Starting next year, possession of small quantities of cannabis will no longer be a criminal offense in Hawaii.

Gov. David Ige said Monday he will allow House Bill 1383 — which eliminates any criminal penalties for possession of three grams of pot or less — to become law.

The new law, which takes effect Jan. 11, will make possession of those small amounts of cannabis an infraction, similar to a parking ticket, punishable by fines of no more than $130.

The law also will allow those previously convicted of possessing three grams or less of cannabis to have that criminal record erased. It also would establish a cannabis evaluation task force to make recommendations on further changes to pakalolo penalties in the state.

Cannabis is becoming more of a societal norm in the U.S. with more than 30 states, including Hawaii, legalizing the drug for medical purposes, even though it is still illegal under federal law. Twenty-four states have decriminalized cannabis, and 10 states have legalized recreational pot.

An effort to legalize recreational pot in Hawaii failed this year in the Legislature.

Ige said at a news conference Monday his decision to decriminalize cannabis “was a very tough call.” For one thing, law enforcement officials tell him that three grams is such a small amount of pot that “essentially they will proceed the way they always have,” Ige said.

Ige said he also wanted to see provisions in the bill that would help to steer young people who are using cannabis into treatment programs to help them deal with their substance abuse issues, but lawmakers did not include that language in the bill.

State Rep. Chris Lee, chairman of the House Judiciary Committee, introduced the decriminalization bill and said it makes sense.

“This law keeps drug dealers behind bars where they belong but also keeps regular people who just had a joint out of jail to avoid creating more hardened criminals, which makes crime worse,” said Lee. “It removes the unnecessary permanent mark from their record so they can go back to school, get a better job and take care of their family. If we want to actually reduce crime and reduce substance abuse, then our taxpayer dollars are more effectively spent on treatment rather than jailing people at a cost of $146 per person per day.”

Under current state law the possession of any amount of pot is considered “promoting a detrimental drug in the third degree,” a petty misdemeanor punishable by up to 30 days in prison as well as a possible fine of $1,000.

Under the new law possession of more than three grams would still be a petty misdemeanor with possible prison time. Any offense for which prison time is authorized is considered a crime.

Hawaii legalized medical cannabis in 2000, and the first medical cannabis dispensary, Maui Grown Therapies, opened in August 2017.

Monday was the deadline for the governor to publicly identify any bills that lawmakers passed last spring that he might veto. The cannabis decriminalization bill was not on Ige’s list. He did identify 20 measures that could get the axe, including a measure to authorize medical cannabis patients to transport it between the islands.

Real estate investment trusts

Ige also said he plans to veto a bill that would impose the state’s corporate income tax on real estate investment trusts, saying the taxing proposal wouldn’t generate much extra tax revenue and could put a damper on outside investment in Hawaii.

Ige signaled he might also reject bills that would increase the value of state tax credits that motion picture and digital media companies can claim each year, and would require public school teachers to confiscate electronic smoking devices from any student who is under 21 years of age.

Ige has until July 9 to sign or veto the measures that were passed by lawmakers this year. If he does not act by then, the bills will become law without his signature.

State tax officials calculated that taxing the real estate investment trusts, also known as REITs, would generate about $9 million extra each year for the state treasury, but Ige said the risks to the Hawaii economy outweigh that potential extra tax revenue.

REITs were created under federal law to allow small investors to buy into large commercial developments such as office buildings and retail centers. The trusts have made major investments in Hawaii, including in developments such as Ala Moana Center, the International Market Place and Ka Makana Alii Shopping Center.

Real estate investment trusts are required to pay out at least 90% of their taxable income as dividends to their shareholders each year, and Hawaii and 48 other states allow REITs to deduct those dividends for tax purposes. That means REITs are able to avoid paying state corporate income taxes on their earnings.

Senate Bill 301, which Ige said he will veto, would end that tax deduction for dividends. The measure “could potentially stifle economic development and scare away investment capital,” Ige said.

“REITs are an important investment vehicle for all types of investments in Hawaii,” he said. “Hawaii needs to be a place that is able to attract investment capital in order to create jobs and a sustainable economy.”

Opponents of the REIT bill launched an intense lobbying and advertising campaign that continued after lawmakers adjourned for the year.

Companies and trade groups opposed to the bill spent about $400,000 on lobbying activities this past legislative session, according to expenditure reports covering Jan. 1 to April 30 that were filed with the State Ethics Commission.

The National Association of Real Estate Investment Trusts spent the most, doling out $314,126 on lobbyists and advertisements urging the public to oppose Senate Bill 301.

That amount far exceeded what other registered lobbying groups expended this year. The association hired SanHi Government Strategies, the government affairs arm of Honolulu law firm Ashford & Wriston, to lobby the Legislature, the Department of Taxation and Department of Business, Economic Development and Tourism, according to the reports.

Alexander & Baldwin, which testified against the bill, spent about $25,000 on lobbying this past session, though the company’s interests extended beyond the REIT measure.

Other companies and trade groups that testified against SB 301 and spent money lobbying the Legislature include Brookfield Properties Retail, Douglas Emmett Management, Park Hotels and Resorts, DeBartolo Development, the Hawaii Construction Alliance, Hawaii Chamber of Commerce and the Hawaii chapter of the National Association of National Association for Industrial and Office Parks, known as NAIOP, which represents the interests of developers and owners of commercial real estate.

Peter Savio, a Hawaii developer who is an outspoken supporter of the REIT tax bill, said the REITs were worried that if Hawaii requires them to pay state corporate income taxes, then other states would follow suit.

“I think he made a mistake,” Savio said. “I think he was misled by the threats the REITs put forward about how it’s going to stop them from investing and coming to Hawaii. The governor doesn’t understand the strength of Hawaii’s real estate market and that the REITs will continue to invest in Hawaii because our market is so unique.”

Another bill on Ige’s list of potential vetoes is House Bill 748, which would prohibit state law enforcement officials from seizing and forfeiting assets in connection with alleged criminal activity unless there is a felony conviction of the owner of the property.

Ige said there are significant safeguards in the existing civil asset forfeiture law to prevent abuses, and called the forfeiture program “an effective and critical law enforcement tool.”

Carl Bergquist, executive director of the Drug Policy Forum of Hawaii, countered in a written statement that civil asset forfeiture “allows law enforcement to seize and sell a person’s assets based on the mere suspicion that the property is connected to an alleged crime (often related to drugs).”

Bergquist urged Ige to allow the bill to become law, describing civil asset forfeiture as an “upside-down version of due process.” He said 18 states now require that a criminal conviction be obtained before a forfeiture can be completed.

Lawmakers have the option of meeting in a special session this summer to override one or more of Ige’s vetoes, but veto sessions are rare.

Star-Advertiser reporter Sophie Cocke contributed to this report.