A new finance bill being considered by Nebraska lawmakers would levy a 30 percent tax on consumable hemp and CBD products as part of a proposal to provide property tax relief. Lawmakers have separately introduced two cannabis legalization measures on the final day to bring bills as part of a special lawmaking session.
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The new tax proposal, from Sen. Lou Ann Linehan (R), comes after an earlier plan of hers fell short in April. The senator asked that the measure be pulled from the agenda on the final day of the state’s regular legislative session after acknowledging that it did not have the votes to overcome a filibuster.
The new measures was introduced last week as part of a special legislative session called last week by Gov. Jim Pillen (R) to deal with the property tax issue. Some lawmakers on Friday attempted to cut short the special session, but that effort failed on a 34–4 vote.
The discussion on how to tax what the state calls “consumable hemp,” is part of a broader debate on how lawmakers want to balance sources of state revenue. Many lawmakers complain property taxes are too high, and proponents of the bill have said raising sales taxes would prevent further state reliance on property taxes to fund schools. Opponents, however, criticized the bill’s overall increase in taxes, with some Democrats noting that sales taxes in particular would hit poorer Nebraskans hardest.
The measure’s text defines consumable hemp products as finished products that contain hemp and that contain no more than 0.3 percent THC. Hemp products made from stalks or seed—that is, for fiber or food use—would not be included in the definition.
Linehan’s earlier measure, 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.
“The 100% tax was unworkable for CBD companies in our state. They were concerned it would drive them out of business,” Sen. Anna Wishart (D), who’s backed past efforts to end marijuana prohibition in the state, told Marijuana Moment in an email at the time. “In talking with representatives from a group of CBD companies in the state, I worked with them and other senators to negotiate the tax down to 25%.”
Despite the failure of the earlier property-tax relief bill, Linehan said months ago that she’d be interested in returning to the issue during special session.
“I’m willing to come back this summer, this fall, whenever,” she told Senate colleagues in April. “But I hope we have a lot of conversations between now and then about all your perfect answers to this problem. Because it’s easy to say, ‘No, no, no.’ That’s real easy. So everybody who’s saying we can do better, I hope you have those ideas to the Revenue Committee by the end of June.”
Linehan’s new bill, LB 1, was referred to the unicameral legislature’s Revenue Committee on Monday.
Two new legalization bills—LB 52 from Sen. Justin Wayne (D) and LB 71 from Sen. Terrell McKinney (D)—also landed in the legislature on Monday, which was the final day for lawmakers to file legislation for the special session. Wayne’s bill, which was one of 23 introduced by the lawmaker that day, comes in at 162 pages, while McKinney’s is 165 pages long.
Both bills would legalize, regulate and tax marijuana for adult use as well as take steps to provide relief for individuals with criminal records involving cannabis.
On the hemp tax issue, lawmakers have lamented that the many provisions in the earlier proposal seemed to come out of nowhere, although sponsor Linehan and others said on the floor at the time that the details were taken from other bills that lawmakers had introduced and debated. The hemp and CBD tax, for instance, ostensibly came out of LB 1341, introduced in January by Sen. Justin Wayne (D) and apparently never acted on by lawmakers.
That bill as introduced indeed would have increased taxes on consumable hemp, but only to 7.5 percent.
The latest proposal comes as the state, like others 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, though activists are hoping to change that, working to qualify two prospective medical cannabis initiatives for November’s ballot.
Activists earlier this month turned in what they hope will be more than enough signatures to qualify the 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, including campaign co-chair Wishart, have also attempted to enact the reform legislatively, but cannabis bills have consistently stalled out in the conservative legislature.
Wishart’s medical cannabis bill received a hearing in the unicameral Judiciary Committee in February, but it did not advance. She 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
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