Here Comes the Nug

Adult-use cannabis bill likely to land on new governor's desk next year


That's the number a coalition working to bring recreational cannabis to New Mexico has in their sights. After Michigan became the 10th state last week to legalize adult use of the plant, legislators, advocates and business owners who spoke with SFR say New Mexico is poised to become the eleventh. (It's also legal to use and grow in the District of Columbia.)

Many of the pieces now seem to be in place. A majority in the state House are favorable to the idea, and senators have warmed to it since a failed effort that would have added a proposed constitutional amendment to ballots in 2016.

Two state representatives, Javier Martínez (D-Albuquerque) and Bill McCamley (D-Las Cruces), introduced a legalization bill during the 2017 session for the purpose of workshopping it ahead of a future session when its passage appeared more prominent. With an incoming governor who has expressed openness to signing such a bill into law, that time could be in just a few months.

Martínez confirms to SFR that he plans re-introduce the bill ahead of this coming legislative session. House Speaker Rep. Brian Egolf (D-Santa Fe) tells SFR the chances of a bill passing this time around are far higher. Pending the specifics of newly filed legislation, weed might be legal in New Mexico as soon as July.

"I don't know if I have a whip count on the floor for recreational cannabis, but my guess is if it were to make it to the floor, it would probably pass the House," says Egolf, a personal supporter of recreational cannabis who also serves as legal counsel for the state's largest dispensary, Ultra Health.

Any bill introduced in either the House or the Senate would initially be referred to at least two committees for review before arriving on the chamber floor for a vote. Depending on which chamber passes the bill, that version would then go to the other chamber for its own passage. Lastly, the House and the Senate reconcile any discrepancies between their separate versions before sending it to the governor for a signature or veto.

Rep. McCamley, whose tenure in the state House will end after December following a failed run for state auditor, tells SFR some of the main issues for legislators to hash out will be whether revenue generated from cannabis goes to the general fund or is earmarked for specific projects. He says lawmakers also will also need to write "safeguards" to prevent children and some young adults from obtaining the plant.

In the past, the Senate has been most resistant to recreational cannabis, according to Sen. Jerry Ortiz y Pino (D-Albuquerque), who has championed the cause for years and plans to carry a legalization bill in the Senate. He tells SFR that while he's personally been unsuccessful convincing certain senators to support the idea, he feels "optimistic" about the upcoming session.

"With a governor in office who is in favor of legalization, I think some Republicans who have been unanimous in opposition [and] were loyal to Martinez maybe feel they can now vote the way they really feel," he says.

Sen. Mark Moores (R-Albuquerque) tells SFR he opposes recreational cannabis, which he believes "is bad for society and has hugely negative consequences, like alcohol." But he describes the shifting political landscape as a reason he is inclined to support a legalization measure, so long as it comes with a strong regulatory framework. (A survey from Albuquerque-based Research and Polling, Inc. this fall found that 60 percent of likely voters support legalization, and a 2016 survey pegged more than 65 percent of New Mexicans as supporters.)

"I don't want recreational marijuana, but I understand the political reality that it is here," Moores says. "I want to make sure we have a system that is extremely well-regulated, and the ability to take those revenues and mitigate some of those negative social impacts that marijuana has."

Sen. Peter Wirth (D-Santa Fe), the Senate's majority floor leader, says his chamber is more likely to vote in favor now because Democrats picked up two seats in the 2016 election. Like Egolf, he is also a personal supporter of recreational cannabis.

"I think the fact that we're not first [to legalize cannabis under state law] is important here," Wirth tells SFR. "We're not re-inventing the wheel. We're also a border state with Texas, where there's no recreational or medical [cannabis, and] I think this would lead to huge economic development on the east side of our state."

Both Martínez and McCamley have worked closely over the last year with the Drug Policy Alliance, which has held numerous meetings with legislators, dispensary owners and others about what an adult cannabis industry could look like in New Mexico. A central part of that conversation has been how to tax it.

According to Emily Kaltenbach, DPA New Mexico's executive director, revenues from cannabis would likely be collected at the point of retail sales, based on what has worked elsewhere. When cannabis was first legalized in Washington, for example, that state tried to tax growers, processors and retailers separately, but growers would often partner with processors in order to skirt the tax. Washington wound up replacing the three-tiered arrangement with a single tax on retailers.

Current purchasers of cannabis in New Mexico's medical program pay just gross receipts tax. Whether and how the state levies additional excise tax could get complicated in a hurry.

Taxing cannabis sales is trickier than other excise taxes such as the one on gas, which can be applied to a number of gallons, because it comes in many forms such as edibles, beverages, joints, and topical creams. Richard Pomp, an adviser to states on tax law, told New Mexico's Revenue Stabilization and Tax Policy in July that most other states with legal adult use impose the tax as a percentage of a product's purchase price.

Pomp also told the committee that New Mexico could expect total tax revenue between $30 and $60 million a year, in addition to state and local gross receipts taxes, as well as revenue collected through the business licensing process and increased tourism.

Related Story: Santa Fe dispensary owners sound off on possible legal weed

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