You can’t legally buy it yet, but cannabis is no longer prohibited in New Mexico when it comes to possession and home growing.
After years of debate, New Mexico became the 17th state to legalize recreational cannabis for users 21 and over Tuesday when a new law greenlighting the long illegal drug took effect.
But the task of setting up a new weed industry from scratch is far from finished.
A virtual rules hearing on the initial batch of proposed state rules governing marijuana licensing and plant count limits stretched on for hours Tuesday and drew more than 500 attendees, some of whom raised concerns about water rights, out-of-state corporations and transparency issues.
Matt Muñoz, a former University of New Mexico lobbyist who is applying for a cannabis microbusiness license, said state regulators should ensure a level playing field for local entrepreneurs.
“New Mexico should not be a playground for those who have lost licenses in other states,” said Muñoz, who described being arrested for cannabis possession as an 18-year-old as a “life-changing” event.
With the new law in effect, New Mexico now allows for possession of up to 2 ounces of cannabis – or equivalent amounts of cannabis extract – and personal production of no more than six mature and six immature marijuana plants per adult.
However, the deadline for beginning commercial sales is not until April 2022, to give state officials time to craft rules that will govern the cannabis industry and begin issuing licenses for legal pot production and sales.
Gov. Michelle Lujan Grisham, who called lawmakers back to the Roundhouse to pass a cannabis legalization bill during a March special session, heralded Tuesday as the historic culmination of a yearslong effort.
“This is a landmark day, a huge step forward both for social justice and economic development in our state,” Lujan Grisham said. “We are proactively stopping the disproportionate criminalization of people of color for cannabis possession, and we are building a new industry in which all New Mexicans can participate – and that will bring millions of dollars to our local communities and our state.”
But there are still ample questions about how the legal cannabis industry will operate in New Mexico and about which groups – and individuals – stand to profit.
Several New Mexicans raised questions Tuesday about whether big cannabis producers would buy up water rights to the detriment of small farmers and communities.
One woman who testified said the state’s proposed rules set the stage for a possible “water war,” while others suggested imposing an in-state residency requirement for cannabis production licenses.
$2,500 license fee
Although the proposed rules discussed Tuesday could change before any are ultimately adopted, they would in their current form set the cost of both producer and retailer licenses at $2,500 annually.
Licenses for cannabis consumption areas, or designated places where adults can smoke, eat or drink cannabis products, would also cost $2,500 annually under the draft rule.
In addition, the proposed rules call for a three-tier system for cannabis producer plant limits – with a maximum of 4,500 mature plants. Larger-scale producers would face slightly higher per-plant fees than smaller producers.
The Cannabis Control Division, a newly created office within the state Regulation and Licensing Department, will review the public comments – and hundreds of written comments – in the coming weeks, said Regulation and Licensing Superintendent Linda Trujillo on Tuesday.
Final production rules must be in place before Sept. 1.
“We are grateful for the extensive public engagement in this process,” Trujillo said. “It’s heartening to see so many people engaging with the public process to stand up the adult-use cannabis industry, which will provide economic opportunities for entrepreneurs, businesses and local communities.”
However, some medical cannabis patients have expressed unease about the state’s approach to legalization.
Larry Love, a medical cannabis advocate and longtime patient, said the proposed rules as written are vague and the proposed plant count limit could end up being too low.
“There will be a shortage,” Love said. “It happens in every state.”
Revenue forecast
Since taking office in 2019, Lujan Grisham has pitched cannabis legalization as a way to diversify New Mexico’s economy, create jobs and bolster the state as a tourist destination, especially with neighboring Texas unlikely to legalize marijuana in the near future.
The law is expected to generate $20 million in revenue for the state in the 2023 fiscal year, along with an estimated $10 million for local governments around New Mexico, according to a fiscal analysis.
Once commercial sales begin, a 12% excise tax will be levied on legal weed purchases in addition to sales taxes ranging from about 5% to 9%.
Unlike in some other states that have legalized recreational cannabis for adult users, New Mexico cities and counties will not be able to opt out of the state’s industry.
However, local governments can “reasonably” limit the density of cannabis establishments and the operating hours of dispensaries under the new law, and some cities have begun adopting local ordinances dealing with zoning limits for cannabis dispensaries.
