June 30, 2021

State takes first steps to establish adult-use cannabis regulations

On the first day of legalized, recreational-use cannabis in New Mexico the department set to oversee the new industry held a rulemaking hearing. 

During the hearing, held by the New Mexico Regulation and Licensing Department and its Cannabis Control Division, a long list of stakeholders shared their concerns about water conservation, racial and social equity and transparency. But the public comment included nearly as many questions for the department as there were concerns. 

As New Mexico struggles with yet another drought this year, many who spoke at the meeting raised concerns about large cannabis companies adding to the state’s ongoing water problems. 

Alejandría Lyons, the environmental justice organizer with the Southwest Organizing Project said she and the organization want to see more water-use oversight to protect the generations-old family farms across the state. 

“We worry about our acequias, we worry about our farmers who have already been asked not to water, to fallow their fields,” Lyons said. “And more importantly, we are very worried about the oversight. The Office of the State Engineer is already at capacity, and we fear that we need higher regulation to prevent illegal water use, especially in a drought year, as we’re seeing right now.”

Jaimie Park, the policy coordinator and staff attorney for the New Mexico Acequia Association said that although the Cannabis Regulation Act details water requirements like showing proof of access to water or water rights, she and the association would like to see deliberate rules regarding legal access to water. 

“It’s really important that the regulatory language mirror the statutory language so that this important water protection mandate is lawfully and meaningfully implemented through these draft rules,” Park said. 

Park added that she and the association submitted written comments with suggestions that RLD and the Cannabis Control Division add stringent water reporting requirements for cannabis cultivators. 

One of the major selling points during the special legislative session that resulted in the newly effective Cannabis Regulation Act was social justice and equity. The bill’s sponsors argued that legalization should also include a minimally restrictive path for New Mexicans to enter the industry. One provision in the act is the allowance of cannabis microbusinesses, but under the proposed rules, microbusinesses could have to pay the state up to $2,500 a year. And all applicants must show that they have a physical space for their business before being licensed by RLD. 

Patiricia Monaghan, an attorney involved in the cannabis industry who spoke at the hearing, said she has represented a number of medical cannabis producers over the years and that they were never required to sign a lease or purchase a building before being licensed. 

“Requiring documentation of ownership of property to be used prior to being approved for license is difficult, or probably an insurmountable barrier to entry,” Monaghan said. “It’s just too much of an impediment for the small entrepreneur, the small business owner that wants to get going. You can’t ask them to do all that before they’re even licensed, before they’re even starting their business.” 

Charles Jones, who identified himself as a medical cannabis patient who is qualified to grow his own cannabis and the operator of a hemp farm in northern New Mexico, also said he was concerned with the department’s proposed requirement to have a physical space before applying for a cannabis business license. He said it is already difficult to find space in Albuquerque for a small grow or cannabis retail operation. 

“Right now in Albuquerque, there’s pretty much a war, any warehouse space is being gobbled up by anybody that can,” Jones said. “And this is before anybody has already been approved, or any of these applications. So before even these applications open up, all the warehouse space is diminishing.”

Many who spoke at the hearing did not have any comments, but instead had a list of questions, namely when RLD might post applications for industry hopefuls. All questions were submitted to the record and the hearing officer said RLD would work through them and get them answered. 

The next steps towards promulgating the rules include a review by RLD Superintendent Linda Trujillo of the hearing, comments and exhibits presented. If Trujillo and RLD decide to amend the proposed rules, there may be a need for a second hearing, depending on if the changes are outside the scope of the hearing. Assuming a second hearing is not needed, the rules will be filed and will go into effect 30 days later. 

Even though RLD has a statutory deadline to start accepting applications and establish an advisory committee by Sept. 1 of this year, there is no specific deadline for rule promulgation. But a spokesperson for RLD said the department aims to have the rules in place by the Sept. 1 deadline. 

The department also must start issuing cannabis business licenses no later than Jan. 1, 2022 and by law, retail cannabis sales must start no later than April 1, 2022.