December 29, 2021

2021 Top Stories #3: Cannabis legalized

See our entire countdown of 2021 top stories, to date, here.

One of the most notable things that happened in 2021 was the legalization of recreational-use cannabis. 

The use of medical cannabis has been legal in New Mexico for more than a decade, but full legalization did not become a reality for New Mexico until earlier this year, during a special legislative session devoted mostly to legalization. Weeks before, during a regular legislative session, lawmakers were unable to come up with a version of a legalization bill that would address everyone’s concerns. Ultimately, the effort in the regular session stalled in a key Senate committee

But the special session proved to be a success for proponents of cannabis legalization and Gov. Michelle Lujan Grisham signed the bill into law in April. But even as it looked like legalization was on the horizon, there were still many concerns about how legalization would impact rural communities in the northern part of the state

Of course, New Mexico couldn’t legalize cannabis without former Gov. Gary Johnson weighing in. Johnson, a former Republican turned Libertarian, called for the legalization of all drugs in the 1990s, during his second term. At that time Johnson received criticism on his stance from both his party and many Democrats. His public safety secretary at the time, Darren White, stepped down, reportedly because of Johnson’s call for legalization. White would go on to help found one of New Mexico’s larger medical cannabis producers. 

Part of the new Cannabis Control Act also makes medical cannabis tax-free, which likely made many medical cannabis patients happy, but it also highlights an issue that began before Lujan Grisham took office: was medical cannabis supposed to have been exempt from gross receipts taxes all along? 

That question came up several years ago when a medical cannabis producer asked the state to refund gross receipts taxes the company had paid, on the basis that prescription drugs are already exempt from that tax. The issue is now a pending state supreme court case, and in May Attorney General Hector Balderas’ office, on behalf of the governor and the Taxation and Revenue Department, argued that if lawmakers had intended to make medical cannabis sales exempt from tax, then they would have done so earlier.

Statewide cannabis legalization also meant that local governments were tasked with coming up with their own policies regarding cannabis businesses. In most cases, that meant cities and counties updated their zoning codes to comply with the new state law and to set guidelines for new cannabis businesses. In Albuquerque, for example, city councilors approved amendments to the city zoning laws. In the surrounding areas of Albuquerque, which are governed by the Bernalillo County Board of Commissioners, local lawmakers approved a zoning ordinance change that would restrict cannabis consumption areas to indoor only

State regulators have not completely finalized rules and regulations for cannabis businesses, which they ultimately have to have done by April 1, 2022. And until those applicants are licensed and start growing and selling cannabis products, much of the supply will likely come from the more than two dozen legacy cannabis producers who were already licensed under the state’s Medical Cannabis Program. At least two of those producers told NM Political Report earlier this year that they thought the state is likely headed for a shortage of cannabis. State regulators have said they do not think the state will face state-wide shortages. 

2021 also saw a peculiar addition to the list of legacy producers. After years of keeping the licensing process for medical cannabis producers closed, the state Department of Health quietly approved one more license, just days before the department’s regulatory duties were transferred to the Regulation and Licensing Department. The advantage of getting a headstart into the recreational-use cannabis industry was arguably minimal when the company got its license. But as time went on, the possible advantage to start producing cannabis over the summer became more clear. Many cannabis business applicants have said they need at least a four-month lead time before sales are slated to begin in April.  

But just because cannabis is legal to use and possess, doesn’t mean there aren’t penalties for unauthorized sales or distribution. The Doña Ana County Sheriff’s Office and the local district attorney’s office offered a reminder earlier this year when they charged a Las Cruces man for trafficking cannabis, a fourth-degree felony, for allegedly selling cannabis out of his store without a license. The operation came to light earlier in the year when the store was openly giving away cannabis with the purchase of a sticker. Over the summer, state regulators sent the store a cease and desist letter, notifying the operators they were in violation of state law. The new Cannabis Regulation Act allows for individuals 21 years of age or older to gift cannabis to each other, but the law also defines cannabis trafficking as the “distribution, sale, barter or giving away of cannabis products.”To learn more about cannabis in New Mexico, check out Growing Forward, the collaborative podcast between New Mexico Political Report and New Mexico PBS.