SB375 SD1

PART I

SECTION 1. 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-1930s 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, which classifies marijuana and tetrahydrocannabinol as schedule I controlled substances.

Notwithstanding the prospect of federal prosecution, several states, including Hawaii, have enacted medical cannabis laws. Chapter 329, part IX, Hawaii Revised Statutes, was enacted to create a medical use of cannabis exemption from criminal sanctions. Other jurisdictions—specifically, Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Illinois, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Utah, Vermont, Virginia, Washington, and West Virginia—also allow the use of cannabis for medicinal purposes. Furthermore, chapter 329D, Hawaii Revised Statutes, was enacted to establish medical cannabis dispensaries that were 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, knowing that the medicine will be regulated and tested.

In addition to medicinal cannabis laws, some states have decriminalized cannabis: Alaska, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oregon, Rhode Island, Vermont, Virginia, and Washington. In 2019, Hawaii enacted Act 273, which decriminalized the possession of cannabis in the amount of three grams or less. In each of these states, cannabis users no longer face arrest or jail time for the possession or use of cannabis in an amount permitted by statute. Most places that have decriminalized possession of small amounts of cannabis have replaced incarceration or criminal charges with civil fines, confiscation, drug education, or drug treatment, or have made various cannabis offenses the lowest priority for law enforcement.

The legislature further 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. In 2012, voters in Colorado and Washington voted to legalize and regulate the production, possession, and distribution of cannabis for persons aged twenty-one and older. Following Colorado and Washington's lead, Alaska, Arizona, California, Connecticut, District of Columbia, Illinois, Maine, Maryland, Massachusetts, Michigan, Missouri, Montana, Nevada, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, and Virginia also legalized small amounts of cannabis for adult recreational use.

States that have legalized cannabis use have increased their tax collections. For example, Colorado collected $67,594,323 from medical and retail cannabis taxes and fees during the first year of retail cannabis sales in 2014, $302,458,426 during the 2019 calendar year, and a total of $2,321,115,468 in revenues as of November 2022. Most industry experts estimate that New Jersey and Arizona will be billion-dollar markets in a few years.

The legislature further finds that the virus known as SARS-CoV-2 causes a disease named coronavirus disease 2019 (COVID‑19), which spread globally and was declared a pandemic by the World Health Organization on March 11, 2020. Upon reaching Hawaii's shores, the COVID-19 outbreak disrupted the economy, resulting in an estimated $2,300,000,000 budget shortfall as of August 2020. While the State has since seen revenues bounce back, an additional source of revenue is necessary to allow the State to continue to meet its strategic goals, including the provision of quality early learning and preschool programs for Hawaii's children. The legislature further finds that cannabis cultivation and sales hold potential for economic development, increased tax revenues, and reduction in crime.

The purpose of this Act is to:

(1) Establish the Hawaii cannabis authority within the department of health to adopt rules to regulate responsible, adult use of cannabis in the State;

(2) Establish that possession of cannabis by an adult without a prescription in the amount of four ounces or less shall be lawful and require all records relating to the arrest, criminal charge, or convictions for such acts be expunged; and

(3) Transfer the powers and duties of the department of health under chapter 329D, Hawaii Revised Statutes, including powers and duties over medical marijuana dispensary operations, licensing, testing, and administration, to the Hawaii cannabis authority.

PART II

SECTION 2. The purpose of this part is to authorize responsible, adult-use cannabis in the State and to provide for its regulation.

SECTION 3. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter A

RESPONSIBLE, ADULT-USE CANNABIS

PART I. GENERAL PROVISIONS

§A-1 Short title. This chapter may be cited as the Hawaii Responsible, Adult-Use Cannabis Law.

§A-2 Definitions. As used in this chapter, unless the context otherwise requires:

"Authority" means the Hawaii cannabis authority established under section A-11.

"Cannabis" means all parts of the plant Cannabis sativa L., Cannabis indica, or Cannabis ruderalis, whether growing or not; the seeds thereof; the resin, whether crude or purified, extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or resin. "Cannabis" includes the separated resin, whether crude or purified, obtained from cannabis. "Cannabis" does not include the mature stalks of the plant; fiber produced from the stalks; oil or cake made from the seeds of the plant; any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks (except the resin extracted therefrom), fiber, oil, or cake; the sterilized seed of the plant that is incapable of germination; or hemp as defined by section 328G-1.

"Cannabis accessories" means any equipment, products or materials of any kind which are used, intended for use, or designed for use in planting, propagating, cultivating, growing, harvesting, manufacturing, compounding, converting, producing, processing, preparing, testing, analyzing, packaging, repackaging, storing, smoking, vaporizing, or containing cannabis, or for ingesting, inhaling, or otherwise introducing cannabis or manufactured cannabis products into or onto the human body.

"Concentrated cannabis" means the separated resin, whether crude or purified, obtained from cannabis.

"Cultivation" means any activity involving the planting, growing, harvesting, drying, curing, grading, or trimming of cannabis.

"Department" means the department of health.

"Manufacture" means to compound, blend, extract, infuse, or otherwise make or prepare a manufactured cannabis product.

"Manufactured cannabis products" means cannabis that has undergone a process whereby the plant material has been transformed into a concentrate, including but not limited to concentrated cannabis, an edible or topical product containing cannabis, or concentrated cannabis and other ingredients.

"Responsible, adult use" means use in accordance with section A-17 and any rules adopted by the authority pursuant to this chapter.

§A-3 Cannabidiol products; application of chapter. This chapter shall not apply to any product containing cannabidiol that has been approved by the federal Food and Drug Administration that has either been placed on a schedule of the federal Controlled Substances Act other than Schedule I or has been exempted from one or more provisions of that act, and that is intended for prescribed use for the treatment of a medical condition.

§A-4 Construction of the chapter. Nothing in this chapter shall be construed to:

(1) Affect the medical use of cannabis or limit any privileges or rights as provided in part IX of chapter 329;

(2) Affect the regulation of medical cannabis dispensaries as provided in chapter 329D;

(3) Require an employer to permit or accommodate conduct otherwise allowed by this chapter in any workplace or on the employer's property;

(4) Prohibit an employer from disciplining an employee for violation of a workplace drug policy or for working while under the influence of cannabis;

(5) 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 a workplace drug policy or because that person was working while under the influence of cannabis;

(6) Supersede any law relating to operating a vehicle under the influence of an intoxicant;

(7) Permit the transfer of cannabis, with or without remuneration, to a minor or to allow a minor to purchase, possess, use, transport, grow, or consume cannabis; or

(8) Require any person, corporation, or any other entity that occupies, owns, or controls real property to allow the consumption, cultivation, display, sale, or transfer of cannabis on or in that property; provided that in the case of the rental of a residential dwelling, a landlord shall not prohibit the possession of cannabis or the consumption of cannabis that is not inhaled, unless:

(A) The tenant is not leasing the entire residential dwelling;

(B) The residence is incidental to detention or the provision of medical, geriatric, educational, counseling, religious, or similar service;

(D) Failing to prohibit cannabis possession or consumption would violate federal law or regulations or cause the landlord to lose a monetary or licensing-related benefit under federal law or regulations.

PART II. ADMINISTRATION

§A-11 Hawaii cannabis authority; members; qualifications; compensation. (a) There is established a Hawaii cannabis authority within the department of health for administrative purposes only.

(b) Notwithstanding section 26-34 to the contrary, the authority shall consist of nine members who shall be residents of the State and of which:

(1) One person from the public health sector to be appointed by the director of health;

(2) One person actively engaged in the cannabis industry to be appointed by the director of commerce and consumer affairs;

(3) One person to be appointed by the chairperson of the civil rights commission;

(4) One person to be appointed by the chairperson of the commission on the status of women;

(5) One person to be appointed by the chairperson of the board of trustees of the office of Hawaiian affairs;

(6) One person from a nonprofit advocacy organization that focuses on cannabis decriminalization or correctional justice reform to be appointed by the governor;

(7) One person from the public appointed by the governor; and

(8) Two persons from the public, one each to be appointed by the speaker of the house of representatives and president of the senate.

The member representing the public health sector or public, or the member's immediate family member, may not have a financial interest in the cannabis industry or liquor industry. No person who has served as a commissioner on a county liquor commission shall be eligible to sit as a member of the authority until at least five years have expired between the person's termination from service as a commissioner on a county liquor commission and the person's appointment to the authority.

For purposes of this subsection:

"Cannabis industry" means a business or profession related to cannabis in which the person is lawfully engaged and that is in compliance with the provisions of state law, including this chapter and rules adopted under this chapter.

"Financial interest" means holding directly or indirectly, a legal or equitable interest in the operation of a business licensed under this chapter.

"Immediate family member" means a spouse, child, or parent.

"Public health sector" means a state, federal, or local entity that works to ensure the health and safety of persons and communities through education, policymaking, treatment, and prevention of injury and disease, and promotion of wellness.

(c) Each member of the authority shall serve without pay. However, the actual and necessary traveling expenses incurred in connection with the performance of the member's official duties shall be paid by the department, upon the presentation of vouchers approved by the department.

§A-12 Hawaii cannabis authority; organization. (a) The authority shall elect one member as chairperson and one member as vice-chairperson annually. In the absence of both the chairperson and the vice-chairperson to preside at a meeting, the members present shall select a chair pro tem.

(b) The authority shall meet not less than quarterly at a time and place determined by the authority.

(c) The majority of the members shall constitute a quorum. The concurrence of a majority of the members shall be necessary to make any action taken by the authority valid. The authority shall conduct its meetings in accordance with chapters 91 and 92.

§A-13 Hawaii cannabis authority; powers and duties. In addition to any other powers or duties authorized by law, the Hawaii cannabis authority may:

(1) Adopt, amend, or repeal rules, issue declaratory rulings or informal nonbinding interpretations, and conduct contested case proceedings pursuant to chapter 91;

(2) Grant, deny, convert, forfeit, renew, reinstate, or restore licenses, including the issuance of conditional licenses;

(3) Revoke, suspend, or otherwise limit the license of any licensee for any violation of the provisions in this chapter or any rule or order of the authority;

(4) Develop requirements for licensure;

(5) Establish fees;

(6) Investigate and conduct hearings regarding any violation of this chapter and any rule or order of the authority;

(7) Create fact-finding committees which may make recommendations to the authority for its deliberations;

(8) Contract with qualified persons including investigators who may be exempt from chapter 76 and who shall assist the authority in exercising its powers and duties; and

(9) Subpoena witnesses and documents, administer oaths, and receive affidavits and oral testimony, including telephonic communications, and do any and all things necessary or incidental to the exercise of the authority's power and duties, including the authority to conduct contested case proceedings under chapter 91.

§A-14 Delegation of authority. (a) The authority shall delegate to the department the authority to receive, arbitrate, investigate, and prosecute any complaint against a licensee.

(b) The authority may delegate to the director of health any of its powers or duties as it deems reasonable and proper. The delegation of powers and duties by the authority shall be made in accordance with the procedures set forth in rules adopted by the authority pursuant to section A-16; provided that the authority shall not delegate its discretionary functions resulting in a final decision, including but not limited to the following:

(1) Adopting, amending, or repealing rules;

(2) Ordering disciplinary action against a licensee, including the revocation, suspension, or imposition of conditions or fines; provided that summary suspensions may be delegated; and

(3) Granting, denying, or otherwise conditioning license applications.

§A-15 Hawaii cannabis authority special fund. (a) There is established within the state treasury the Hawaii cannabis authority special fund. The special fund shall be administered by the department and the moneys in the special fund shall be expended for the purposes of this chapter.

(b) The special fund shall consist of all revenues, fees, and fines collected pursuant to this chapter, except part VI, and the rules adopted thereunder.

§A-16 Rules. (a) The authority shall adopt rules pursuant to chapter 91 to effectuate this chapter and to carry out its purpose of protecting the health, safety, and welfare of consumers, including rules concerning licensing, fees, operations, and testing, and all issues concerning the dispensing, sale, and taxation of adult-use cannabis, no later than December 1, 2024. The enumeration of specific matters which may properly be made the subject of rules shall not be construed to limit the authority's broad general power to make all rules necessary to fully effectuate the purpose of this chapter.

(b) The authority shall begin accepting applications for licenses according to rules adopted by the authority pursuant to this section no later than January 31, 2025. The issuance of licenses by the authority pursuant to the rules adopted by the authority shall begin no later than March 30, 2025.

§A-17 Possession of cannabis by persons twenty-one years of age or older. (a) Except as limited by this part, it shall be lawful for persons twenty-one years of age or older, without a prescription, to:

(1) Possess, process, transport, purchase, obtain, or give away to persons twenty-one years of age or older without any compensation, cannabis in an amount not to exceed four ounces;

(2) Possess, process, transport, purchase, obtain, or give away to persons twenty-one years of age or older without any compensation, cannabis in the form of concentrated cannabis, including as contained in cannabis products, in excess of a limit as established by the authority by rule pursuant to chapter 91;

(3) Possess, plant, cultivate, harvest, dry, or process not more than ten living cannabis plants and possess the cannabis produced by the plants;

(4) Smoke or ingest cannabis or manufactured cannabis products; and

(5) Possess, transport, purchase, obtain, use, manufacture, or give away cannabis accessories to persons twenty-one years of age or older without any compensation.

(b) It is the intent of subsection (a)(5) to meet the requirements of title 21 United States Code section 863(f) by authorizing, under state law, any person in compliance with this section to manufacture, possess, or distribute cannabis accessories.

(c) Cannabis and manufactured cannabis products involved in any way with conduct deemed lawful by this section are not contraband nor subject to seizure, and no conduct deemed lawful by this section shall constitute the basis for detention, search, or arrest."

PART III

SECTION 4. The purpose of this part is to transfer the powers and duties of the department of health under chapter 329D, Hawaii Revised Statutes, to the Hawaii cannabis authority established in section 3 of this Act.

SECTION 5. Section 329D-1, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

""Authority" means the Hawaii Cannabis Authority established by section A-11."

SECTION 6. Sections 329D-2, 329D-2.5, 329D-3, 329D-4, 329D‑5, 329D-5.5, 329D-6, 329D-7, 329D-8, 329D-9, 329D-10, 329D‑11, 329D-12, 329D-15, 329D-16, 329D-18, 329D-19, 329D-20, 329D-21, 329D-23, 329D-25, 329D-26, and 329D-27, Hawaii Revised Statutes, are amended by substituting the word "authority" wherever the word "department" appears, as the context requires.

PART IV

SECTION 7. The purpose of this part is to clarify the lawful possession of cannabis and manufactured cannabis products for responsible, adult use with respect to the uniform controlled substances act and the Hawaii penal code.

SECTION 8. Chapter 329, Hawaii Revised Statutes, is amended by adding a new section to part IX to be appropriately designated and to read as follows:

"§329- Relation to chapter A. This part shall not affect the possession of cannabis for responsible, adult use as authorized under section A-17."

SECTION 9. Section 329-43.5, Hawaii Revised Statutes, is amended by amending subsection (e) to read as follows:

"(e) Subsections (a) and (b) shall not apply to a person who is authorized to:

(1) Acquire, possess, cultivate, use, distribute, or transport cannabis pursuant to the definition of "medical use" under section 329-121, while the person is facilitating the medical use of cannabis by a qualifying patient; [or]

(2) Dispense, manufacture, or produce cannabis or manufactured cannabis products pursuant to and in compliance with chapter 329D, while the person is facilitating the medical use of cannabis by a qualifying patient pursuant to part IX of chapter 329[.]; or

(3) Possess cannabis for the individual's responsible, adult use, pursuant to section A-17."

SECTION 10. Chapter 329D, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§329D- Relation to chapter A. Nothing in this chapter shall be construed to affect the possession of cannabis for responsible, adult use as authorized under section A-17."

SECTION 11. Chapter 706, Hawaii Revised Statutes, is amended by adding a new section to part II 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 section A-17 or decriminalized under Act , Session Laws of Hawaii 2023, including the possession of marijuana, shall be ordered to be 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 convicted 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 section A-17 or decriminalized under Act , Session Laws of Hawaii 2023, including the possession 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; and

(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 what counts are expunged and what 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, or 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 which 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."

PART V

SECTION 12. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2023-2024 and the same sum or so much thereof as may be necessary for fiscal year 2024-2025 for the implementation of this Act.

The sums appropriated shall be expended by the department of health for the purposes of this Act.

PART VI

SECTION 13. In codifying the new chapters and sections added by sections 3 and referenced in sections 5, 8, 9, 10, and 11 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 14. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 15. This Act shall take effect on July 1, 2023.

THE SENATE	S.B. NO.	375
THIRTY-SECOND LEGISLATURE, 2023		S.D. 1
STATE OF HAWAII