Industry updateNew Mexico joins US recreational weed wave

New Mexico to become 17th US state to legalize adult-use cannabis with sales launching no later than April 1, 2022
Jared Gnam Jared GnamApril 1, 202110 min

New Mexico has joined a wave of U.S. states legalizing recreational weed as its Democrat-controlled Legislature sent two cannabis bills to the governor’s desk that provide licensing opportunities for communities disproportionately harmed by the war on drugs.

Legal retail sales are scheduled to start no later than April 1, 2022.

New Mexico’s medical cannabis program sales climbed to US$200 million last year, and a new adult-use market is projected to generate as much as US$800 million once it matures.

Late Wednesday, the state Senate passed an amended recreational bill that the House passed earlier in the day as part of a two-day special session.

Under the Cannabis Regulation Act, New Mexicans 21 and older can possess up to two ounces of cannabis and grow up to six plants at home.

The bill will only allow micro-businesses to be vertically integrated, and social equity would be able to grow, process and sell cannabis products under a single licence.

Key sponsors of HB-2 say the separate licence will allow wider access to the new industry for entrepreneurs without access to significant capital.

A second measure to expunge low-level cannabis convictions passed the state Legislature earlier on Wednesday.

Gov. Michelle Lujan Grisham praised both bills in a statement, saying they will bolster New Mexico’s economy while helping those most harmed by the country’s failed war on drugs.

She has been pushing for adult-use legalization for two years, citing a need for new revenue to help offset the state’s reliance on oil and gas.

Read more: New Mexico governor regrets not legalizing weed as pandemic slams economy

“My signing pen is ready,” she tweeted.

New Mexico is the 17th state to legalize cannabis for adults after New York Gov. Andrew Cuomo signed legislation to set up recreational market also on Wednesday.

Pressure mounted on New Mexico to pass a bill this year after neighbouring Arizona launched adult-use sales in January.

Read more: First Arizona dispensaries get green light to sell recreational weed

Read more: New York legalizes US’s most progressive recreational weed market

The bill passed in the Land of Enchantment continues a national trend of including social equity provisions in recreational cannabis reform.

Emily Kaltenbach, Drug Policy Alliance senior director for New Mexico, spearheaded advocacy efforts in the state to ensure the legalization bill would include equitable opportunities for farmers and other small businesses.

“New Mexicans are finally able to exhale,” she said in a statement. “After many years of hard work, another whirlwind legislative session, and input from stakeholders throughout the state, social justice-centered cannabis legalization is on its way to the Governor’s desk, where she has already agreed to sign.”

The bill calls for a Cannabis Control Commission to be set up this year, which will be tasked with creating a plan to ensure licensing diversity.

When sales are launched, New Mexico would levy an initial excise tax on adult-use products of 12 per cent that eventually rises to 18 per cent. That’s on top of current state 8-per-cent sales tax.

However, medical marijuana patients will be exempt from the excise tax.

The bill will let state-licensed producers reserve up to 10 per cent of their products for patients, if shortages occur.

The Cannabis Control Commission will take over patient registration and remove previous provisions for personal production licences for medical cannabis.

According to the New Mexico Department of Health, medical cannabis sales totaled US$203 million last year, up from US$74 million in 2019.

Patient enrollment grew over 30 per cent in that period to a total of 104,655.

Ultra Health, one of 34 licensed producers currently operating in the state, estimated a mature recreational market could add up to US$800 million in sales.

New Mexico will permit municipalities to limit the density of adult-use operations, but not completely prohibit licensing.

Under the bill, Native American communities will be encouraged to participate in the recreational market through agreements with regulators.

The Cannabis Control Commission is mandated to develop final rules by Jan. 1, 2022.

Licence applications for producers and micro-businesses are slated to open Sept. 1 this year, and retail licence applications by no later than Jan. 1, 2022.

Top image via Ron Cogswell/Flickr Commons

 

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