Cannabis Business Times
31 March 2021
The New Mexico Legislature is working overtime, but adult-use cannabis legalization is now closer to reaching Gov. Michelle Lujan Grisham’s desk after the House passed an amended bill and the Senate took up an expungement measure during a special session March 31.
The lower chamber cleared the adult-use bill, 38-32, while the expungement measure for certain low-level cannabis convictions drew a 23-13 vote in the Senate, where the overall bill previously stalled during the legislature’s 60-day regular session that concluded March 20, which sparked Lujan Grisham’s call for the special session.
One key amendment adopted in House Bill 2, which was a continuation of H.B. 12, the Cannabis Regulation Act that the body passed Feb. 26, includes raising the excise tax on cannabis products from 12% to 18% over the course of six years, beginning in 2024, according to chief sponsor Rep. Javier Martinez. Under the bill, roughly 4% of the excise would be distributed back to the local communities where the cannabis is sold, whether it’s a city or county municipality, Martinez said on the floor Wednesday.
The House Tax Committee approved the amended excise tax portion of the bill during the first day of the special session on March 30.
“As we embark on building a brand-new industry and we get to set the rules of the game for how this industry will play out … this is a good opportunity to actually raise revenue,” Martinez said. “If we’re going to do this, we might as well get the most we can get without overdoing it to the point where we are maybe undercutting our efforts to get rid of the illicit markets. So, that’s the number we settled on—18% excise tax.”
According to Martinez, economic projections indicate that adult-use legalization would create more than 11,000 jobs and generate $28.6 million in tax revenue in the first year of implementing a program, which H.B. 2 aims to activate no later than April 1, 2022.
Another amendment to H.B. 2 directs 100% of revenue distributions to the general fund, Martinez said on floor.
“We heard from members of both parties; we heard from members of both chambers that earmarking dollars at this stage of the game, when the framework isn’t even legalized, when revenue isn’t even coming in yet, was not a good idea,” he said. “And, so, we’ve conceded that point. We removed all specialty funds that we had created under the legislation. That’s not to say those funds will not come back.”
Martinez said he’s committed to ensuring those funds are established through legislation in the upcoming session, particularly a rural equity fund that provides rural communities that would want to join the industry access to capital and business development support mechanisms.
Meanwhile, several main proposals of the adult-use bill remained intact, such as allowing adults 21 and older to possess no more than 2 ounces of cannabis, 16 grams of cannabis extract or 800 milligrams of edible cannabis. Adults will be allowed to grow up to six immature plants and six matures plants for personal use. The bill also creates 10 license types, ranging from the needs of large-scale vertically integrated companies to small-scale microbusinesses.
Additional foundational principles of the bill include protecting and enhancing New Mexico’s medical cannabis program as well as ensuring social justice when it comes to providing reinvestments toward communities disproportionately affected by prohibition, Martinez said.
During the first day of the special session in the upper chamber, the Senate Judiciary Committee added 11 amendments to accompanying S.B. 2, the expungement measure that, as previously stated, passed the full body vote earlier in the day March 31.
Both legislative bodies are scheduled to reconvene later in the day Wednesday, in an effort to continue working toward sending the adult-use legislation to Lujan Grisham’s desk.
“I am grateful to those legislative leaders and members who have expressed enthusiasm about returning to the people’s work so soon after a challenging 60-day session,” she said in a press release when she called the special session.
“The unique circumstances of the session, with public health safeguards in place, in my view prevented the measures on my call from crossing the finish line,” Lujan Grisham said. “While I applaud the legislature and staff for their incredible perseverance and productivity during the 60-day in the face of these challenges, we must and we will forge ahead and finish the job on these initiatives together for the good of the people and future of our great state.”