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Cannabis in NM: How will it work?

SANTA FE, N.M. — What’s the status of the legislation?

The proposal to legalize cannabis won approval in a two-day special session called by Gov. Michelle Lujan Grisham in late March.

The governor has until April 20 to act on the legislation, House Bill 2, but she is expected to sign the bill before then. It passed the House 38-32 and the Senate 22-15. No Republicans voted in favor of the measure, and some Democrats opposed it.

What does the bill do?

The legislation would establish a regulatory framework allowing adults 21 and over to buy, possess, grow and use marijuana. It’s often called an adult-use or recreational marijuana law, because sales aren’t restricted to medical patients.

A new Cannabis Control Division would operate within the Regulation and Licensing Department.

Why does everyone call it cannabis rather than marijuana?

The legislation itself uses the word “cannabis,” a reference to the scientific name of the plant.

The law defines cannabis as all parts of the plant genus “Cannabis” that have a certain concentration of the ingredient that causes consumers to feel high.

Also, some advocates contend the word “marijuana” has racist origins.

When can adults start buying cannabis legally?

Retail sales would begin by April 1 next year. The state has the option of allowing sales earlier.

Ryan O’Leary, the operations assistant at High Desert Relief in Albuquerque, cleans out dead leaves and other debris from 200 cannabis plants last week. (Eddie Moore/Albuquerque Journal)

When can adults grow, use or possess cannabis?

Starting June 29, it would be legal under state law for a person 21 or older to possess, use or grow cannabis, within the limits set by the Cannabis Regulation Act.

Commercial sales, however, would remain illegal until April 1, 2022, at the latest.

When possession is legal, how much can a person have?

An adult would be allowed to possess outside the home up to 2 ounces of marijuana, 800 milligrams of edible cannabis or 16 grams of extract. Those would also be the limits on how much a customer could buy at one time.

There’s no restriction on how much cannabis people could keep at home, as long as it’s out of public view.

How much can a person grow?

Each person would be permitted to grow up to six mature plants and six immature plants at a time. But the limit per household would be 12 mature plants, no matter how many adults live in the residence.

How will cannabis sales be taxed?

The state would levy a 12% excise tax to start with, and gross receipts taxes would be levied on top, pushing the total rate to about 20% in many communities.

In Albuquerque, for example, the gross receipts tax of 7.875% would result in a 19.875% tax on cannabis sales.

But the excise tax would grow over time. It would climb to 13% in July 2025 and increase by 1 percentage point each year until reaching 18% in 2030.

With gross receipts taxes added, the total rate could reach about 26% nine years from now.

In Colorado, the combined tax rate can reach 26.2%. In Arizona, it’s 21.6%.

How much revenue will cannabis taxes generate, and where will it go?

Sales are expected to generate about $19 million in revenue for the state in the fiscal year that starts in July next year, in addition to $9.4 million for local governments.

A sharp increase is expected as the industry matures, with $30 million in state revenue projected the following year and $15 million for local governments.

The legislation doesn’t earmark the revenue for any particular purpose, which means it will flow into the state’s general fund. But some lawmakers have broached the idea of introducing future proposals that might direct the money to certain programs or funds.

Are there safeguards to protect the medical cannabis program?

Businesses would have to make at least 25% of their sales to patients for the first few months, through the end of 2022.

After that, state regulators would have the option of requiring cannabis establishments to set aside a certain portion of their stock for medical cannabis patients, among other steps, to address shortages.

Patients would also benefit from a lower price, as the excise and gross receipts taxes wouldn’t apply to their purchases.

Doesn’t the bill conflict with federal law?

Yes. Cannabis remains a controlled substance under federal law, similar to cocaine and heroin.

Conduct that’s allowed under the state law – such as possession and distribution – would remain criminal under federal law.

Can employers prohibit cannabis use by employees?

Yes. Employers would be permitted to establish “drug-free workplace” policies allowing for discipline or termination of any employee who tests positive. They could also prohibit possession at work or during work hours.

How will the state combat driving under the influence of cannabis?

There’s no standard breath test for cannabis use, unlike alcohol.

State law, however, allows officers to prove impairment without a breath test for alcohol and other drugs. They could cite a driver’s performance on roadside sobriety tasks, admission of use or evidence in the car.

Lawmakers authorized $750,000 to cover the cost of certifying law enforcement officers as experts in drug recognition and to either develop roadside impairment tests for cannabis or to purchase them, once they’re available.

What steps will New Mexico take to keep cannabis away from people under 21?

Cannabis products must be sealed in child-resistant packaging. Advertising targeting minors would be prohibited.

Businesses would face suspension of their license and the possibility of a $10,000 fine for knowingly selling to a minor.

A minor who possesses cannabis could be found guilty of a civil violation and required to complete four hours of community service or four hours of a drug education and legal rights program.

Who can sell it?

By Jan. 1, 2022, the Cannabis Control Division would set rules for licensing and regulating commercial cannabis sales and begin processing applications.

A variety of license types would be available, depending on the business size and purpose.

The licensing fees would start at $2,500 a year for manufacturers, producers, retailers or testing laboratories. A microbusiness producer’s license would cost $1,000 a year.

For all but the smaller licensees, there would also be per-plant fees for the cultivation of cannabis. Extra locations and cannabis consumption areas would also cost more.

Can people consume cannabis outside the home?

Yes, but smoking in a public place would be prohibited. Cannabis establishments could offer on-site consumption indoors or outdoors – including smoking – if they meet certain requirements.

Can local jurisdictions restrict cannabis sales?

Not entirely. Cities and counties will be allowed to establish restrictions on operating hours and locations, but they cannot opt out of sales altogether. They can also set reasonable limits on the density of licensees.

Cities and counties are entitled to set minimum distance requirements – up to 300 feet – separating cannabis establishments from schools or child care centers.

What kinds of arrest and conviction records will be expunged?

Under a stand-alone proposal, Senate Bill 2, any arrests or convictions for conduct now made legal by the act – such as possessing small amounts of cannabis – are to be automatically expunged from state court records, blocking them from public view.

Will the state impose limits on supply?

Yes, at least initially. The state would restrict the number of plants that larger suppliers could produce through the end of 2025 based on an annual analysis.

The legislation calls for the limits to be set based on projected demand if 20% or more of adults participate in the market.

Starting in 2026, there would be no state-imposed limit on production.

Sources: Text of House Bill 2, Senate Bill 2, fiscal analysis reports by the Legislative Finance Committee and interviews with state officials.


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