Green Equity

Cannabis industry fairness—a cornerstone to legalization in New Mexico—is a work in progress, which lawmakers may continue in January

With drug laws that disproportionately impacted people of color in the rearview mirror under cannabis legalization in New Mexico, the next step for regulators is creating a market that offers a bit of redemption for those whose lives have been forever changed by cannabis convictions.

New Mexico’s Cannabis Control Division has made some strides toward a more equitable industry in the seven months since adult-use sales began. But there’s more work to be done in order to meet the benchmarks set by the division and its statutorily created advisory panel. A diverse and fair cannabis industry is on the division’s to-do list and at least one lawmaker is ready to invest money from cannabis taxes into the hardest-hit communities.

The notion of creating equity in terms of who earns profits from the state’s cannabis industry began surfacing in legislative debates several years ago and crystalized in the months leading up to the final passage of the Cannabis Regulation Act this year. One of the law’s architects, Rep. Javier Martínez, D-Albuquerque, repeatedly made industry fairness part of his legalization pitch. That push from Martínez and the bill’s other cosponsors ultimately left the Cannabis Regulatory Advisory Committee—one of the creations of the legalization law—in charge of coming up with guideposts for equity. In December 2021—eight months after the legalization law went into effect and four months before the state saw any sales—the advisory committee sent state regulators a Mary Poppins list of suggestions, including the creation of a “social and economic equity applicant” classification to help small, diverse operators compete against large, corporate entities; setting up an equity office at the division; and reinvesting cannabis tax money back into communities disproportionately affected by the war on drugs.

In turn, the division outlined its plan—based on the committee’s recommendations—in a February memo, which included devoting a staff member to oversee “the social and economic equity initiatives of the division.” The division’s plan also includes specifics on who qualifies as a “equity applicant,” such as a “distressed farmer,” those with cannabis-related criminal records, Indigenous people and people of color, among others.

Robert Sachs, the division’s deputy director of policy, tells SFR the work has begun and still has a ways to go.

“Where we’re starting is working with industry and developing some workshops and mentorship programs specifically to just really educate licensees and applicants on how the licensing process works,” Sachs says.

Some of those workshops, Sachs adds, are with the help of industry veterans and largely focus on the basics of applying for a business license and running a business.

“There are some barriers that any entrepreneur would face,” he says. “But for cannabis licensees, or anyone who wants to break into the cannabis industry, there are additional barriers that we found a lot of people aren’t really aware of, particularly those who are social equity applicants or micro business applicants.”

But, Sachs says, the division can’t fully identify everyone who might qualify as an equity applicant because the division does not collect data beyond gender, ethnicity and preferred pronouns.

Emily Kaltenbach, whose day job is heading New Mexico’s Drug Policy Alliance, chairs the Cannabis Regulatory Advisory Committee. She says an often-overlooked part of industry equity is reinvesting cannabis tax money to impacted communities.

“Equity is more than just equity in the market,” Kaltenbach tells SFR. “It’s also about reinvesting dollars. It’s about industry being engaged in the community in which they are a part of. So I think it’s important that we remember that equity is broader than just who has a license.”

Early iterations of what became the Cannabis Regulation Act included specific appropriations for cannabis tax dollars, but as time wore on, sponsors opted to wait and see exactly how much revenue the state and municipalities would collect. Despite no specific home for cannabis revenue, a national tax expert praised New Mexico during a recent interim legislative hearing for not going overboard with divvying up the money before the market fully stabilizes. But one New Mexico lawmaker says the 2023 legislative session marks the right time to start talking about what to do with the millions of dollars coming in each month.

Rep. Andrea Romero, D-Santa Fe, was another primary sponsor of the Cannabis Regulation Act. She sees an increase in minority and female owned cannabis businesses as a “positive start,” making the state an “equitable gold standard.”

“How we continue to grow, how we continue to build, I think is going to be really important and critical to see that it’s a success story for New Mexico,” Romero says. “But already I’m really proud and happy with how it’s gone so far.”

Besides plans to earmark cannabis revenue, Romero says she plans to sponsor a bill that would put small cultivation operations on even ground with larger growers by creating parity in production limits.

Romero’s vision of an equitable cannabis industry includes, in part, revenue reinvestments in communities that need it most and access to capital for those who have a business background and want to get into the cannabis game, but don’t have access to traditional funding. She compares reinvesting cannabis revenue to other projects such as broadband internet access and early childhood education and says they all require “baby steps” to make sure the funding is there. But, she says, now that the cannabis money is rolling in, the next step comes during next year’s legislative session.

“I really do think we will be at the stage of starting to make those investments and starting to ensure that these programs are set up to do what we’d like them to once they’re fully funded,” Romero says.

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