February 15, 2022

Senate passes cannabis law changes, adds new water rights language

The New Mexico Senate approved a bill late Monday night that aims to clean up language of the state’s Cannabis Regulation Act, increase production limits for small cannabis companies and allow those smaller companies to wholesale cannabis to and from other cannabis businesses. 

The most significant changes SB 100 proposes are increasing plant limits for cannabis microbusinesses from 200 to 1,000, allowing those types of businesses to buy, sell and transport cannabis from other companies and allow medical cannabis companies that were previously required to be registered as nonprofits to become for-profit companies. 

After an amendment in a committee hearing the day before, nearly all of the debate on the Senate floor was devoted to water issues, even though the original bill did not address any changes related to water.    

Earlier this week, a Senate committee approved an amendment that stripped a water right verification section from the Cannabis Regulation Act. 

During a Senate Judiciary Committee, Sen. Cliff Pirtle, R-Roswell, proposed removing the section, calling it “unnecessary red tape.”

“There’s one instance of a constituent of mine that was trying to get licensed and they tried to transfer ownership into a separate business so that it didn’t put his farm into liability,” Pirtle said on Sunday. “And it became problematic to prove who has the legal right, who’s supposed to have it, who’s leasing from whom.”

Sen. Katy Duhigg, D-Albuquerque, who works as a cannabis attorney, agreed with Pirtle. 

“We have hamstrung this industry with the approach that we took to water in the bill last year,” Duhigg said on Sunday. “I think we got it wrong, frankly, last year, with what we did with water.” 

Sen. Linda Lopez, D-Albuquerque, unsuccessfully tried to further amend the bill to include what she said was a compromise in verifying legal water access. Her amendment, she argued, would only require that a cannabis company “demonstrate” that it has legal access to water. But after about an hour of debate, her amendment failed on a 19-20 vote, with a number of Democrats voting against it. 

Most of the pushback on the amendment came from Pirtle who reiterated his comments from the previous day, arguing that it’s already illegal to use water for any agricultural use without legal access to it. 

“You have a water right or you don’t have a water right,” Pirtle said. “It’s not that complicated.”

After Lopez’s amendment failed to pass, Pirtle introduced his own, more simplified amendment to address water access, which passed by a 20-11 vote. Instead of showing legal access to water as a condition of the licensure of a cannabis producer, Pirtle’s amendment would allow the state to revoke a cannabis license if “a licensee is using water to which the licensee does not have a legal right.”

The question of how a recreational-use cannabis industry will impact the state’s water supplies has been asked for years in the Legislature, but the issue came to a head last year. During both the 2021 special session, the New Mexico Acequia Association successfully advocated to add a provision in the Cannabis Regulation Act, which legalized adult-use cannabis in the state, that requires cannabis growers to verify they have valid water rights. In a letter to lawmakers last March, the Acequia Association’s leadership criticized early versions of the Cannabis Regulation Act for not including provisions to protect community-managed water sources like acequias.

“[The proposed cannabis legislation] has several provisions that seek to ensure that those communities affected by years of criminalization of cannabis are included in the economic boon to come,” the association’s leadership wrote. “However, there is not the same level of consideration for traditional, land-based communities, such as acequias, where a significant agricultural land base and senior water rights are located and are now at risk of being lost to wealthy outside interests.”

Gov. Michelle Lujan Grisham eventually signed a version of the act into law that included a requirement that cannabis producers verify they have legal water access with the Office of the State Engineer. 

The Acequia Association on Tuesday issued a statement calling on the Senate to add the water language back into the bill. 

“We worked very hard with the legislature in 2021 to enact safeguards for water resources from the negative impacts of the cannabis industry,” association director Paula Garcia said in a statement. “In a few minutes, with no opportunity for public comment, all that hard work was erased.”

Senate Judiciary Committee Chair Joseph Cervantes during the meeting said no one had signed up for public comment either in favor or against the bill. 

Harold Trujillo, the president of the Acequia Association and a member of the state’s Cannabis Regulatory Advisory Committee challenged Duhigg and Pirtle’s claims that water rights verification is a major speedbump for industry hopefuls. 

“We are concerned that the cause of equity is being misrepresented,” Trujillo said in the association’s statement. “The root cause of inequity is the lack of capital for micro-producers. Requiring validity checks for water actually ensures water equity for rural communities such as mutual domestics and acequias.”

Last year, John Romero, who oversees the state’s Water Resources Allocation Program, spoke with Growing Forward, the collaborative cannabis podcast between New Mexico PBS and NM Political Report, about water and cannabis. He said the verification process for cannabis growers created more work for his staff and likened it to an “unfunded mandate.” But on Monday Romero told NM Political Report that his staff will be faced with even more work without the water right verification provision.

“It’s going to make it that much more difficult on the agency when we’re already resource-strapped,” Romero said.

By requiring cannabis producers to first verify water rights, Romero said, his office will have a clear picture of who is tapping into water resources for cannabis cultivation, instead of spending resources on investigating reported violations or waiting on his staff to stumble onto something. 

As an example of the work that goes into addressing violations after they occur, Romero referenced an agricultural water user in Southern New Mexico who has fought state sanctions for three years after Romero’s office found the water user did not have valid access, requiring even more resources from the state. 

“You need attorneys to work on this from the legal end, you need the water rights specialist and engineers to go out and do the field checks and document this so the attorneys can do their work, you’ve got to have a memo with all the facts, pictures, maybe some meter readings to show the judge, or whomever,” Romero said. 

According to Romero, only about 10 to 15 percent of cannabis businesses seeking water rights verification have shown valid water rights. The rest he said, “have presented invalid water rights, need to reconfigure the water rights or plan to use a domestic well, which is not allowed for agriculture.” 

SB 100 now heads to the House where it will go through the committee process before going to the governor’s desk for a signature.