To the Floor

A proposal to legalize adult cannabis use in New Mexico and create a regulatory and taxation structure is heading to the House floor following Wednesday's do-pass from that chamber's  Taxation and Revenue Committee on a 8-4 party-line vote.

A substitute for House Bill 12 moves forward incorporating some changes, including a drop in the originally proposed 9% excise tax on cannabis sales down to 8%. It would also levy a flat tax of 4% that passes through to the local city or county where the sale takes place. Sales would additionally be subject to local gross receipts tax, which puts the total, maximum taxation at about 20%. Backers say the statewide tax revenue could range from $25 to $50 million dollar annually.

Another big change in the recommended version removes previously proposed earmarks for social justice provisions, which means the measure would not direct a certain portion of revenue to two new programs it would create (a community reinvestment fund and low-income medical patient subsidy fund).

"That's to allow the appropriators of money to make policy decisions as they allocate the money in future years," said Rep. Javier Martinez, D-Albuquerque, one of the bill's sponsors.

The legislation would permit recreational sales by current medical distributors and newly created "microbusiness" on Jan. 1, 2022 and others nine months later. It allows home cultivation of six mature and six immature plants at a time.

On the topic of local control, the bill's drafters had originally contemplated allowing cities and counties to opt out of allowing cannabis sales. Martinez says law enforcement requested that provision not go forward and it's not in the current version. However, counties and cities would be permitted to use zoning rules to regulate the locations of storefronts and production facilities.

Public testimony at the hearing held via Zoom was largely from those in support of the measure, including the New Mexico Criminal Defense Lawyers Association, which says it particularly backs the criminal justice provisions in the measure. Those proposed reforms include expungement of criminal records for those with prior convictions of cannabis possession.

Even though Rep. Jason Harper, R-Rio Rancho, voted against the measure with three Republican colleagues on the committee, noting "I really believe deeply we will regret doing this," he said the tax portions of the proposal had improved since its last iteration.

A similar measure passed the House last year and died in the Senate Judiciary Committee, so it's noteworthy that the chairman of the Senate Taxation, Business and Transportation Committee said a hearing on several bills will take place Saturday.

The agenda is not yet posted on the Legislature's website. It could include: Senate Bill 363, sponsored by Sen. Jacob Candelaria, D-Albuquerque, the companion to HB 12; Senate Bill 13, backed by the New Mexico Cannabis Chamber of Commerce; and Senate Bill 288 from Republican Sen. Cliff Pirtle of Roswell.

Senate leaders have said they expect to end up ironing out a compromise on the final form of legislation that might reach the Senate floor.