal sanctions. As of 2022, thirty-seven states and four United States territories allow the use of cannabis for either or both medical and personal purposes. Furthermore, chapter 329D, Hawaii Revised Statutes, was enacted to establish medical cannabis dispensaries authorized to operate beginning in July 2016. As Hawaii expands its medical cannabis program through the use of highly regulated and monitored dispensaries, more patients are anticipated to consider medical cannabis as a viable treatment. In addition to medical cannabis laws, some states and jurisdictions have legalized or decriminalized cannabis. Currently Alaska, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Carolina, North Dakota, Ohio, Oregon, Rhode Island, South Dakota, Vermont, Virginia, and Washington have all decriminalized cannabis in small amounts. In each state, cannabis users no longer face jail time for the possession or use of cannabis in the amount permitted by statute. Most jurisdictions that decriminalized small amounts of cannabis replaced incarceration or criminal charges with civil fines, confiscation, drug education, or drug treatment, or made various cannabis offenses the lowest priority for law enforcement. In addition to the majority of states that have decriminalized possession of cannabis, the federal government has also signaled its approval of decriminalization at the federal level. On December 4, 2020, the United States House of Representatives passed the Marijuana Opportunity Reinvestment and Expungement Act, or MORE Act, which removes cannabis from the list of federally controlled substances and facilitates cancelling low-level federal convictions and arrests related to cannabis. This was the first time Congress has acted on the issue of decriminalizing cannabis. In 2012, voters in Colorado and Washington voted to legalize and regulate the production, possession, and distribution of cannabis for persons age twenty-one and older. Following Colorado and Washington's lead, Alaska, California, District of Columbia, Maine, Massachusetts, Michigan, Nevada, Oregon, and Vermont subsequently legalized small amounts of cannabis for adult recreational use. As of 2020, twenty-one states and three United States territories have legalized recreational cannabis. Colorado was the first state to remove the prohibition on commercial production of cannabis for general use. During the first year of legal cannabis sales in 2014, Colorado collected $67,594,323 in taxes and fees from medical and retail cannabis. As of November 2020, Colorado has collected $1,563,063,859 in total revenue from cannabis taxes and fees. The legislature finds that the legalization of cannabis for personal or recreational use is a natural, logical, and reasonable outgrowth of the current science of cannabis and attitude toward cannabis. The legislature further finds that cannabis cultivation and sales hold potential for economic development, increased tax revenues, and reduction in crime. Accordingly, the purpose of this Act is to: (1) Establish regulations for the cultivation, manufacture, sale, and personal use of small amounts of cannabis; (2) Decriminalize and regulate small amounts of cannabis for personal use; (3) Establish taxes for cannabis sales; and (4) Reduce unregulated and illicit sales of cannabis by unlicensed entities and establish penalties. PART II SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows: "Chapter A LEGALIZATION OF CANNABIS FOR PERSONAL USE §A-1 Definitions. As used in this chapter: "Agency" means the Hawaii cannabis regulatory authority established by section A-4. "Cannabis" means all parts of the plant of the genus cannabis, whether growing or not; the seeds thereof; the resin extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or its resin, including cannabis concentrate. "Cannabis" does not include industrial hemp; fiber produced from the stalks, oil, or cake made from the seeds of the plant; sterilized seed of the plant that is incapable of germination; or the weight of any other ingredient combined with cannabis to prepare topical or oral administrations, food, drink, or other product. For purposes of this definition, "industrial hemp" means the plant of the genus cannabis and any part of the plant, whether growing or not, with a delta-9 tetrahydrocannabinol concentration that does not exceed 0.3 per cent on a dry weight basis. "Cannabis accessories" means any equipment, products, or materials of any kind that are used, intended for use, or designed for use in planting, propagating, cultivating, growing, harvesting, composting, manufacturing, compounding, converting, producing, processing, preparing, testing, analyzing, packaging, repackaging, storing, vaporizing, or containing cannabis, or for ingesting, inhaling, or otherwise introducing cannabis into the human body. "Cannabis cultivation facility" means an entity licensed under section A-6(b)(1). "Cannabis establishment" means a cannabis cultivation facility, cannabis manufacturing facility, cannabis testing facility, retail cannabis store, dual use cannabis dispensary, or any other type of licensed cannabis-related business. "Cannabis manufacturing facility" means an entity licensed under section A-6(b)(5). "Cannabis products" means cannabis concentrate products and products that comprise cannabis and other ingredients intended for use or consumption and include but are not limited to edible products, ointments, and tinctures. "Cannabis testing facility" means an entity licensed under section A-6(b)(3). "Consumer" means a person who is twenty-one years of age or older, and who is authorized by law to consume or use cannabis. "Department" means the department of health. "Dual use cannabis dispensary" means an entity licensed under section A-6(b)(4). "Executive director" means the cannabis regulation oversight director appointed by the governor as provided in section A-4(b). "Final issuance of the rules" means the rules adopted by the agency pursuant to section A-8 and shall not include any emergency, provisional or interim rules, regulations, requirements, orders, instructions, or procedures. "License" means a license issued by the agency to authorize the operation of a cannabis establishment. "Licensee" means a person or entity licensed by the agency pursuant to the provisions of this chapter. "Medical cannabis dispensary" means a person licensed as a medical cannabis dispensary under chapter 329D. "Personal use" means one ounce of cannabis plant material, ten grams of cannabis concentrate, or any other cannabis products with up to eight hundred milligrams of tetrahydrocannabinol, that is used for private, personal, or recreational purposes by persons age twenty-one years or older. The term personal use includes display, possession, transport, transfer, or processing of cannabis or cannabis products. "Pilot period" means the period defined in section A-7(b). "Place", "premises", or "location" means the real estate, together with any buildings or improvements thereon, designated in the application for a license as the place at which the cultivation, manufacturing, sale, or testing of cannabis shall be performed. "Retail cannabis store" means an entity licensed under section A-6(b)(2). §A-2 Personal use of cannabis. (a) Notwithstanding any law to the contrary, the personal use of cannabis by vaping or smoking shall be regulated in accordance with chapter 328J. (b) Personal use of cannabis shall not be the basis for arrest, seizure, or forfeiture of assets. (c) The possession, use, display, purchase, transfer, or transport of cannabis, cannabis accessories, or cannabis paraphernalia for personal use shall be immune from criminal prosecution. (d) The possession, growing, processing, or transporting of not more than six cannabis plants, with three or fewer being mature, flowering plants, and possession of the cannabis produced by the plants on the premises where the plants are grown shall not be subject to criminal prosecution; provided that the growing takes place in an enclosed and locked space and is not conducted openly or publicly, and that the plants are not made available for sale. (e) The transfer of one ounce or less of cannabis plant material, ten grams or less of cannabis concentrate, or any other cannabis products with up to eight hundred milligrams or less of tetrahydrocannabinol, without remuneration to a person who is twenty-one years of age or older shall be permitted. (f) The transfer of cannabis with remuneration to a person who is twenty-one years of age or older, including transfer with a delayed payment or in return for reciprocal gifts, items, or services of value, shall be prohibited except as otherwise provided in this chapter. (g) The consumption of cannabis products by a person who is twenty-one years of age or older shall be permitted; provided that consumption of flavored e-liquids and juices containing cannabis for vaporizing devices shall be prohibited. (h) Assisting, advising, or abetting another person who is twenty-one years of age or older in any actions described in this section shall be permitted. (i) Personal use of cannabis shall be prohibited on public highways, public sidewalks, federal property, and any location where the consumption of alcohol or smoking is prohibited. §A-3 Lawful operation of cannabis establishments. (a) Notwithstanding any law to the contrary, except as otherwise provided in this chapter or in rules adopted pursuant to this chapter, the following acts shall be permitted and shall not constitute a criminal offense or be the basis for search, seizure, or forfeiture of assets of a person who is twenty-one years of age or older: (1) Manufacturing, possessing, or purchasing cannabis accessories or selling cannabis accessories to a person who is twenty-one years of age or older; (2) Possessing, displaying, or transporting cannabis or cannabis products; purchasing cannabis from a cannabis cultivation facility, cannabis manufacturing facility, or dual use cannabis dispensary; or selling cannabis or cannabis products to consumers; provided that the person has obtained a current, valid license to operate a dual use cannabis dispensary or retail cannabis store or is acting in the capacity of an owner, employee, or agent of a licensed dual use cannabis dispensary or retail cannabis store; (3) Cultivating, harvesting, processing, packaging, transporting, displaying, or possessing cannabis; delivering or transferring cannabis to a dual use cannabis dispensary or cannabis testing facility; selling cannabis to a dual use cannabis dispensary, cannabis cultivation facility, cannabis manufacturing facility, or retail cannabis store; or purchasing cannabis from a dual use cannabis dispensary, cannabis cultivation facility, or cannabis manufacturing facility; provided that the person has obtained a current, valid license to operate a dual use cannabis dispensary, cannabis cultivation facility, or cannabis manufacturing facility or is acting in the capacity of an owner, employee, or agent of a licensed dual use cannabis dispensary, cannabis cultivation facility, or cannabis manufacturing facility; (4) Possessing, processing, repackaging, storing, transporting, displaying, transferring, or delivering cannabis or cannabis products; provided that the person has obtained a current, valid license to operate a cannabis testing facility or is acting in the capacity as an owner, employee, or agent of a licensed cannabis testing facility; or (5) Leasing or otherwise allowing the use of property owned, occupied, or controlled by any person, corporation, or other entity for any of the activities conducted lawfully in accordance with this section. (b) Cannabis products shall be contained in generic packaging that uses only black lettering and contains no colors, pictures, cartoons, or images that may appeal to children and youth; provided that the agency shall adopt rules pursuant to section A-8 to implement restrictions on labeling requirements for cannabis and cannabis products sold or distributed by a cannabis establishment. (c) Cannabis advertising shall be prohibited within one thousand feet of a youth-centered area, including but not limited to: (1) State and private parks; (2) Schools; (3) Recreational facilities; (4) Public transit stations; and (5) Bus stops; provided that the agency shall adopt rules pursuant to section A-8 to implement restrictions on the advertising and display of cannabis and cannabis products. §A-4 Hawaii cannabis regulatory authority; established. (a) There is hereby established an independent agency known as the Hawaii cannabis regulatory authority. The purpose of the agency is to oversee the regulation and licensing of cannabis pursuant to this chapter and upon transfer of powers pursuant to the provisions of subsection (c), to exercise primary responsibility to oversee the regulation and licensing of all cannabis use including medical use. The agency shall be attached to the department for administrative purposes. The agency shall be a public body and a body corporate and politic. (b) The agency shall be led by an executive director, appointed by the governor pursuant to section 26-34. (c) All powers, duties, and responsibilities of the department, including the office of medical cannabis control and regulation, with respect to the regulation, administration, and enforcement of the provisions of chapter 329D shall be transferred to the agency, except for the administration of registry identification cards to qualified patients and primary caregivers and powers delegated to the department pursuant to this chapter or by the agency's rules. (d) The employment, appointment, promotion, transfer, demotion, discharge, and job descriptions of all officers and employees of or under the jurisdiction of the office of medical cannabis control and regulation shall be transferred to the agency subject to the approval of the director of health and to applicable personnel laws. (e) The agency shall report annually to the governor and the legislature on the regulation of cannabis establishments, including but not limited to the number and location of cannabis establishments licensed by license type, the total licensing fees collected, the total amount of taxes collected from cannabis establishments, and any licensing violations determined by the agency. §A-5 Powers; generally. The agency shall have all the powers necessary and reasonable to carry out and effectuate its purposes, including but not limited to the power to: (1) Sue and be sued; (2) Adopt, use, and alter at will a common seal; (3) Make and execute contracts and all other instruments necessary or convenient for the exercise of its powers and functions under this chapter; (4) Make and alter bylaws for its organization and internal management; (5) Adopt, amend, or repeal rules and regulations for the implementation, administration, and enforcement of this chapter, which rules shall be in conformance with chapter 91; (6) Through its executive director appoint officers, agents, and employees, prescribe their duties and qualifications, and fix their salaries, without regard to chapter 76; (7) Determine which applicants shall be awarded licenses; (8) Deny an application or limit, condition, restrict, revoke, or suspend any license; (9) Determine and establish the process and methodology by which licenses shall be awarded by the agency; (10) Appear on its own behalf before boards, commissions, departments, or other agencies of municipal, state, or federal government; (11) Review data and market conditions prior to the adoption of rules pursuant to this chapter and on a periodic basis thereafter to determine the maximum number of licenses that may be issued in order to meet estimated production demand and facilitate a reduction in the unauthorized distribution of cannabis; (12) Conduct and administer procedures and hearings in compliance with chapter 91 for the adoption of rules and review of the issuance, denial, or revocation of licenses or violation of this chapter or the rules adopted pursuant to this chapter; (13) Impose and collect fees, sanctions, and administrative penalties, as authorized by this chapter and established by rule, and for a violation of any rule adopted by the agency; (14) Conduct investigations into the qualifications of all applicants for employment by the agency and all applicants for licensure pursuant to this chapter; (15) Inspect cannabis establishments and have access to all equipment and supplies in a cannabis establishment for the purpose of ensuring and enforcing compliance with this chapter, and all rules and regulations adopted pursuant to this chapter; (16) Require that the books and financial or other records or statements of a licensee be kept in a manner that the agency deems proper; (17) Establish adjudicatory procedures and conduct adjudicatory proceedings pursuant to chapter 91; (18) Maintain an official internet website for the agency; (19) Form advisory boards and submit any matter to an advisory board for study, review, or recommendation; (20) Delegate any administrative, procedural, or operational matter to the executive director; (21) Issue temporary emergency orders, directives, or instructions, with or without prior notice or hearing, in an instance in which the public health or safety is in substantial or imminent danger as it relates to the activities, conduct, or practices of a licensee or as a result of a defective or dangerous product offered for sale by a licensee; and (22) Do any and all things necessary to carry out its purposes and exercise the powers given and granted in this chapter. §A-6 Licenses. (a) Licenses may be granted by the agency as provided in this section. (b) The agency may issue any of the following licenses: (1) Cannabis cultivation facility licenses, which shall authorize the licensee to cultivate, process, prepare, label, transport, and package cannabis and cannabis products for sale or wholesale to retail cannabis stores, cannabis manufacturing facilities, and dual use cannabis dispensaries; to purchase or take possession of cannabis from other licensed cannabis cultivation facilities or dual use cannabis dispensaries; and to transfer possession of and sell cannabis and cannabis products to retail cannabis stores and dual use cannabis dispensaries; provided a cannabis cultivation facility licensee may establish one cultivation facility that shall be not larger than five thousand square feet of total indoor or outdoor canopy space; (2) Retail cannabis store licenses, which shall authorize the licensee to transport, sell, wholesale, purchase, or take possession of cannabis or cannabis products from a cannabis cultivation facility, cannabis manufacturing facility, or dual use cannabis dispensary and to sell cannabis and cannabis products to consumers on premises approved by the agency; provided that a retail cannabis store licensee may establish not more than two retail cannabis stores; (3) Cannabis testing facility licenses, which shall authorize the licensee to develop, research, transport, or test cannabis and cannabis products for that facility or another licensee; (4) Dual use cannabis licenses, which shall authorize the licensee to cultivate, process, manufacture, transport, and sell cannabis and cannabis products for both medical and personal use; to purchase or take possession of cannabis or cannabis products from a cannabis cultivation facility, cannabis manufacturing facility, or dual use cannabis dispensary; and to transfer possession of and sell or wholesale cannabis and cannabis products to retail cannabis stores, other dual use cannabis dispensaries, and consumers; and (5) Cannabis manufacturing facility licenses, which shall authorize the licensee to produce, prepare, propagate, or compound cannabis or cannabis products either directly or indirectly or by extraction methods, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis, at a fixed location that packages or repackages cannabis or cannabis products or labels or relabels its container, and transport the same, for sale or wholesale to retail cannabis stores, cannabis manufacturing facilities, and dual use cannabis dispensaries; provided that a cannabis manufacturing facility licensee may establish not more than two cannabis manufacturing facilities. (c) The agency may establish additional license types and grant temporary licenses of any type specified in subsection (b), in accordance with conditions set forth in the rules adopted pursuant to this chapter. (d) Except as otherwise permitted by this chapter or the rules adopted pursuant to this chapter, a person may have an interest in more than one license under this chapter but shall not have an interest in more than one license in each category; provided that no person granted a cannabis testing facility license or a dual use cannabis license shall have an interest in any other license granted by this chapter. As used in this subsection, "interest" means an equity ownership interest or partial equity ownership interest or any other type of financial interest, including but not limited to being an investor or serving in a management position. (e) No cannabis shall be sold or otherwise marketed pursuant to this chapter that has not first been tested by a cannabis testing facility and determined to meet the agency's testing requirements set forth in the rules adopted pursuant to this chapter or chapter 329D. (f) Each license granted by the agency shall designate the location where the business of the licensee will be conducted. Except as otherwise permitted by the rules adopted pursuant to this chapter, no license shall be transferable from one person to another or from one location to another. (g) The privilege of any licensee to cultivate, manufacture, transport, sell, or test cannabis or cannabis products shall extend to the licensee and to all agents and employees of the licensee for the purpose of operating under the license. The licensee may be held liable for any violation of this chapter or the rules adopted pursuant to this chapter by the agents or employees in connection with their employment. §A-7 Pilot period. (a) Except as provided in subsection (b), there shall be a pilot period prior to the issuance of new licenses until the date that is the later of: (1) Two years following the effective date of this chapter; or (2) The final issuance of the rules. (b) Notwithstanding subsection (a), during the pilot period from the effective date of this chapter until final issuance of the rules, any licensed medical cannabis dispensary under chapter 329D shall be permitted to cultivate, process, manufacture, transport, and sell cannabis and cannabis products under this chapter as a dual use cannabis dispensary; provided that, prior to operating as a dual use cannabis dispensary, the medical cannabis dispensary shall submit to the department and obtain the department's approval of a detailed medical preservation plan specifying how the dispensary will prioritize sales and access to medical cannabis products for qualifying patients, including but not limited to managing customer traffic flow, preventing supply shortages, preventing price increases for patients, and ensuring appropriate staffing levels. (c) The agency shall utilize the pilot period to monitor and study relevant data, market conditions, and regulations to inform, develop, and adopt final rules or statutory recommendations to effectuate the purpose of this chapter. (d) During the pilot period, dual use cannabis dispensaries shall comply with directives of state agencies, departments, and offices exercising regulatory authority pursuant to subsection (e), and directives provided or issued by the agency to protect public health and public safety. Failure to comply with the rules or directives may result in the revocation or suspension of the authorization granted under subsection (b). (e) During the pilot period, the agency may prescribe the forms, procedures, and requirements as necessary to facilitate the operation of medical cannabis dispensaries as dual use cannabis dispensaries. The prescription of the necessary forms, procedures, and requirements shall be exempt from chapter 91. (f) All prospective and approved dual use cannabis dispensaries under this chapter shall maintain compliance with the provisions of chapter 329D during the pilot period until final issuance of the rules, except transfer of cannabis for personal use shall be exempt from sections 329D-11(a)(3), 329D-11(a)(9)(B)(i), 329D-13, and 329D-15. (g) Forms, procedures, and requirements relating to this pilot period may be amended by the agency until final issuance of the rules, at which time the forms, procedures, and requirements shall be superseded by the agencys final rules. §A-8 Regulation of cannabis; rules. (a) The agency shall adopt rules pursuant to chapter 91 necessary for implementation of this chapter. The rules shall include: (1) Procedures for the application, issuance, renewal, denial, suspension, or revocation of a license to operate a cannabis establishment; provided that any license to be issued shall be issued no later than one hundred twenty days after receipt of an application; (2) A schedule of application, licensing, and renewal fees; provided that application fees shall not exceed $10,000, adjusted annually for inflation, unless the department determines a greater fee is necessary to carry out its responsibilities under this section; (3) Qualifications for licensure that are directly and demonstrably related to the operation of a cannabis establishment; (4) Security requirements for the premises of cannabis establishments; (5) Requirements to prevent the sale or diversion of cannabis and cannabis products to persons under the age of twenty-one; (6) Labeling requirements for cannabis and cannabis products sold or distributed by a cannabis establishment; (7) Health and safety regulations and standards for the manufacture of cannabis products and the cultivation of cannabis; (8) Restrictions on the number of licenses that may be approved under this chapter. The agency shall give consideration to geography, socio-economic conditions, and other factors that may impact communities where cannabis establishments are located; (9) Restrictions on the advertising and display of cannabis and cannabis products; (10) Civil penalties for the failure to comply with rules adopted pursuant to this section; and (11) Specific penalties such as the imposition of fines or suspension or revocation of a license. (b) In order to ensure that individual privacy is protected, the agency shall not require a consumer purchasing cannabis for personal use to provide a retail cannabis store or dual use cannabis dispensary with personal information other than government issued identification to determine the consumer's age. A retail cannabis store or dual use cannabis dispensary shall not be required to acquire and record personal information about consumers purchasing cannabis for personal use. (c) If an application for a license under this section is denied, the applicant shall be notified in writing of the specific reason for the denial. The applicant may be entitled to resubmit the application at any time after denial of the initial application. §A-9 Tracking. The agency shall track the cultivation, processing, manufacturing, and sale of cannabis and cannabis products. §A-10 Effect on employers. This chapter shall not be construed to: (1) Require an employer to permit or accommodate the use, consumption, possession, transfer, display, transport, sale, or growing of cannabis in the workplace; (2) Affect the ability of an employer to have policies restricting the use of cannabis by employees; or (3) Prevent an employer from refusing to hire, discharging, disciplining, or otherwise taking an adverse employment action against a person with respect to hire, tenure, terms, conditions, or privileges of employment because of that person's violation of policies restricting the use of cannabis or working while under the influence of cannabis. §A-11 Effect on intoxicated driving laws. This chapter shall not be construed as a defense, exemption, or immunity from chapter 291E. §A-12 Effect on medical cannabis law. This chapter shall not be construed to affect medical use of cannabis as provided in chapter 329 and shall not be deemed to expand the medical use of cannabis beyond the uses provided in chapter 329. §A-13 Effect on medical cannabis dispensary law. This chapter shall not be construed to affect the dispensing of medical cannabis as provided in chapter 329D and shall not be deemed to expand the dispensing of medical cannabis beyond the uses provided in chapter 329D. §A-14 Effect on property rights. Condominium associations may restrict or prohibit the smoking of cannabis in the same manner they may restrict or prohibit the smoking of tobacco on the property. This chapter shall not be construed to prohibit a person, employer, school, hospital, detention facility, corporation, or any other entity who occupies, owns, or controls a property from prohibiting or otherwise regulating the possession, consumption, use, display, transfer, distribution, sale, transportation, or growing of cannabis on or in that property. §A-15 Effect on contracts pertaining to cannabis. It is the public policy of the State that a contract is not void or voidable as against public policy if it pertains to lawful activities authorized by this chapter. §A-16 Civil Penalties. Any person who intentionally operates a cannabis cultivation facility, cannabis manufacturing facility, cannabis testing facility, dual use cannabis dispensary, or retail cannabis store without a license shall be fined not more than $ for each day of unlicensed operation." PART III SECTION 3. Chapter 706, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows: "§706- Marijuana offenders; resentencing; expungement; sealing. (1) Records relating to the arrest, criminal charge, or conviction of a person for an offense under chapter 329, part IV of chapter 712, or any other offense, the basis of which is an act permitted by chapter A or decriminalized under Act , Session Laws of Hawaii 2023, including the possession or distribution of marijuana, shall be ordered expunged in accordance with the provisions of this section. (2) No later than December 31, 2025, the attorney general, in collaboration with the judiciary and county prosecuting attorneys, shall determine the offenses that meet the criteria for expungement set forth in subsection (1). The county prosecuting attorneys shall issue a written notice to persons with records that qualify for expungement under subsection (1). Once offenses have been identified, but no later than January 1, 2026, the attorney general (in cases of an arrest for or charge with but not a conviction of a crime) and the appropriate court of record (in cases of conviction and pursuant to procedures established by the judiciary) shall order the automatic expungement of the records relating to the arrest, criminal charge, or conviction, as appropriate. (3) A person convicted for an offense under chapter 329, part IV of chapter 712, or any other offense, the basis of which is an act permitted by chapter A or decriminalized under Act , Session Laws of Hawaii 2023, including the possession or distribution of marijuana, shall have the right to petition at any time and without limitation to the number of petitions a convicted person may file, with the appropriate court of record for review and adjustment of the sentence. (4) Any expungement order issued pursuant to this section shall be sealed. (5) Eligibility pursuant to this section shall be granted notwithstanding the existence of: (a) Prior arrests or convictions; (b) Pending criminal proceedings; or (c) Outstanding court-imposed or court-related fees, fines, costs, assessments, or charges. (6) Any outstanding fees, fines, costs, assessments, or charges related to the eligible conviction shall be waived. (7) Nothing in this section shall be construed to restrict or modify a person's right to have the person's records expunged, except as otherwise may be provided by law, or diminish or abrogate any rights or remedies otherwise available to the person. (8) Nothing in this section shall be construed to require the court or any agency to reimburse any petitioner for fines, fees, and costs previously incurred, paid, or collected in association with the eligible conviction. (9) The existence of convictions in other counts within the same case that are not eligible for expungement pursuant to this section or other applicable laws shall not prevent any conviction otherwise eligible for expungement under this section from being expunged pursuant to this section; provided that the court shall make clear in its order which counts are expunged and which counts are not expunged or remain convictions; provided further that notwithstanding subsection (5), any expungement pursuant to this subsection shall not affect the records related to any count or conviction in the same case that are not eligible for expungement. (10) Any conviction ordered expunged pursuant to this section shall not be considered as a prior conviction when determining the sentence to be imposed for any subsequent crime. (11) In any application for employment, license, or other civil right or privilege, or in any appearance as a witness, a person whose conviction of a crime has been expunged pursuant to this chapter may state that the person has never been convicted of the crime; provided that, if the person is an applicant for a law enforcement agency position, for admission to the bar of any court, an applicant for a teaching certificate, or the operator or employee of an early childhood education facility, the person shall disclose the fact of a conviction. (12) Whenever the records of any conviction of a person have been expunged under the provisions of this section, any custodian of the records of conviction relating to that crime shall not disclose the existence of the records upon inquiry from any source, unless the inquiry is that of the person whose record was expunged; that of a bar admission, character and fitness, or disciplinary committee, board, or agency, or court which is considering a bar admission, character and fitness, or disciplinary matter; that of the board of education; or that of any law enforcement agency, when the nature and character of the offense in which an individual is to be charged would be affected by virtue of the person having been previously convicted or adjudicated of the same offense. The custodian of any records that have been expunged pursuant to the provisions of this section shall only release or allow access to those records for the purposes specified in this subsection or by order of a court. (13) The judiciary and its employees and agents and the department of the attorney general and its employees and agents shall be immune from any civil liability for any act of commission or omission, taken in good faith, arising out of and in the course of participation in, or assistance with the expungement procedures set forth in this section. The immunity afforded pursuant to this section shall be in addition to and not in limitation of any other immunity provided by law. (14) The attorney general may adopt rules to effectuate the purposes of this section." SECTION 4. Chapter 712, Hawaii Revised Statutes, is amended by adding a new section to part IV to be appropriately designated and to read as follows: "§712- Legalization of marijuana. The following acts shall be exempt from arrest, prosecution, and criminal culpability under this part: (1) Any act permitted under section A-2; (2) Any act permitted under section A-3; and (3) An act of any person who is appropriately and currently licensed if the act requires a license under chapter A." SECTION 5. Section 235-2.4, Hawaii Revised Statutes, is amended by amending subsection (v) to read as follows: "(v) Section 280E (with respect to expenditures in connection with the illegal sale of drugs) of the Internal Revenue Code shall be operative for the purposes of this chapter, except that section 280E shall not be operative with respect to [the]: (1) The production and sale of medical cannabis and manufactured cannabis products by dispensaries licensed under chapter 329D and their subcontractors, as defined in section 329D-1[.]; and (2) Any activity authorized by chapter A." SECTION 6. Section 712-1244, Hawaii Revised Statutes, is amended by amending subsection (1) to read as follows: "(1) [A] Except as otherwise provided in chapter A, a person commits the offense of promoting a harmful drug in the first degree if the person knowingly: (a) Possesses one hundred or more capsules or tablets or dosage units containing one or more of the harmful drugs or one or more of the marijuana concentrates, or any combination thereof; (b) Possesses one or more preparations, compounds, mixtures, or substances, of an aggregate weight of one ounce or more containing one or more of the harmful drugs or one or more of the marijuana concentrates, or any combination thereof; (c) Distributes twenty-five or more capsules or tablets or dosage units containing one or more of the harmful drugs or one or more of the marijuana concentrates, or any combination thereof; (d) Distributes one or more preparations, compounds, mixtures, or substances, of an aggregate weight of one- eighth ounce or more, containing one or more of the harmful drugs or one or more of the marijuana concentrates, or any combination thereof; or (e) Distributes any harmful drug or any marijuana concentrate in any amount to a minor." SECTION 7. Section 712-1245, Hawaii Revised Statutes, is amended by amending subsection (1) to read as follows: "(1) [A] Except as otherwise provided in chapter A, a person commits the offense of promoting a harmful drug in the second degree if the person knowingly: (a) Possesses fifty or more capsules or tablets or dosage units containing one or more of the harmful drugs or one or more of the marijuana concentrates, or any combination thereof; (b) Possesses one or more preparations, compounds, mixtures, or substances, of an aggregate weight of one- eighth ounce or more, containing one or more of the harmful drugs or one or more of the marijuana concentrates, or any combination thereof; or (c) Distributes any harmful drug or any marijuana concentrate in any amount." SECTION 8. Section 712-1246, Hawaii Revised Statutes, is amended by amending subsection (1) to read as follows: "(1) [A] Except as otherwise provided in chapter A, a person commits the offense of promoting a harmful drug in the third degree if the person knowingly possesses twenty-five or more capsules or tablets or dosage units containing one or more of the harmful drugs or one or more of the marijuana concentrates, or any combination thereof." SECTION 9. Section 712-1247, Hawaii Revised Statutes, is amended by amending subsection (1) to read as follows: "(1) [A] Except as otherwise provided in chapter A, a person commits the offense of promoting a detrimental drug in the first degree if the person knowingly: (a) Possesses four hundred or more capsules or tablets containing one or more of the Schedule V substances; (b) Possesses one or more preparations, compounds, mixtures, or substances of an aggregate weight of one ounce or more, containing one or more of the Schedule V substances; (c) Distributes fifty or more capsules or tablets containing one or more of the Schedule V substances; (d) Distributes one or more preparations, compounds, mixtures, or substances of an aggregate weight of one- eighth ounce or more, containing one or more of the Schedule V substances; (e) Possesses one or more preparations, compounds, mixtures, or substances of an aggregate weight of one pound or more, containing any marijuana; (f) Distributes one or more preparations, compounds, mixtures, or substances of an aggregate weight of one ounce or more, containing any marijuana; (g) Possesses, cultivates, or has under the person's control twenty-five or more marijuana plants; or (h) Sells or barters any marijuana or any Schedule V substance in any amount." SECTION 10. Section 712-1248, Hawaii Revised Statutes, is amended by amending subsection (1) to read as follows: "(1) [A] Except as otherwise provided in chapter A, a person commits the offense of promoting a detrimental drug in the second degree if the person knowingly: (a) Possesses fifty or more capsules or tablets containing one or more of the Schedule V substances; (b) Possesses one or more preparations, compounds, mixtures, or substances, of an aggregate weight of one- eighth ounce or more, containing one or more of the Schedule V substances; (c) Possesses one or more preparations, compounds, mixtures, or substances, of an aggregate weight of one ounce or more, containing any marijuana; or (d) Distributes any marijuana or any Schedule V substance in any amount." SECTION 11. Section 712-1249, Hawaii Revised Statutes, is amended by amending subsection (1) to read as follows: "(1) [A] Except as otherwise provided in chapter A, a person commits the offense of promoting a detrimental drug in the third degree if the person knowingly possesses any marijuana or any Schedule V substance in any amount." SECTION 12. Section 712-1249.4, Hawaii Revised Statutes, is amended by amending subsection (1) to read as follows: "(1) [A] Except as otherwise provided in chapter A, a person commits the offense of commercial promotion of marijuana in the first degree if the person knowingly: (a) Possesses marijuana having an aggregate weight of twenty-five pounds or more; (b) Distributes marijuana having an aggregate weight of five pounds or more; (c) Possesses, cultivates, or has under the person's control one hundred or more marijuana plants; (d) Cultivates on land owned by another person, including land owned by the government or other legal entity, twenty-five or more marijuana plants, unless the person has the express permission from the owner of the land to cultivate the marijuana or the person has a legal or an equitable ownership interest in the land or the person has a legal right to occupy the land; or (e) Uses, or causes to be used, any firearm or other weapon, device, instrument, material, or substance, whether animate or inanimate, which in the manner used is capable of causing death, serious bodily injury, substantial bodily injury, or other bodily injury, as defined in chapter 707 in order to prevent the theft, removal, search and seizure, or destruction of marijuana." SECTION 13. Section 712-1249.5, Hawaii Revised Statutes, is amended by amending subsection (1) to read as follows: "(1) [A] Except as otherwise provided in chapter A, a person commits the offense of commercial promotion of marijuana in the second degree if the person knowingly: (a) Possesses marijuana having an aggregate weight of two pounds or more; (b) Distributes marijuana having an aggregate weight of one pound or more; (c) Possesses, cultivates, or has under the person's control fifty or more marijuana plants; (d) Cultivates on land owned by another person, including land owned by the government or other legal entity, any marijuana plant, unless the person has the express permission from the owner of the land to cultivate the marijuana or the person has a legal or an equitable ownership interest in the land or the person has a legal right to occupy the land; or (e) Sells or barters any marijuana or any Schedule V substance in any amount to a minor." PART IV SECTION 14. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows: "CHAPTER B CANNABIS TAX LAW §B-1 Definitions. As used in this chapter, unless the context otherwise requires: "Agency" shall have the same meaning as the term is defined in section A-1. "Cannabis" shall have the same meaning as the term is defined in section A-1. "Cannabis cultivation facility" shall have the same meaning as the term is defined in section A-1. "Cannabis establishment" shall have the same meaning as the term is defined in secton A-1. "Cannabis manufacturing facility" shall have the same meaning as the term is defined in section A-1. "Cannabis products" shall have the same meaning as the term is defined in section A-1. "Consumer" shall have the same meaning as the term is defined in section A-1. "Department" means the department of taxation. "Dual use cannabis dispensary" shall have the same meaning as the term is defined in section A-1. "License" shall have the same meaning as the term is defined in section A-1. "Licensee" shall have the same meaning as the term is defined in section A-1. "Medical cannabis dispensary" means a person licensed as a medical cannabis dispensary under chapter 329D. "Permittee" means the holder of a permit under section B-2. "Personal use" shall have the same meaning as the term is defined in section A-1. "Place", "premises", or "location" means the real estate, together with any buildings or improvements thereon, designated in the application for a license as the place at which the cultivation, manufacture, sale, or testing of cannabis shall be performed. "Retail cannabis store" shall have the same meaning as the term is defined in section A-1. §B-2 Permit. (a) It shall be unlawful for any retail cannabis store or dual use cannabis dispensary to sell cannabis to consumers for personal use unless a permit has been issued to the retail cannabis store or dual use cannabis dispensary as hereinafter prescribed, and the permit is in full force and effect. (b) The agency or the department of health shall certify to the department the name of every retail cannabis store and dual use cannabis dispensary, together with the place of business and the period covered by the license held by the retail cannabis store or dual use cannabis dispensary. The department shall issue its permit to the retail cannabis store or dual use cannabis dispensary upon the payment of a permit fee of $25.00. The permit shall be issued by the department to: (1) Retail cannabis stores as of the date when the agency issued the retail cannabis store license; and (2) Dual use cannabis dispensaries as of the date when the pilot period under chapter A begins. (c) Any permit issued under this chapter shall be for the period covered by the retail cannabis store or dual use cannabis dispensary's license; it shall not be assignable; it shall be conspicuously displayed on the licensed premises of the permittee; it shall expire upon the expiration of the period covered by the permittee's license, or on June 30 next succeeding the date upon which it is issued, whichever is earlier, unless sooner suspended, surrendered, or revoked for good cause by the department; and it shall be renewed annually before July 1, upon fulfillment of all requirements as in the case of an original permit and the payment of a renewal fee of $25.00. Whenever a permit is defaced, destroyed, or lost, or the licensed premises are relocated, the department may issue a duplicate permit to the permittee upon the payment of a fee of $5.00. (d) The department may suspend, revoke, or decline to renew any permit issued under this chapter whenever the department finds that the applicant or permittee has failed to comply with this chapter or any rule adopted under this chapter, or for any other good cause. Good cause includes but is not limited to instances where an applicant or permittee has: (1) Submitted a false or fraudulent application or provided a false statement in an application; (2) Possessed or displayed a false or fraudulent permit; or (3) Failed to maintain complete and accurate records when and if required to be kept. Upon suspending or revoking any permit, the department may request that the permittee surrender the permit or any duplicate issued to, or printed by the permittee, and the permittee shall surrender the permit or duplicate promptly to the department as requested. (e) Whenever the department suspends, revokes, or declines to renew a permit, the department shall notify the applicant or permittee immediately and afford the applicant or permittee a hearing, if desired; provided that a hearing has not already been afforded. The department shall provide not less than thirty days notice to the applicant or permittee of a hearing afforded under this subsection. After the hearing the department shall: (l) Rescind its order of suspension; (2) Continue the suspension; (3) Revoke the permit; (4) Rescind its order of revocation; (5) Decline to renew the permit; or (6) Renew the permit. §B-3 Cooperation between department and the agency or department of health. (a) The department and the agency or department of health shall cooperate in the enforcement of this chapter. (b) The department shall notify the agency or department of health of the name and address of every permittee whose permit has been revoked, and any license issued to the permittee under chapter A thereupon shall be deemed forfeited. (c) The department may notify the agency or department of health of the name and address of every person who has failed to file any return required, to pay any tax prescribed, to secure a permit, or to perform any other duty or act imposed under this chapter, and the agency or department of health shall thereupon suspend any license that may have been issued to any the person under chapter A until the time as the person complies with this chapter. §B-4 Tax; limitations. (a) Every person who sells any cannabis in the State shall pay a tax that is hereby imposed at the rate of ten per cent of the sales price. (b) The tax levied pursuant to subsection (a) shall be paid only once upon the same cannabis; provided that the tax shall not apply to: (1) Cannabis sold by one licensee to another licensee under chapter A; and (2) Cannabis sold for medical use by a medical cannabis dispensary under chapter 329D. §B-5 Return; form; contents. Every taxpayer shall, on or before the twentieth day of each month, file with the department a return showing all sales of cannabis by dollar volume and taxes under section B-4(a) made by the taxpayer during the preceding month, showing separately the amount of the nontaxable sales, and the amount of the taxable sales, and the tax payable thereon. The form and manner of the return shall be prescribed by the department and shall contain any information the department may deem necessary for the proper administration of this chapter. §B-6 Payment of tax; penalties. At the time of the filing of the return required under section B-5 and within the time prescribed therefor, each taxpayer shall pay to the department the tax imposed by this chapter, required to be shown by the return. Penalties and interest shall be added to and become a part of the tax, when and as provided by section 231-39. §B-7 Determination of tax, additional assessments, credit, and refunds. (a) As soon as practicable after each return has been filed, the department shall cause it to be examined and shall compute and determine the amount of the tax payable thereon. (b) If it should appear upon the examination or thereafter within five years after the filing of the return, or at any time if no return has been filed, as a result of the examination or as a result of any examination of the records of the taxpayer or of any other inquiry or investigation, that the correct amount of the tax is greater than that shown on the return, or that any tax imposed by the chapter has not been paid, an assessment of the tax may be made in the manner provided in section 235‑108(b). The amount of the tax for the period covered by the assessment shall not be reduced below the amount determined by an assessment so made, except upon appeal or in a proceeding brought pursuant to section 40-35. (c) If the taxpayer has paid or returned with respect to any month more than the amount determined to be the correct amount of tax for the month, the amount of the tax so returned and any assessment of tax made pursuant to the return may be reduced, and any overpayment of tax may be credited upon the tax imposed by this chapter, or at the election of the taxpayer, the taxpayer not being delinquent in the payment of any taxes owing to the State, may be refunded in the manner provided in section 231-23(c); provided that no reduction of tax may be made when forbidden by subsection (b) or more than five years after the filing of the return. §B-8 Records to be kept. (a) Every permittee under this chapter shall keep a record of all sales of cannabis and cannabis products made by the permittee, in the form as the department may prescribe. Every person holding a license under chapter A, other than a cannabis testing facility, cannabis manufacturing facility, or cannabis cultivation facility license, shall keep a record of all purchases by the person of cannabis and cannabis products and taxes under section B-4(a), in the form as the department may prescribe. All records shall be offered for inspection and examination at any time upon demand by the department or agency and shall be preserved for a period of five years, except that the department may in writing consent to their destruction within the period or may require that they be kept longer. The department may by rule require the permittee to keep other records as it may deem necessary for the proper enforcement of this chapter. (b) If any permittee or any other taxpayer fails to keep records from which a proper determination of the tax due under this chapter may be made, the department may fix the amount of tax for any period from the best information obtainable by it, and assess the tax as hereinbefore provided. §B-9 Inspection. The director of taxation, the agency, or the duly authorized agent of either the director or agency, may examine all records required to be kept under this chapter, and books, papers, and records of any person engaged in the sale of cannabis to verify the accuracy of the payment of the tax imposed by this chapter and in compliance with this chapter and regulations adopted pursuant thereto. Every person in possession of the books, papers, and records and the person's agents and employees shall give the director of taxation, the agency, or the duly authorized agent of either of them, the means, facilities, and opportunities for examination. The agency shall have the authority of a duly accredited tax official of the State pursuant to section 231-18 to inspect tax returns of any taxpayer for the limited purposes set forth in this section; provided that this authority shall not extend to the inspection of any documents not directly related to this chapter. §B-10 Tax in addition to other taxes. The tax imposed by this chapter shall be in addition to any other tax imposed upon the business of selling cannabis or upon any of the transactions, acts, or activities taxed by this chapter. §B-11 Appeals. Any person aggrieved by any assessment of the tax imposed by this chapter may appeal from the assessment in the manner and within the time and in all other respects as provided in the case of income tax appeals by section 235-114. The hearing and disposition of the appeal, including the distribution of costs shall be as provided in chapter 232. §B-12 Other provisions applicable. All of the provisions of chapters 235 and 237 not inconsistent with this chapter and that may appropriately be applied to the taxes, persons, circumstances, and situations involved in this chapter, including provisions as to penalties and interest, provisions granting administrative powers to the director of taxation, provisions for the assessment, levy, and collection of taxes, shall be applicable to the taxes imposed by this chapter, and to the assessment, levy, and collection thereof. §B-13 Investigations; contempt; fees. The director of taxation, and any representative of the director duly authorized by the director, shall have the authority to conduct any civil audit or criminal investigation, investigation, of hearing relating to the taxes in this section in the manner provided in section 231-7. §B-14 Administration by director; rules and regulations. The administration of this chapter is vested in the director of taxation who may prescribe and enforce rules and regulations for the enforcement and administration of this chapter. The rules and regulations shall be prescribed by the director of taxation, subject to chapter 91. §B-15 Disposition of revenues. All moneys collected pursuant to this chapter shall be paid into the state treasury as state realizations, to be kept and accounted for as provided by law." PART V SECTION 15. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date. SECTION 16. In codifying the new chapters added by sections 2 and 14 of this Act, the revisor of statutes shall substitute appropriate chapter numbers for the letters used in designating the new chapters in this Act. SECTION 17. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored. SECTION 18. This Act shall take effect on March 22, 2075. |
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| 47 | + | PART I SECTION 1. The legislature finds that the legal history of cannabis or marijuana in the United States primarily addresses the regulation of cannabis for medical use, and secondarily the use of cannabis for personal or recreational purposes. By the mid-1930's, cannabis was regulated as a drug in every state, including thirty-five states that adopted the Uniform State Narcotic Drug Act, which was subsequently replaced in 1970 with the federal Uniform Controlled Substances Act. Under the federal Uniform Controlled Substances Act, marijuana and tetrahydarocannabinol, the primary psychoactive compound in cannabis, are classified as schedule I controlled substances. Notwithstanding the prospect of federal prosecution, several states, including Hawaii, enacted medical cannabis laws. Chapter 329, part IX, Hawaii Revised Statutes, was enacted to create a medical use of cannabis exemption from criminal sanctions. As of 2022, thirty-seven states and four U.S. territories allow the use of cannabis for either or both medical and personal purposes. Furthermore, chapter 329D, Hawaii Revised Statutes, was enacted to establish medical cannabis dispensaries authorized to operate beginning in July 2016. As Hawaii expands its medical cannabis program through the use of highly regulated and monitored dispensaries, more patients are anticipated to consider medical cannabis as a viable treatment. In addition to medical cannabis laws, some states and jurisdictions have legalized or decriminalized cannabis. Currently Alaska, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Carolina, North Dakota, Ohio, Oregon, Rhode Island, South Dakota, Vermont, Virginia, and Washington have all decriminalized cannabis in small amounts. In each state, cannabis users no longer face jail time for the possession or use of cannabis in the amount permitted by statute. Most jurisdictions that decriminalized small amounts of cannabis replaced incarceration or criminal charges with civil fines, confiscation, drug education, or drug treatment, or made various cannabis offenses the lowest priority for law enforcement. In addition to the majority of states that have decriminalized possession of cannabis, the federal government has also signaled its approval of decriminalization at the federal level. On December 4, 2020, the United States House of Representatives passed the Marijuana Opportunity Reinvestment and Expungement Act, or MORE Act, which removes cannabis from the list of federally controlled substances and facilitates cancelling low-level federal convictions and arrests related to cannabis. This was the first time Congress has acted on the issue of decriminalizing cannabis. In 2012, voters in Colorado and Washington voted to legalize and regulate the production, possession, and distribution of cannabis for persons age twenty-one and older. Following Colorado and Washington's lead, Alaska, California, District of Columbia, Maine, Massachusetts, Michigan, Nevada, Oregon, and Vermont subsequently legalized small amounts of cannabis for adult recreational use. As of 2020, twenty-one states and three United States territories have legalized recreational cannabis. Colorado was the first state to remove the prohibition on commercial production of cannabis for general use. During the first year of legal cannabis sales in 2014, Colorado collected $67,594,323 in taxes and fees from medical and retail cannabis. As of November 2020, Colorado has collected $1,563,063,859 in total revenue from cannabis taxes and fees. The legislature finds that the legalization of cannabis for personal or recreational use is a natural, logical, and reasonable outgrowth of the current science of cannabis and attitude toward cannabis. The legislature further finds that cannabis cultivation and sales hold potential for economic development, increased tax revenues, and reduction in crime. Accordingly, the purpose of this Act is to: (1) Establish regulations for the cultivation, sale, and personal use of small amounts of cannabis; (2) Decriminalize and regulate small amounts of cannabis for personal use; (3) Establishes taxes for cannabis sales; and (4) Reduce unregulated and illicit sales of cannabis by unlicensed entities. PART II SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows: "Chapter A LEGALIZATION OF CANNABIS FOR PERSONAL USE §A-1 Definitions. As used in this chapter: "Agency" means the Hawaii cannabis regulatory authority established by section A-4. "Cannabis" means all parts of the plant of the genus cannabis, whether growing or not; the seeds thereof; the resin extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or its resin, including cannabis concentrate. "Cannabis" does not include industrial hemp; fiber produced from the stalks, oil, or cake made from the seeds of the plant; sterilized seed of the plant that is incapable of germination; or the weight of any other ingredient combined with cannabis to prepare topical or oral administrations, food, drink, or other product. For purposes of this definition, "industrial hemp" means the plant of the genus cannabis and any part of the plant, whether growing or not, with a delta-9 tetrahydrocannabinol concentration that does not exceed 0.3 per cent on a dry weight basis. "Cannabis accessories" means any equipment, products, or materials of any kind that are used, intended for use, or designed for use in planting, propagating, cultivating, growing, harvesting, composting, manufacturing, compounding, converting, producing, processing, preparing, testing, analyzing, packaging, repackaging, storing, vaporizing, or containing cannabis, or for ingesting, inhaling, or otherwise introducing cannabis into the human body. "Cannabis cultivation facility" means an entity licensed under section A-6(b)(1). "Cannabis establishment" means a cannabis cultivation facility, cannabis testing facility, retail cannabis store, dual use cannabis dispensary, or any other type of licensed cannabis-related business. "Cannabis products" means cannabis concentrate products and products that comprise cannabis and other ingredients intended for use or consumption and include but are not limited to edible products, ointments, and tinctures. "Cannabis testing facility" means an entity licensed under section A-6(b)(3). "Consumer" means a person who is twenty-one years of age or older, and who is authorized by law to consume or use cannabis. "Department" means the department of health. "Dual use cannabis dispensary" means an entity licensed under section A-6(b)(4). "Executive director" means the cannabis regulation oversight director appointed by the governor as provided in section A-4(b). "Final issuance of the rules" means the rules adopted by the agency pursuant to section A-8 and shall not include any emergency, provisional or interim rules, regulations, requirements, orders, instructions, or procedures. "License" means a license issued by the agency to authorize the operation of a cannabis establishment. "Licensee" means a person or entity licensed by the agency pursuant to the provisions of this chapter. "Medical cannabis dispensary" means a person licensed as a medical cannabis dispensary under chapter 329D. "Personal use" means an amount of cannabis not exceeding thirty grams that is used for private, personal, or recreational purposes by persons age twenty-one years or older. The term personal use includes display, possession, transport, transfer, or processing of cannabis or cannabis products. "Pilot period" means the period defined in section A-7(b). "Place", "premises", or "location" means the real estate, together with any buildings or improvements thereon, designated in the application for a license as the place at which the cultivation, sale, or testing of cannabis shall be performed. "Retail cannabis store" means an entity licensed under section A-6(b)(2). §A-2 Personal use of cannabis. (a) Notwithstanding any law to the contrary, the personal use of cannabis by vaping or smoking shall be regulated in accordance with chapter 328J. (b) Personal use of cannabis shall not be the basis for arrest, seizure, or forfeiture of assets. (c) The possession, use, display, purchase, transfer, or transport of cannabis, cannabis accessories, or cannabis paraphernalia for personal use shall be immune from criminal prosecution. (d) The possession, growing, processing, or transporting of no more than six cannabis plants, with three or fewer being mature, flowering plants, and possession of the cannabis produced by the plants on the premises where the plants are grown shall not be subject to criminal prosecution; provided that the growing takes place in an enclosed and locked space and is not conducted openly or publicly, and that the plants are not made available for sale. (e) The transfer of thirty grams or less of cannabis without remuneration to a person who is twenty-one years of age or older shall be permitted. (f) The transfer of cannabis with remuneration to a person who is twenty-one years of age or older, including transfer with a delayed payment or in return for reciprocal gifts, items, or services of value, shall be prohibited except as otherwise provided in this chapter. (g) The consumption of cannabis products by a person who is twenty-one years of age or older shall be permitted; provided that consumption of flavored e-liquids and juices containing cannabis for vaporizing devices shall be prohibited. (h) Assisting, advising, or abetting another person who is twenty-one years of age or older in any actions described in this section shall be permitted. (i) Personal use of cannabis shall be prohibited on public highways, public sidewalks, federal property, and any location where the consumption of alcohol or smoking is prohibited. §A-3 Lawful operation of cannabis establishments. (a) Notwithstanding any law to the contrary, except as otherwise provided in this chapter or in rules adopted pursuant to this chapter, the following acts shall be permitted and shall not constitute a criminal offense or be the basis for search, seizure, or forfeiture of assets of a person who is twenty-one years of age or older: (1) Manufacturing, possessing, or purchasing cannabis accessories or selling cannabis accessories to a person who is twenty-one years of age or older; (2) Possessing, displaying, or transporting cannabis or cannabis products; purchasing cannabis from a cannabis cultivation facility or dual use cannabis dispensary; or selling cannabis or cannabis products to consumers; provided that the person has obtained a current, valid license to operate a dual use cannabis dispensary or retail cannabis store or is acting in the capacity of an owner, employee, or agent of a licensed dual use cannabis dispensary or retail cannabis store; (3) Cultivating, harvesting, processing, packaging, transporting, displaying, or possessing cannabis; delivering or transferring cannabis to a dual use cannabis dispensary or cannabis testing facility; selling cannabis to a dual use cannabis dispensary, cannabis cultivation facility or retail cannabis store; or purchasing cannabis from a dual use cannabis dispensary or cannabis cultivation facility; provided that the person has obtained a current, valid license to operate a dual use cannabis dispensary or cannabis cultivation facility or is acting in the capacity of an owner, employee, or agent of a licensed dual use cannabis dispensary or cannabis cultivation facility; (4) Possessing, processing, repackaging, storing, transporting, displaying, transferring, or delivering cannabis or cannabis products; provided that the person has obtained a current, valid license to operate a cannabis testing facility or is acting in the capacity as an owner, employee, or agent of a licensed cannabis testing facility; or (5) Leasing or otherwise allowing the use of property owned, occupied, or controlled by any person, corporation, or other entity for any of the activities conducted lawfully in accordance with this section. (b) Cannabis products shall be contained in generic packaging that uses only black lettering and contains no colors, pictures, cartoons, or images that may appeal to children and youth; provided that the agency shall adopt rules pursuant to section A-8 to implement restrictions on labeling requirements for cannabis and cannabis products sold or distributed by a cannabis establishment. (c) Cannabis advertising shall be prohibited near youth-centered areas, including but not limited to: (1) State and private parks; (2) Schools; (3) Recreational facilities; (4) Public transit stations; and (5) Bus stops; provided that the agency shall adopt rules pursuant to section A-8 to implement restrictions on the advertising and display of cannabis and cannabis products. §A-4 Hawaii cannabis regulatory authority; established. (a) There is hereby established an independent agency known as the Hawaii cannabis regulatory authority. The purpose of the agency is to oversee the regulation and licensing of cannabis pursuant to this chapter and upon transfer of powers pursuant to the provisions of subsection (c), to exercise primary responsibility to oversee the regulation and licensing of all cannabis use including medical use. The agency shall be attached to the department of health for administrative purposes. The agency shall be a public body and a body corporate and politic. (b) The agency shall be led by an executive director, appointed by the governor pursuant to section 26-34. (c) All powers, duties, and responsibilities of the department of health, including the office of medical cannabis control and regulation, with respect to the regulation, administration, and enforcement of the provisions of chapter 329D shall be transferred to the agency, except for the administration of registry identification cards to qualified patients and primary caregivers and powers delegated to the department of health pursuant to this chapter or by the agency's rules. (d) The employment, appointment, promotion, transfer, demotion, discharge, and job descriptions of all officers and employees of or under the jurisdiction of the office of medical cannabis control and regulation shall be transferred to the agency subject to the approval of the director of health and to applicable personnel laws. (e) The agency shall report annually to the governor and the legislature on the regulation of cannabis establishments, including but not limited to the number and location of cannabis establishments licensed by license type, the total licensing fees collected, the total amount of taxes collected from cannabis establishments, and any licensing violations determined by the agency. §A-5 Powers; generally. The agency shall have all the powers necessary and reasonable to carry out and effectuate its purposes, including but not limited to the power to: (1) Sue and be sued; (2) Adopt, use, and alter at will a common seal; (3) Make and execute contracts and all other instruments necessary or convenient for the exercise of its powers and functions under this chapter; (4) Make and alter bylaws for its organization and internal management; (5) Adopt, amend, or repeal rules and regulations for the implementation, administration, and enforcement of this chapter, which rules shall be in conformance with chapter 91; (6) Through its executive director appoint officers, agents, and employees, prescribe their duties and qualifications, and fix their salaries, without regard to chapter 76; (7) Determine which applicants shall be awarded licenses; (8) Deny an application or limit, condition, restrict, revoke, or suspend any license; (9) Determine and establish the process and methodology by which licenses shall be awarded by the agency; (10) Appear on its own behalf before boards, commissions, departments, or other agencies of municipal, state, or federal government; (11) Review data and market conditions prior to the adoption of rules pursuant to this chapter and on a periodic basis thereafter to determine the maximum number of licenses that may be issued in order to meet estimated production demand and facilitate a reduction in the unauthorized distribution of cannabis; (12) Conduct and administer procedures and hearings in compliance with chapter 91 for the adoption of rules and review of the issuance, denial, or revocation of licenses or violation of this chapter or the rules adopted pursuant to this chapter; (13) Impose and collect fees, sanctions and administrative penalties, as authorized by this chapter and established by rule, and for a violation of any rule adopted by the agency; (14) Conduct investigations into the qualifications of all applicants for employment by the agency and all applicants for licensure pursuant to this chapter; (15) Inspect cannabis establishments and have access to all equipment and supplies in a cannabis establishment for the purpose of ensuring and enforcing compliance with this chapter, and all rules and regulations adopted pursuant to this chapter; (16) Require that the books and financial or other records or statements of a licensee be kept in a manner that the agency deems proper; (17) Establish adjudicatory procedures and conduct adjudicatory proceedings pursuant to chapter 91; (18) Maintain an official internet website for the agency; (19) Form advisory boards and submit any matter to an advisory board for study, review, or recommendation; (20) Delegate any administrative, procedural, or operational matter to the executive director; (21) Issue temporary emergency orders, directives, or instructions, with or without prior notice or hearing, in an instance in which the public health or safety is in substantial or imminent danger as it relates to the activities, conduct, or practices of a licensee or as a result of a defective or dangerous product offered for sale by a licensee; and (22) Do any and all things necessary to carry out its purposes and exercise the powers given and granted in this chapter. §A-6 Licenses. (a) Licenses may be granted by the agency as provided in this section. (b) The agency may issue any of the following licenses: (1) Cannabis cultivation facility licenses, which shall authorize the licensee to cultivate, process, prepare, label, and package cannabis and cannabis products for sale to retail cannabis stores and dual use cannabis dispensaries; to purchase or take possession of cannabis from other licensed cannabis cultivation facilities or dual use cannabis dispensaries; and to transfer possession of and sell cannabis and cannabis products to retail cannabis stores and dual use cannabis dispensaries; (2) Retail cannabis store licenses, which shall authorize the licensee to purchase or take possession of cannabis or cannabis products from a cannabis cultivation facility or dual use cannabis dispensary and to sell cannabis and cannabis products to consumers on premises approved by the agency; (3) Cannabis testing facility licenses, which shall authorize the licensee to develop, research, or test cannabis and cannabis products for that facility or another licensee; and (4) Dual use cannabis licenses, which shall authorize the licensee to cultivate, process, manufacture, transport, and sell cannabis and cannabis products for both medical and personal use; to purchase or take possession of cannabis or cannabis products from a cannabis cultivation facility or dual use cannabis dispensary; and to transfer possession of and sell cannabis and cannabis products to retail cannabis stores, other dual use cannabis dispensaries, and consumers. (c) The agency may establish additional license types and grant temporary licenses of any type specified in subsection (b), in accordance with conditions set forth in the rules adopted pursuant to this chapter. (d) Except as otherwise permitted by this chapter or the rules adopted pursuant to this chapter, no person shall be granted or have any interest in a license in more than one of the following categories: dual use cannabis license, cannabis cultivation facility license, retail cannabis store license, or cannabis testing facility license. As used in this subsection, "interest" means an equity ownership interest or partial equity ownership interest or any other type of financial interest, including but not limited to being an investor or serving in a management position. (e) No cannabis shall be sold or otherwise marketed pursuant to this chapter that has not first been tested by a cannabis testing laboratory and determined to meet the agency's testing requirements set forth in the rules adopted pursuant to this chapter or chapter 329D. (f) Each license granted by the agency shall designate the location where the business of the licensee will be conducted. Except as otherwise permitted by the rules adopted pursuant to this chapter, no license shall be transferable from one person to another or from one location to another. (g) The privilege of any licensee to cultivate, transport, sell, or test cannabis or cannabis products shall extend to the licensee and to all agents and employees of the licensee for the purpose of operating under the license. The licensee may be held liable for any violation of this chapter or the rules adopted pursuant to this chapter by the agents or employees in connection with their employment. §A-7 Pilot period. (a) Except as provided in subsection (b), there shall be a pilot period prior to the issuance of new licenses until the date that is the later of: (1) Two years following the effective date of this chapter; or (2) The final issuance of the rules. (b) Notwithstanding subsection (a), during the pilot period from the effective date of this chapter until final issuance of the rules, any licensed medical cannabis dispensary under chapter 329D shall be permitted to cultivate, process, manufacture, transport, and sell cannabis and cannabis products under this chapter as a dual use cannabis dispensary. (c) The agency shall utilize the pilot period to monitor and study relevant data, market conditions, and regulations to inform, develop, and adopt final rules or statutory recommendations to effectuate the purpose of this chapter. (d) During the pilot period, dual use cannabis dispensaries shall comply with directives of state agencies, departments, and offices exercising regulatory authority pursuant to subsection (e), and directives provided or issued by the agency to protect public health and public safety. Failure to comply with the rules or directives may result in the revocation or suspension of the authorization granted under subsection (b). (e) During the pilot period, the agency may prescribe the forms, procedures, and requirements as necessary to facilitate the operation of medical cannabis dispensaries as dual use cannabis dispensaries. The prescription of the necessary forms, procedures, and requirements shall be exempt from chapter 91. (f) All prospective and approved dual use cannabis dispensaries under this chapter shall maintain compliance with the provisions of chapter 329D during the pilot period until final issuance of the rules, except transfer of cannabis for personal use shall be exempt from sections 329D-11(a)(3), 329D-11(a)(9)(B)(i), 329D-13, and 329D-15. (g) Forms, procedures, and requirements relating to this pilot period may be amended by the agency until final issuance of the rules, at which time the forms, procedures, and requirements shall be superseded by the agencys final rules. §A-8 Regulation of cannabis; rules. (a) The agency shall adopt rules pursuant to chapter 91 necessary for implementation of this chapter. The rules shall include: (1) Procedures for the application, issuance, renewal, denial, suspension, or revocation of a license to operate a cannabis establishment; provided that any license to be issued shall be issued no later than thirty days after receipt of an application; (2) A schedule of application, licensing, and renewal fees; provided that application fees shall not exceed $10,000, adjusted annually for inflation, unless the department determines a greater fee is necessary to carry out its responsibilities under this section; (3) Qualifications for licensure that are directly and demonstrably related to the operation of a cannabis establishment; (4) Security requirements for the premises of cannabis establishments; (5) Requirements to prevent the sale or diversion of cannabis and cannabis products to persons under the age of twenty-one; (6) Labeling requirements for cannabis and cannabis products sold or distributed by a cannabis establishment; (7) Health and safety regulations and standards for the manufacture of cannabis products and the cultivation of cannabis; (8) Restrictions on the number of licenses that may be approved under this chapter. The agency shall give consideration to geography, socio-economic conditions, and other factors that may impact communities where cannabis establishments are located; (9) Restrictions on the advertising and display of cannabis and cannabis products; (10) Civil penalties for the failure to comply with rules adopted pursuant to this section; and (11) Specific penalties such as the imposition of fines or suspension or revocation of a license. (b) In order to ensure that individual privacy is protected, the agency shall not require a consumer purchasing cannabis for personal use to provide a retail cannabis store or dual use cannabis dispensary with personal information other than government issued identification to determine the consumer's age. A retail cannabis store or dual use cannabis dispensary shall not be required to acquire and record personal information about consumers purchasing cannabis for personal use. (c) If an application for a license under this section is denied, the applicant shall be notified in writing of the specific reason for the denial. The applicant may be entitled to resubmit the application at any time after denial of the initial application. §A-9 Tracking. The authority shall track the cultivation, processing, and sale of cannabis and cannabis products. §A-10 Effect on employers. This chapter shall not be construed to: (1) Require an employer to permit or accommodate the use, consumption, possession, transfer, display, transport, sale, or growing of cannabis in the workplace; or (2) Affect the ability of an employer to have policies restricting the use of cannabis by employees. §A-11 Effect on intoxicated driving laws. This chapter shall not be construed as a defense, exemption, or immunity from chapter 291E. §A-12 Effect on medical cannabis law. This chapter shall not be construed to affect medical use of cannabis as provided in chapter 329 and shall not be deemed to expand the medical use of cannabis beyond the uses provided in chapter 329. §A-13 Effect on medical cannabis dispensary law. This chapter shall not be construed to affect the dispensing of medical cannabis as provided in chapter 329D and shall not be deemed to expand the dispensing of medical cannabis beyond the uses provided in chapter 329D. §A-14 Effect on property rights. Condominium associations may restrict or prohibit the smoking of cannabis in the same manner they may restrict or prohibit the smoking of tobacco on the property. This chapter shall not be construed to prohibit a person, employer, school, hospital, detention facility, corporation, or any other entity who occupies, owns, or controls a property from prohibiting or otherwise regulating the possession, consumption, use, display, transfer, distribution, sale, transportation, or growing of cannabis on or in that property." PART III SECTION 3. Chapter 706, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows: "§706- Marijuana offenders; resentencing; expungement; sealing. (1) Records relating to the arrest, criminal charge, or conviction of a person for an offense under chapter 329, part IV of chapter 712, or any other offense, the basis of which is an act permitted by chapter A or decriminalized under Act , Session Laws of Hawaii 2023, including the possession or distribution of marijuana, shall be ordered expunged in accordance with the provisions of this section. (2) No later than December 31, 2025, the attorney general, in collaboration with the judiciary and county prosecuting attorneys, shall determine the offenses that meet the criteria for expungement set forth in subsection (1). The county prosecuting attorneys shall issue a written notice to persons with records that qualify for expungement under subsection (1). Once offenses have been identified, but no later than January 1, 2026, the attorney general (in cases of an arrest for or charge with but not a conviction of a crime) and the appropriate court of record (in cases of conviction and pursuant to procedures established by the judiciary) shall order the automatic expungement of the records relating to the arrest, criminal charge, or conviction, as appropriate. (3) A person convicted for an offense under chapter 329, part IV of chapter 712, or any other offense, the basis of which is an act permitted by chapter A or decriminalized under Act , Session Laws of Hawaii 2023, including the possession or distribution of marijuana, shall have the right to petition at any time and without limitation to the number of petitions a convicted person may file, with the appropriate court of record for review and adjustment of the sentence. (4) Any expungement order issued pursuant to this section shall be sealed. (5) Eligibility pursuant to this section shall be granted notwithstanding the existence of: (a) Prior arrests or convictions; (b) Pending criminal proceedings; or (c) Outstanding court-imposed or court-related fees, fines, costs, assessments, or charges. (6) Any outstanding fees, fines, costs, assessments, or charges related to the eligible conviction shall be waived. (7) Nothing in this section shall be construed to restrict or modify a person's right to have the person's records expunged, except as otherwise may be provided by law, or diminish or abrogate any rights or remedies otherwise available to the person. (8) Nothing in this section shall be construed to require the court or any agency to reimburse any petitioner for fines, fees, and costs previously incurred, paid, or collected in association with the eligible conviction. (9) The existence of convictions in other counts within the same case that are not eligible for expungement pursuant to this section or other applicable laws shall not prevent any conviction otherwise eligible for expungement under this section from being expunged pursuant to this section. In such circumstances, the court shall make clear in its order which counts are expunged and which counts are not expunged or remain convictions. In such circumstances, notwithstanding subsection (5), any expungement pursuant to this subsection shall not affect the records related to any count or conviction in the same case that are not eligible for expungement. (10) Any conviction ordered expunged pursuant to this section shall not be considered as a prior conviction when determining the sentence to be imposed for any subsequent crime. (11) In any application for employment, license, or other civil right or privilege, or any appearance as a witness, a person whose conviction of a crime has been expunged pursuant to this chapter may state that the person has never been convicted of the crime; provided that, if the person is an applicant for a law enforcement agency position, for admission to the bar of any court, an applicant for a teaching certificate, or the operator or employee of an early childhood education facility, the person shall disclose the fact of a conviction. (12) Whenever the records of any conviction of a person have been expunged under the provisions of this section, any custodian of the records of conviction relating to that crime shall not disclose the existence of the records upon inquiry from any source, unless the inquiry is that of the person whose record was expunged; that of a bar admission, character and fitness, or disciplinary committee, board, or agency, or court which is considering a bar admission, character and fitness, or disciplinary matter; that of the board of education; or that of any law enforcement agency, when the nature and character of the offense in which an individual is to be charged would be affected by virtue of the person having been previously convicted or adjudicated of the same offense. The custodian of any records that have been expunged pursuant to the provisions of this section shall only release or allow access to those records for the purposes specified in this subsection or by order of a court. (13) The judiciary and its employees and agents and the department of the attorney general and its employees and agents are immune from any civil liability for any act of commission or omission, taken in good faith, arising out of and in the course of participation in, or assistance with the expungement procedures set forth in this section. This immunity shall be in addition to and not in limitation of any other immunity provided by law. (14) The attorney general may adopt rules to effectuate the purposes of this section." SECTION 4. Chapter 712, Hawaii Revised Statutes, is amended by adding a new section to part IV to be appropriately designated and to read as follows: "§712- Legalization of marijuana. The following acts shall be exempt from arrest, prosecution, and criminal culpability under this part: (1) Any act permitted under section A-2; (2) Any act permitted under section A-3; and (3) An act of any person who is appropriately and currently licensed if the act requires a license under chapter A." SECTION 5. Section 235-2.4, Hawaii Revised Statutes, is amended by amending subsection (v) to read as follows: "(v) Section 280E (with respect to expenditures in connection with the illegal sale of drugs) of the Internal Revenue Code shall be operative for the purposes of this chapter, except that section 280E shall not be operative with respect to [the]: (1) The production and sale of medical cannabis and manufactured cannabis products by dispensaries licensed under chapter 329D and their subcontractors, as defined in section 329D-1[.]; and (2) Any activity authorized by chapter A." SECTION 6. Section 712-1244, Hawaii Revised Statutes, is amended by amending subsection (1) to read as follows: "(1) [A] Except as otherwise provided in chapter A, a person commits the offense of promoting a harmful drug in the first degree if the person knowingly: (a) Possesses one hundred or more capsules or tablets or dosage units containing one or more of the harmful drugs or one or more of the marijuana concentrates, or any combination thereof; (b) Possesses one or more preparations, compounds, mixtures, or substances, of an aggregate weight of one ounce or more containing one or more of the harmful drugs or one or more of the marijuana concentrates, or any combination thereof; (c) Distributes twenty-five or more capsules or tablets or dosage units containing one or more of the harmful drugs or one or more of the marijuana concentrates, or any combination thereof; (d) Distributes one or more preparations, compounds, mixtures, or substances, of an aggregate weight of one- eighth ounce or more, containing one or more of the harmful drugs or one or more of the marijuana concentrates, or any combination thereof; or (e) Distributes any harmful drug or any marijuana concentrate in any amount to a minor." SECTION 7. Section 712-1245, Hawaii Revised Statutes, is amended by amending subsection (1) to read as follows: "(1) [A] Except as otherwise provided in chapter A, a person commits the offense of promoting a harmful drug in the second degree if the person knowingly: (a) Possesses fifty or more capsules or tablets or dosage units containing one or more of the harmful drugs or one or more of the marijuana concentrates, or any combination thereof; (b) Possesses one or more preparations, compounds, mixtures, or substances, of an aggregate weight of one- eighth ounce or more, containing one or more of the harmful drugs or one or more of the marijuana concentrates, or any combination thereof; or (c) Distributes any harmful drug or any marijuana concentrate in any amount." SECTION 8. Section 712-1246, Hawaii Revised Statutes, is amended by amending subsection (1) to read as follows: "(1) [A] Except as otherwise provided in chapter A, a person commits the offense of promoting a harmful drug in the third degree if the person knowingly possesses twenty-five or more capsules or tablets or dosage units containing one or more of the harmful drugs or one or more of the marijuana concentrates, or any combination thereof." SECTION 9. Section 712-1247, Hawaii Revised Statutes, is amended by amending subsection (1) to read as follows: "(1) [A] Except as otherwise provided in chapter A, a person commits the offense of promoting a detrimental drug in the first degree if the person knowingly: (a) Possesses four hundred or more capsules or tablets containing one or more of the Schedule V substances; (b) Possesses one or more preparations, compounds, mixtures, or substances of an aggregate weight of one ounce or more, containing one or more of the Schedule V substances; (c) Distributes fifty or more capsules or tablets containing one or more of the Schedule V substances; (d) Distributes one or more preparations, compounds, mixtures, or substances of an aggregate weight of one- eighth ounce or more, containing one or more of the Schedule V substances; (e) Possesses one or more preparations, compounds, mixtures, or substances of an aggregate weight of one pound or more, containing any marijuana; (f) Distributes one or more preparations, compounds, mixtures, or substances of an aggregate weight of one ounce or more, containing any marijuana; (g) Possesses, cultivates, or has under the person's control twenty-five or more marijuana plants; or (h) Sells or barters any marijuana or any Schedule V substance in any amount." SECTION 10. Section 712-1248, Hawaii Revised Statutes, is amended by amending subsection (1) to read as follows: "(1) [A] Except as otherwise provided in chapter A, a person commits the offense of promoting a detrimental drug in the second degree if the person knowingly: (a) Possesses fifty or more capsules or tablets containing one or more of the Schedule V substances; (b) Possesses one or more preparations, compounds, mixtures, or substances, of an aggregate weight of one- eighth ounce or more, containing one or more of the Schedule V substances; (c) Possesses one or more preparations, compounds, mixtures, or substances, of an aggregate weight of one ounce or more, containing any marijuana; or (d) Distributes any marijuana or any Schedule V substance in any amount." SECTION 11. Section 712-1249, Hawaii Revised Statutes, is amended by amending subsection (1) to read as follows: "(1) [A] Except as otherwise provided in chapter A, a person commits the offense of promoting a detrimental drug in the third degree if the person knowingly possesses any marijuana or any Schedule V substance in any amount." SECTION 12. Section 712-1249.4, Hawaii Revised Statutes, is amended by amending subsection (1) to read as follows: "(1) [A] Except as otherwise provided in chapter A, a person commits the offense of commercial promotion of marijuana in the first degree if the person knowingly: (a) Possesses marijuana having an aggregate weight of twenty-five pounds or more; (b) Distributes marijuana having an aggregate weight of five pounds or more; (c) Possesses, cultivates, or has under the person's control one hundred or more marijuana plants; (d) Cultivates on land owned by another person, including land owned by the government or other legal entity, twenty-five or more marijuana plants, unless the person has the express permission from the owner of the land to cultivate the marijuana or the person has a legal or an equitable ownership interest in the land or the person has a legal right to occupy the land; or (e) Uses, or causes to be used, any firearm or other weapon, device, instrument, material, or substance, whether animate or inanimate, which in the manner used is capable of causing death, serious bodily injury, substantial bodily injury, or other bodily injury, as defined in chapter 707 in order to prevent the theft, removal, search and seizure, or destruction of marijuana." SECTION 13. Section 712-1249.5, Hawaii Revised Statutes, is amended by amending subsection (1) to read as follows: "(1) [A] Except as otherwise provided in chapter A, a person commits the offense of commercial promotion of marijuana in the second degree if the person knowingly: (a) Possesses marijuana having an aggregate weight of two pounds or more; (b) Distributes marijuana having an aggregate weight of one pound or more; (c) Possesses, cultivates, or has under the person's control fifty or more marijuana plants; (d) Cultivates on land owned by another person, including land owned by the government or other legal entity, any marijuana plant, unless the person has the express permission from the owner of the land to cultivate the marijuana or the person has a legal or an equitable ownership interest in the land or the person has a legal right to occupy the land; or (e) Sells or barters any marijuana or any Schedule V substance in any amount to a minor." PART IV SECTION 14. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows: "CHAPTER B CANNABIS TAX LAW §B-1 Definitions. As used in this chapter, unless the context otherwise requires: "Agency" shall have the same meaning as the term is used in chapter A-1. "Cannabis" shall have the same meaning as the term is used in chapter A-1. "Cannabis cultivation facility" shall have the same meaning as the term is used in chapter A-1. "Cannabis establishment" shall have the same meaning as the term is used in chapter A-1. "Cannabis products" shall have the same meaning as the term is used in chapter A-1. "Consumer" shall have the same meaning as the term is used in chapter A-1. "Department" means the department of taxation. "Dual use cannabis dispensary" shall have the same meaning as the term is used in chapter A-1. "License" shall have the same meaning as the term is used in chapter A-1. "Licensee" shall have the same meaning as the term is used in chapter A-1. "Medical cannabis dispensary" means a person licensed as a medical cannabis dispensary under chapter 329D. "Permittee" means the holder of a permit under section B-2. "Personal use" shall have the same meaning as the term is used in chapter A-1. "Place", "premises", or "location" means the real estate, together with any buildings or improvements thereon, designated in the application for a license as the place at which the cultivation, sale or testing of cannabis shall be performed. "Retail cannabis store" shall have the same meaning as the term is used in chapter A-1. §B-2 Permit. (a) It shall be unlawful for any retail cannabis store or dual use cannabis dispensary to sell cannabis to consumers for personal use unless a permit has been issued to the retail cannabis store or dual use cannabis dispensary as hereinafter prescribed, and the permit is in full force and effect. (b) The agency or the department of health shall certify to the department the name of every retail cannabis store and dual use cannabis dispensary, together with the place of business and the period covered by the license held by the retail cannabis store or dual use cannabis dispensary. The department shall issue its permit to the retail cannabis store or dual use cannabis dispensary upon the payment of a permit fee of $25.00. The permit shall be issued by the department to: (1) Retail cannabis stores as of the date when the agency issued the retail cannabis store license; and (2) Dual use cannabis dispensaries as of the date when the pilot period under chapter A begins. (c) Any permit issued under this chapter shall be for the period covered by the retail cannabis store or dual use cannabis dispensary's license; it shall not be assignable; it shall be conspicuously displayed on the licensed premises of the permittee; it shall expire upon the expiration of the period covered by the permittee's license, or on June 30 next succeeding the date upon which it is issued, whichever is earlier, unless sooner suspended, surrendered, or revoked for good cause by the department; and it shall be renewed annually before July 1, upon fulfillment of all requirements as in the case of an original permit and the payment of a renewal fee of $25.00. Whenever a permit is defaced, destroyed, or lost, or the licensed premises are relocated, the department may issue a duplicate permit to the permittee upon the payment of a fee of $5.00. (d) The department may suspend, revoke, or decline to renew any permit issued under this chapter whenever the department finds that the applicant or permittee has failed to comply with this chapter or any rule adopted under this chapter, or for any other good cause. Good cause includes but is not limited to instances where an applicant or permittee has: (1) Submitted a false or fraudulent application or provided a false statement in an application; (2) Possessed or displayed a false or fraudulent permit; or (3) Failed to maintain complete and accurate records when and if required to be kept. Upon suspending or revoking any permit, the department may request that the permittee surrender the permit or any duplicate issued to, or printed by the permittee, and the permittee shall surrender the permit or duplicate promptly to the department as requested. (e) Whenever the department suspends, revokes, or declines to renew a permit, the department shall notify the applicant or permittee immediately and afford the applicant or permittee a hearing, if desired; provided that a hearing has not already been afforded. The department shall provide not less than thirty days notice to the applicant or permittee of a hearing afforded under this subsection. After the hearing the department shall: (l) Rescind its order of suspension; (2) Continue the suspension; (3) Revoke the permit; (4) Rescind its order of revocation; (5) Decline to renew the permit; or (6) Renew the permit. §B-3 Cooperation between department and the agency or department of health. (a) The department and the agency or department of health shall cooperate in the enforcement of this chapter. (b) The department shall notify the agency or department of health of the name and address of every permittee whose permit has been revoked, and any license issued to the permittee under chapter A thereupon shall be deemed forfeited. (c) The department may notify the agency or department of health of the name and address of every person who has failed to file any return required, to pay any tax prescribed, to secure a permit, or to perform any other duty or act imposed under this chapter, and the agency or department of health shall thereupon suspend any license which may have been issued to any the person under chapter A until the time as the person complies with this chapter. §B-4 Tax; limitations. (a) Every person who sells any cannabis in the State shall pay a tax that is hereby imposed at the rate of ten per cent of the sales price. (b) The tax levied pursuant to subsection (a) shall be paid only once upon the same cannabis; provided that the tax shall not apply to: (1) Cannabis sold by one licensee to another licensee under chapter A; and (2) Cannabis sold for medical use by a medical cannabis dispensary under chapter 329D. §B-5 Return; form; contents. Every taxpayer shall, on or before the twentieth day of each month, file with the department a return showing all sales of cannabis by dollar volume and taxes under section B-4(a) made by the taxpayer during the preceding month, showing separately the amount of the nontaxable sales, and the amount of the taxable sales, and the tax payable thereon. The form and manner of the return shall be prescribed by the department and shall contain any information the department may deem necessary for the proper administration of this chapter. §B-6 Payment of tax; penalties. At the time of the filing of the return required under section B-5 and within the time prescribed therefor, each taxpayer shall pay to the department the tax imposed by this chapter, required to be shown by the return. Penalties and interest shall be added to and become a part of the tax, when and as provided by section 231-39. §B-7 Determination of tax, additional assessments, credit, and refunds. (a) As soon as practicable after each return has been filed, the department shall cause it to be examined and shall compute and determine the amount of the tax payable thereon. (b) If it should appear upon the examination or thereafter within five years after the filing of the return, or at any time if no return has been filed, as a result of the examination or as a result of any examination of the records of the taxpayer or of any other inquiry or investigation, that the correct amount of the tax is greater than that shown on the return, or that any tax imposed by the chapter has not been paid, an assessment of the tax may be made in the manner provided in section 235‑108(b). The amount of the tax for the period covered by the assessment shall not be reduced below the amount determined by an assessment so made, except upon appeal or in a proceeding brought pursuant to section 40-35. (c) If the taxpayer has paid or returned with respect to any month more than the amount determined to be the correct amount of tax for the month, the amount of the tax so returned and any assessment of tax made pursuant to the return may be reduced, and any overpayment of tax may be credited upon the tax imposed by this chapter, or at the election of the taxpayer, the taxpayer not being delinquent in the payment of any taxes owing to the State, may be refunded in the manner provided in section 231-23(c); provided that no reduction of tax may be made when forbidden by subsection (b) or more than five years after the filing of the return. §B-8 Records to be kept. (a) Every permittee under this chapter shall keep a record of all sales of cannabis and cannabis products made by the permittee, in the form as the department may prescribe. Every person holding a license under chapter A, other than a cannabis testing facility or cannabis cultivation facility license, shall keep a record of all purchases by the person of cannabis and cannabis products and taxed under section B-4(a), in the form as the department may prescribe. All records shall be offered for inspection and examination at any time upon demand by the department or agency and shall be preserved for a period of five years, except that the department may in writing consent to their destruction within the period or may require that they be kept longer. The department may by rule require the permitee to keep other records as it may deem necessary for the proper enforcement of this chapter. (b) If any permittee or any other taxpayer fails to keep records from which a proper determination of the tax due under this chapter may be made, the department may fix the amount of tax for any period from the best information obtainable by it, and assess the tax as hereinbefore provided. §B-9 Inspection. The director of taxation, the agency, or the duly authorized agent of either the director or agency, may examine all records required to be kept under this chapter, and books, papers, and records of any person engaged in the sale of cannabis to verify the accuracy of the payment of the tax imposed by this chapter and in compliance with this chapter and regulations adopted pursuant thereto. Every person in possession of the books, papers, and records and the person's agents and employees shall give the director, the agency, or the duly authorized agent of either of them, the means, facilities, and opportunities for examination. The agency shall have the authority of a duly accredited tax official of the State pursuant to section 231-18 to inspect tax returns of any taxpayer for the limited purposes set forth in this section; provided that this authority shall not extend to the inspection of any documents not directly related to this chapter. §B-10 Tax in addition to other taxes. The tax imposed by this chapter shall be in addition to any other tax imposed upon the business of selling cannabis or upon any of the transactions, acts, or activities taxed by this chapter. §B-11 Appeals. Any person aggrieved by any assessment of the tax imposed by this chapter may appeal from the assessment in the manner and within the time and in all other respects as provided in the case of income tax appeals by section 235-114. The hearing and disposition of the appeal, including the distribution of costs shall be as provided in chapter 232. §B-12 Other provisions applicable. All of the provisions of chapters 235 and 237 not inconsistent with this chapter and which may appropriately be applied to the taxes, persons, circumstances, and situations involved in this chapter, including provisions as to penalties and interest, provisions granting administrative powers to the director of taxation, provisions for the assessment, levy, and collection of taxes, shall be applicable to the taxes imposed by this chapter, and to the assessment, levy, and collection thereof. §B-13 Investigations; contempt; fees. The director of taxation, and any representative of the director duly authorized by the director, shall have the authority to conduct any civil audit or criminal investigation, investigation, of hearing relating to the taxes in this section in the manner provided in section 231-7. §B-14 Administration by director; rules and regulations. The administration of this chapter is vested in the director of taxation who may prescribe and enforce rules and regulations for the enforcement and administration of this chapter. The rules and regulations shall be prescribed by the director of taxation, subject to chapter 91. §B-15 Disposition of revenues. All moneys collected pursuant to this chapter shall be paid into the state treasury as state realizations, to be kept and accounted for as provided by law." PART V SECTION 15. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date. SECTION 16. In codifying the new sections added by sections 2 and 14 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act. SECTION 17. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored. SECTION 18. This Act shall take effect on March 22, 2075. |
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