Nebraska Lawmakers Hold Joint Hearing On Two Marijuana Legalization Bills

Two newly filed marijuana legalization bills in Nebraska had initial committee hearings on Friday.

The two proposals—LB 52 from Sen. Justin Wayne (D) and LB 71 from Sen. Terrell McKinney (D)—were filed in the legislature last Monday, the final day for lawmakers to file measures for the special session called last month by Gov. Jim Pillen (R). Wayne’s legalization bill comes in at 162 pages, while McKinney’s is 165 pages long.

The Judiciary Committee heard both bills together. Sen. Rick Holdcroft (R) point out that the panels’ agenda listed the session as a “joint hearing,” prompting laughs in the committee chamber.

McKinney introduced his measure by arguing that the war on drugs continues to inflicted significant harm on Nebraska families even as other states have moved to legalize cannabis. Further, criminalizing marijuana use and possession has failed to deter use, he said.

“Communities have been destabilized and families torn apart,” the lawmaker testified, “all for nonviolent offenses involving a substance that is legal in many states across our nation.”

Pillen specifically called the special legislative session to address property tax issues. McKinney said that colleagues are serious about finding other revenue streams for the state, they need to consider legalizing and regulating marijuana.

“One of the standout features of LB 71 is the potential to generate substantial tax revenue by legalizing marijuana and putting forth a well regulated tax framework,” McKinney said. “We can provide tax relief in our state. This revenue can also be allocated in our educational systems, helping children receive the education they deserve, and into businesses and community development initiatives.”

“If we are back for a special session because property taxes are so bad that we need to come back for two, three weeks of the summer to figure this out, and everything’s supposed to be put on the table,” he continued, “I don’t see how we can sit here and say no and ignore the potential revenue of $100-plus million.”

A fiscal note on McKinney’s bill estimates the measure would bring in $18.9 million in fiscal year 2025, which would increase over time to an estimated $98.0 million in fiscal 2028. Annual state expenses for operations, meanwhile, are expected to start at $1 million annually and rise to $2.5 million by fiscal year 2028.

Half of that revenue would go to the state’s property tax credit cash fund, while 40 percent would go to education. Five percent would fund business development grants “in disproportionately impacted areas and for social equity applications,” the fiscal note says, while smaller amounts would go to prisoner re-entry and rehabilitation, youth outreach and health initiatives and other programs.

A statement of intent from Wayne on his bill, LB 52, says that the proposal “reclassifies cannabis, removing it as a controlled substance, and establishes a comprehensive framework for the cultivation, distribution, and sale of cannabis.”

“The Act requires cannabis enterprises to comply with stringent operational standards, including maintaining secure facilities, ensuring products are child-resistant, and preventing sales to individuals under twenty-one,” the statement says. “It mandates the use of a seed-to-sale tracking system and imposes packaging and labeling requirements to ensure safety. Local and state bodies are given the authority to conduct investigations and enforce compliance, with strict penalties for false statements and unauthorized activities.”

The fiscal note for LB 52 projects more revenue from that bill than from McKinney’s separate measure, starting at $29.5 million in fiscal 2025 and rising to $153.1 million in fiscal 2028. Operational costs to the state are projected to be the same as those associated with McKinney’s bill.

Opponents who spoke against the legalization proposals on Friday included representatives of law enforcement, the state’s Department of Health and Human Services (DHHS), and anti-cannabis advocates.

Nebraska State Patrol Col. John Bolduc, the department’s superintendent of law enforcement and public safety, argued that legalization in states like Colorado has fueled illicit markets and increased hospitalizations and emergency room visits.

Others said revenue from a regulated cannabis industry wouldn’t solve Nebraska’s budget woes, noting that cannabis revenue has fallen in some states as markets have matured and consumer prices have fallen.

Robert Donovick, executive medical officer at DHHS, warned of associations between cannabis use and increased risk of motor vehicle fatalities, psychosis, schizophrenia and various other health complications.

Also testifying was Zachary Viglianco, deputy solicitor general with the state attorney general’s office, who spoke against the bills.

“There is a perception that marijuana is safe and expanding access to marijuana is harmless, and that perception is a myth. It contradicts the scientific, medical and sociological evidence,” Viglianco said. “It has scientific connections to increased rates of heart attack several forms of cancer, and it can exacerbate or cause mental health conditions, such as anxiety, suicidal ideation and schizophrenia.”

He also tied legalization to increases in impaired driving as well as “rising homelessness, crime and reductions to workplace productivity.”

Fewer public speakers commented in support of the proposals. One was Jason Witmer, policy fellow at ACLU of Nebraska, who told the panel that contrary to marijuana being a gateway drug, criminalizing cannabis is a “gateway to prison, and that’s not serving anybody.”

Black Nebraskans were three times more likely to be arrested for cannabis as of 2018, Witmer said. “In the same year, nearly half of all Nebraska’s arrests were for cannabis possession.”

Over approximately the past decade since Colorado legalized marijuana, he added, the state has collected $2.5 million in cannabis tax revenue.

One lawmaker who was particularly active during Friday’s hearing was Sen. Carol Blood (D). Though she expressed concerns about the risks of cannabis legalization and problem use, she repeatedly pushed back on hyperbolic claims by law enforcement and legalization opponents.

In terms of written comments submitted on the bills, opponents of legalization outnumbered supporters.

As part of their closing comments, the sponsors of the two bills pointed out that many of the same criticisms of marijuana leveled by opponents could also be applied to alcohol or tobacco.

“Since all these people are fear mongering, I’m going to bring a bill to prohibit the selling and usage of alcohol,” McKinney said, “and I hope they all show up. Thank you.”

Wayne, in his closing remarks, echoed that sentiment.

“Every argument you heard here opposed is the same argument you can say for alcohol, the same argument you can say for tobacco,” the committee chair told colleagues. One difference, he said, is that “there’s no direct link of overdose when it comes to cannabis.”

As for alcohol and tobacco, “those are legal and we regulate,” Wayne said. “And by regulating it and putting the industry and marketing on notice that they’re going to help us regulate it, those other industries over the years have declined youth participation. So if you want to solve that, there’s the model: regulation.”

Separately, lawmakers this special session are considering a sweeping property tax relief bill from Sen. Lou Ann Linehan (R). A revised measure recently introduced by Linehan, LB 1, would impose a 30 percent tax on consumable hemp products, including CBD, as part of its goal of lessening the state’s reliance on property taxes.

Linehan’s tax bill for the earlier regular session, LB 388, initially contained a 100 percent tax rate on consumable hemp products. But following industry and consumer pushback, the proposed rate was reduced to 25 percent before the underlying tax bill was put on ice.

As part of hearings on the bill this week in the legislature’s Revenue Committee, which Linehan chairs, lawmakers took critical testimony from hemp companies and consumers, who said the change risks putting shuttering local companies and sending consumers to neighboring states where prices would be lower.

Linehan’s latest tax proposal comes as Nebraska, like many other states across the country, witnesses an explosion of hemp-derived products, including intoxicating cannabinoids such as delta-8 THC. Late last year, the state’s attorney general, Mike Hilgers (R), filed suit against retailers in the state over their sale of delta-8 products.

Neither medical nor adult-use cannabis are legal in Nebraska. Beyond the two new legalization bills discussed this week, citizen activists are also hoping to change that, working to qualify two prospective medical cannabis initiatives for November’s ballot.

Activists last month turned in what they hope will be more than enough signatures to qualify two medical marijuana measures—the third time the campaign has sought to let voters decide on the reform in recent years.

A recent poll by the campaign found 70 percent support in the state for legalizing medical marijuana.

Organizers at Nebraskans for Medical Marijuana (NMM) have been petitioning for the change since July, about two months after turning in a pair of complementary ballot proposals to the secretary of state’s office.

The governor has already voiced opposition to the reform effort, saying in September that legalization “poses demonstrated harms to our children,” and that medical cannabis should only be accessible if its approved by FDA.

Late last year, NMM told Marijuana Moment that the governor’s argument was a “cop out,” and she says the campaign will let voters decide for themselves.

One of NMM’s earlier campaigns gathered enough signatures for ballot placement in 2020, but the measure was invalidated by the state Supreme Court following a single-subject challenge. Supporters then came up short on signatures for revised petitions in 2022 due in large part to the loss of funding after one of their key donors died in a plane crash.

Nebraska lawmakers have also attempted to enact the reform legislatively, but cannabis bills have consistently stalled out in the conservative legislature.

A medical cannabis bill received a hearing in the unicameral Judiciary Committee in February, but it did not advance. Its sponsor attributed the inaction to changes in committee membership. An earlier version of the measure ultimately stalled out in the GOP-controlled legislature amid a filibuster that supporters could not overcome.

Photo courtesy of Philip Steffan.