Activists Accuse North Dakota of Misleading Voters About Cannabis Legalization Initiative

Activists supporting a marijuana legalization ballot measure say a ballot summary misleads voters about the potential costs and revenues generated by the proposal.

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

When voters get their ballots this fall, they will see a one-sentence fiscal summary that estimates the costs of implementing the initiative and revenue generated by the measure, should it be approved. Over the next five years, the summary estimates that costs will exceed revenue by more than $1.8 million.

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

But the estimate fails to include any revenue from taxes on cannabis sales, despite the taxes that would be generated by the proposal. If the ballot measure succeeds, cannabis sales would be taxed at the state sales tax rate of 5%, and local taxes of up to 3% could also be added. Lawmakers would also likely add an excise tax on cannabis that could be much higher.

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

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

Other Estimates Project Up to $10 Million in Annual Weed Taxes

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

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

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

The fiscal summary to be placed at the bottom of ballots is a condensed version of a three-page estimate developed with input from several state agencies. Jason Wahl, the director of the North Dakota Division of Medical Marijuana, presented the complete estimate to a panel of legislative leaders on Monday. Wahl said that the majority of the $3.1 million in projected state income would come from application and licensing fees levied on cannabis producers and retailers.

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

The Department of Transportation estimates it would incur much of the nearly $5 million dollars in estimated costs to hire an additional full-time employee, fund training, purchase drug screening devices and launch an anti-impaired driving campaign.

The medical marijuana division would also see expenditures to hire four additional employees and govern the recreational marijuana program. Wahl estimated that licensing and application fees would cover the costs incurred by his agency. The complete fiscal note adds that the Highway Patrol, the attorney general’s office and the state’s 53 counties could also face additional unknown costs.

The fiscal note is added to ballot measures to give voters an estimate of the costs and revenue the state would face if an initiative is approved. But critics including Owen, a political consultant, say the estimates are written by state agencies to influence the election.

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

Ballot Measure Legalizes Cannabis for Adults

If passed by voters in the November general election, the ballot measure would legalize possession of up to one ounce of cannabis and small amounts of marijuana concentrates by adults 21 and older. The initiative also establishes a framework to regulate commercial cannabis production and sales, which would be administered by the state’s Department of Health and Human Services or another agency designated by lawmakers.

Regulators would be given until October 1, 2023 to draft regulations governing security for marijuana facilities, advertising and labeling, packaging and testing standards for cannabis products. The initiative caps the industry to seven production facilities and 18 cannabis retailers, with limits on the number of licenses held by any one entity.

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