Now that New Mexico has legalized recreational cannabis, local leaders must enact new ordinances that align with the state law. Emily Kaltenbach, state director of the nonprofit advocacy organization Drug Policy Alliance, spoke to members of the Intergovernmental Council on Thursday (May 20) about what they should prepare for at the town and county level.
“The act becomes legal on June 29 — so it’s really just around the corner,” said Kaltenbach. “And what that means is that on that date, possession and home grow is allowed. The whole licensing and regulatory system has to be stood up.”
Production of recreational cannabis is scheduled to begin in the fall of 2021, and retail sales to the general public will begin no later than April 1, 2022.
Kaltenbach said other states like Colorado, and now New York, were good models to draw from when crafting local ordinances to address public safety, law enforcement, water protection, zoning, taxation, licensure and other issues they will likely encounter.
The Cannabis Regulation Act (CRA) was introduced in the New Mexico state Legislature during a special session, and was signed into law by Gov. Michelle Lujan Grisham in April 2021.
New Mexico is one of 17 states to legalize recreational cannabis. Thirty-six states have legalized medical cannabis — New Mexico was the first state to do so in 1978. At the federal level, cannabis remains a prohibited substance.
The CRA allows adults 21 or older to purchase and possess up to two ounces of cannabis flowers (also known as buds), and allows up to six mature and six immature plants per household adult for home grow. Medical cannabis patients can continue to grow their own. Extracts are limited to 16 grams, and edibles are limited to 800 milligrams.
The CRA establishes a new Cannabis Control Division within the State Department of Regulation and Licensing.
Local jurisdictions cannot opt-out of legalized recreational cannabis, and cannot prohibit people from transporting cannabis through their jurisdiction. They also cannot prohibit consumption in a private residence or personal home grow of cannabis.
But the law does allow for reasonable zoning, land use and business licensure regulations. And it allows an opt-out for supervised consumption spaces where people can consume if their residence doesn’t allow smoking.
Gross Receipts Tax (GRT) and local taxes apply to cannabis purchases, along with an additional 12 percent excise tax — with 9 percent going to the state general fund and 3 percent going to the local jurisdiction where the sale occurred.
“That means that local jurisdictions don’t have to stand up their own excise sales tax,” said Kaltenbach, who noted that recreational cannabis will be taxed, but medical cannabis will no longer be taxed.
Citing economist Kelly O’Donnell, Kaltenbach said 11,000 new jobs could be created with the legalization of cannabis. Projected sales during the first year are estimated at $318 million.
“If you apply a 12 percent excise tax to that [figure], 9 percent is about $25 million, and the rest would be dispersed with local jurisdictions,” said Kaltenbach. “Many states have actually exceeded their projections, so I wouldn’t be surprised if New Mexico exceeded our budget projections, especially in communities that are bordering Texas.”
The recreational cannabis industry will require a host of new licenses — for manufacturers, producers, couriers, retailers, servers, cannabis consumption areas, research laboratories, testing laboratories and training and education program facilitators.
“We want to make sure that there’s a range of license types,” said Kaltenbach. “There are micro business licenses that will allow small businesses to operate, and their licensing fees will be lower.”
“Do the local municipalities need to come up with their own policy regarding business licenses for potential dispensaries, so it aligns with the state bill?” asked Christof Brownell, mayor of the Village of Taos Ski Valley.
“Yes. Licensing would be like any other business licensing. So that would fall to the local jurisdiction,” said Kaltenbach. “For example, if someone wants to grow cannabis, they’d have to go through the licensing process at the state level, but if you also require a local business license, they’d have to be licensed at the local level as well.”
The CRA calls for a Public Health Advisory Board to monitor the health effects associated with recreational cannabis use. Annual reporting from the New Mexico Department of Health is required, and must include data on youth access, road safety, product safety, workplace safety and more.
“I think it’s critical that we go into the legalization with our eyes wide open, with lessons learned from other states,” said Kaltenbach.
“Looking at Poison Control Center calls, because in Colorado we saw those go up. They go up in the beginning and they tend to come down,” she said. “ER visits tended to go up but then came down. And part of that reason is that people now felt safe about going to the ER if they had an adverse reaction or they consumed too much. In the past, because it was illegal, people tended not to access these types of systems.”
Under the CRA, it is unlawful to drive under the influence of cannabis. It is unlawful to consume in public, except at permitted cannabis consumption areas.
Advertising and marketing of cannabis on TV and radio is prohibited, except to adult subscribers and adults who have solicited marketing materials.
Restrictions on packaging prohibit cannabis sellers from mimicking candy or cartoons typically marketed to children, and must display a warning of the possible adverse effects of consumption.
Selling cannabis to underage customers will result in the loss of licensure and possible fines. Cannabis retailers will also be restricted in their proximity to schools, daycare facilities and houses of worship.
“Was there anything in the bill that prohibits retailers from being in the historic district — for example, our Taos Plaza?” asked Brent Jaramillo, Taos County manager.
“There is no language that prohibits that. It would be left up to the local jurisdiction to determine whether retailers would be allowed in historic districts,” said Kaltenbach.
The CRA requires that recreational cannabis retailers must also sell medical cannabis, but existing medical cannabis establishments are not required to sell to recreational users. “So there still can be standalone medical cannabis establishments,” said Kaltenbach.
The NMDOH will continue to keep the medical cannabis patient registry, and the Cannabis Control Division will be required to take steps to ensure there is enough cannabis supply in the medical program.
“There is lots of language throughout the bill making sure that the regulatory body works with the Department of Agriculture, the Department of Environment and the State Engineer around pesticide use, natural resource protections, water quality and water supply,” said Kaltenbach.
Licensees must submit a plan showing how they will utilize energy and water reduction opportunities, including drip irrigation, renewable energy generation and natural lighting, and must demonstrate they have rights and access to a commercial water supply.
With recreational cannabis now being legal, past criminal records for sales and possession will be automatically expunged. Correctional facilities will be required to notify courts of incarcerated people who now might be eligible to have their cases reopened and even dismissed.
“There’s also language that allows individuals with prior cannabis convictions to work in the new cannabis industry,” said Kaltenbach. “We don’t want to shut out individuals that may have had a record in the past, because we want there to be equity in the industry.”
Northern New Mexico College in Española recently launched a new program to train and certify people who want to work in the cannabis industry.
“They had overwhelming interest in that program,” said Kaltenbach. “They thought they would have 20 students — over 100 students want to participate. I think we’ll start seeing more opportunities for individuals who want to get into the industry who may be struggling with employment opportunities because of past records.”