June 7, 2021

Citizen lawmakers find work in new cannabis industry

Cannabis legalization in New Mexico was sold as, amongst other things, a job creator. Those who are eyeing the new industry are navigating proposed rules and regulations and making plans for real space, how many plants they will be able to grow and how to get their applications approved by the state. Now there seems to be a niche market for cannabis adjacent businesses, particularly those aimed at guiding business owners through the process. 

Even prior to the passage of the Cannabis Regulation Act in the New Mexico Legislature, a handful of consulting and legal firms specializing in cannabis regulations and law existed. But since the Cannabis Regulation Act passed, there are at least three elected officials who are currently, or plan to, sell their knowledge to those interested in getting in at the ground floor of what is expected to become a booming new industry. 

That raises questions about the ethics of state and local lawmakers selling their services in an industry they sometimes have a hand at creating. But some of those elected officials who operate cannabis adjacent businesses say they are keeping things ethical but that the dilemma could be avoided if lawmakers are paid an actual wage.    

On the evening of March 31, which was the last day of New Mexico’s special legislative session, the state Senate was deep in a debate over cannabis legalization. While some lawmakers seemed intent on blocking a House legalization proposal, others were focused on the fine print. 

Sen. Stuart Ingle, R-Portales, for example, proposed an amendment to the bill that would eventually become the Cannabis Regulation Act. The language of Ingle’s amendment was simple: members of the Legislature “shall not apply for or be granted a license to engage in any commercial cannabis activity prior to July 1, 2026.”

But the proposal struck one of the House bill’s sponsors as odd and to others it seemed like a slippery slope. 

One of the bill’s sponsors, Rep. Javier Martínez, D-Albuquerque, said he viewed Ingle’s amendment as “unfriendly,” but mostly because it would complicate the fact that New Mexico legislators do not serve full time and aside from per diems and mileage reimbursement, they do not get a paycheck. 

“I have no business interest at all, and neither does my family at all in this industry,” Martínez said. “And so I’m going to call it unfriendly, not because I have some sort of interest somewhere down the road. I just think it sets a bad precedent in terms of us being a citizen legislature and everything that comes with being a citizen legislature.”

The amendment passed with more than half of the present senator’s voting in favor of it, but some of those who voted against it echoed Martínez’s point, arguing that unless legislators are paid a salary, prohibiting them from a particular industry could be problematic. 

At that point, Sen. Jacob Candleria, D-Albuquerque, had already faced criticism, particularly from a state cabinet secretary, for his work as a lawyer who sometimes represents New Mexico cannabis producer Ultra Health. Also, several years prior, former Senator Phil Griego was convicted of violating state law by using his office to influence the sale of state property to one of Griego’s real estate clients. 

Prior to voting on the amendment, Sen. Mark Moores, R-Albuquerque, used Griego’s conviction as a reason to ask Martínez and the bill’s House sponsors if they stood to financially benefit from cannabis legalization. 

“It was incredibly embarrassing to this chamber and I’d like to know if any of these House members would like to disclose any of that,” Moores said. 

Martínez said he was not involved in, nor did he plan to be involved in, a company that would be vying for a license to sell recreational-use cannabis. 

But it seemed that Moores momentarily forgot about Sen. Katy Duhigg, D-Albuquerque, who was also a cosponsor of the House bill. She chimed in and said the same question should be asked of Sen. Cliff Pirtle, R-Roswell, who sponsored a competing legalization bill. 

“I appreciate Senator Moores’, I think, inherent trust in me as a sponsor of this legislation and not asking me whether I have any financial interest,” Duhigg said. “I do not, and I look forward to Senator Moores also asking the same question of Senator Pirtle when we are hearing Senate Bill 3.”

But now, more than two months after that debate, Duhigg opened a new law firm specializing in cannabis law, and she is the second state senator to do so. 

A history of conflict of interest debates 

Debates over conflicts of interest in the New Mexico Legislature are not new. Nearly every legislative session is marked by lawmakers recusing themselves from votes or at least disclosing that their work outside the Legislature might be impacted by legislation. Both the House and Senate are peppered with legislators who are also teachers, lawyers and doctors. 

In recent years perceived conflicts of interest involving medical cannabis have begun to arise as well. During the 2020 legislative session, Speaker of the House Brian Egolf, D-Santa Fe, recused himself from the entire legislative process of a bill that was directly related to litigation against the Department of Health, filed by one of his clients. That client was medical cannabis producer Ultra Health and the litigation challenged the Department of Health’s ability to limit the state’s Medical Cannabis Program to New Mexico residents.  

Since then, Ultra Health started hiring Candelaria for legal disputes with the state. Both Candelaria and Senate Majority Leader Peter Wirth, D-Santa Fe, have repeatedly defended Candelaria’s work outside the Legislature, arguing that the structure of the Legislature requires lawmakers to find additional work as they are only paid for expenses and not a true salary. Earlier this year, Department of Health Secretary Tracie Collins filed an ethics complaint against Candelaria, arguing that he voted and lobbied against a proposal that Collins said would have benefited Candelaria’s client Ultra Health. The claim was dismissed by the state’s Ethics Committee and the legislative proposal did not make it to the governor’s desk, but did end up in the Cannabis Regulation Act. 

Now Duhigg is the second state senator to own a firm that specializes in cannabis, although Candelaria also practices in other areas.  

Duhigg said she had not considered a cannabis law firm during the special session and actually took measures to disclose her then areas of practice, which sometimes involved medical malpractice. 

“When the medical malpractice bill was up, I did stand up and say, ‘I’m probably going to be doing this,’ because I had assumed I was going to go back to that,” Duhigg told NM Political Report. “But then, after the session ended I was kind of looking around, seeing an opportunity to try something new that I’ve never tried before. And a friend of mine said, ‘Hey, you happen to know a whole lot about cannabis law in New Mexico at the moment, why don’t you give that a shot?’ And it sounded like an interesting thing to try.”

Duhigg said her work running a “one stop shop” for legal issues surrounding the upcoming cannabis industry is not much different than most other legislators and that it comes down to the lack of salaries.

“Every single person who serves in the Legislature who has to work for a living, is at some point going to be dealing with legislation that is going to impact their area,” Duhigg said. “And the fix for that is to professionalize our Legislature, which I very much hope we will follow the lead of every other state in our country in doing.”

But those perceived conflicts of interest, especially with cannabis legalization, now expands beyond the state capitol. 

Albuquerque City Councilor Pat Davis is also branching out into the cannabis consulting world. He, along with two other business partners, started P2M, a consulting agency that specializes in helping cannabis business hopefuls get into the industry. But Davis, as a city councilor, will have a say in a new city zoning proposal for recreational-use cannabis store fronts. Davis told NM Political Report that because of the perception of a conflict of interest, his firm will not consult clients on anything that has to do with the city. Instead, he said, he and his partners will focus on consulting clients on how to set up their cannabis business. 

“I think we’re concerned about that perception,” Davis said. “So where any of our clients might have an issue, all the way down to getting a city business license, which is a pretty administrative sort of thing and something I don’t have any control over as a counselor, all the way up to a potential zoning change that might allow them to do business, we refer them to attorneys who have experience in that area so that I don’t create a conflict.”

And while Albuquerque city councilors do get a consistent paycheck, Davis said councilors are not paid enough to be financially stable without a second job. 

“Especially in the city of Albuquerque, I think we do need full time city councilors at this point,” Davis said. “Because we have a billion dollar budget and a half-million people to deal with every day, I do think that. But given where it is, if you want working-class people, like me or [City Counselor] Lan Sena, or people who aren’t yet retired to be able to run for public office, you’ve got to allow them to work. And it’s going to create these conflicts.”

Davis said his fellow city councilors have generally done a good job of recusing themselves from issues that relate to their respective day jobs. 

But former state Senator Dede Feldman said that’s not always the case in the Legislature. Since leaving office, Feldman has worked extensively with good government and ethics advocacy groups. 

“In the New Mexico legislature, you have insurance agents voting on insurance bills, you have real estate agents voting on property taxes, and you have oil and gas guys voting on oil and gas regulations,” Feldman said. “And so the rule of thumb has been, when the bill would directly benefit your company and hence you definitely need to excuse yourself. But if it is a bill about the entire field, the entire industry, then people typically don’t excuse themselves. In fact, they’ve championed the bill or they’ve championed opposition to the bill.”

Feldman said she also believes that paying lawmakers salaries would help to solve many ethics concerns.  

“This comes with not having a paid legislature and expecting legislators to hold their day jobs,” Feldman said. “And being a lawyer is particularly conducive to a citizens legislature, because you can leave your practice for a month or two.”

Governor’s response

Questions about Candelaria’s role as both a state senator and the lawyer for a medical cannabis company came up both on social media and directly from the state’s executive branch during this year’s special session. When the special session began, Candelaria said he was hesitant to vote for the initial legalization proposal because it sought to put a limit on cannabis plants for producers. 

According to the Albuquerque Journal, a spokeswoman for Gov. Michelle Lujan Grisham said, “It’s hard sometimes to tell where the senator ends and the attorney for the state’s largest medical cannabis company begins.” 

Candelaria said comments from the governor’s office, combined with the ethics complaint filed by the DOH secretary indicate to him that there’s a “double standard” for legislative ethics. He said he feels like he was scrutinized unfairly and that while he sees nothing wrong with Duhigg’s new firm, he feels like she’s getting a pass. 

“It’s really unfortunate that you have a governor’s office and the secretary of health who manipulated and abused our ethics system to prove a political point,” Candelaria said. “The basic acquiescence if not silence, I think just speaks to what their true motives have been coming after me.”

After the ethics complaint against Candelaria was dismissed, he notified DOH that a lawsuit alleging retaliation was soon to come. In response, a spokeswoman for Lujan Grisham dismissed Candelaria’s retaliation claim, saying that he was “seemingly motivated solely by his own personal animus.”

When asked if Collins was concerned about Duhigg’s work as a lawyer specializing in cannabis law, a department spokesperson said if Collins had a comment on the issue, it would not be until Monday. 

Candelaria said his issue is fairness in how rules are applied. 

“I don’t begrudge anybody, but let’s all be held to the same rules,” he said.

Feldman said questions about ethical integrity will always be an issue in the Legislature and that lawmakers need to take public perception seriously. 

“When legislators start the session, they are sworn in and they swear to use their office for the purposes of the public, not for themselves, or not for anyone else,” Feldman said. “I think legislators have got to take that very seriously or they will be perceived as corrupt. And they’re not, they’re really not. But us having this citizen legislature, it’s built in. It makes people question the integrity of legislators.”