What to Expect
Beginning at midnight on April 1st, 2022, any person in New Mexico over the age of 21 will legally be allowed to buy up to 2 ounces of marijuana from dispensaries across the state. People are also allowed to have six of their own cannabis plants for personal consumption (up to 12 per household).
Smoking cannabis in public can get you a $50 fine, and possession of more than the legal limit can earn you just under a year in jail; possession of extreme quantities is still a felony.
The product will be taxed at 12% until July 1, 2025. That excise tax increases by one percent each year until it maxes out at 18% on July 01, 2030. Medical marijuana patients aren’t subject to that tax. There are also gross tax receipts from 5.125% to 8.8125% depending on location.
A third of the tax revenue will go to the municipality where the product was sold; another third goes to the county where that sale was made.
Sales of recreational cannabis are expected to bring in $318 million the first year alone, with an expected $20 million or more in sales tax revenue for New Mexico’s General Fund. That’s expected to surpass $45 million a year after three years or so.
The state government says the industry could bring as many as 11,000 new jobs.
“As we look to rebound from the economic downturn caused by the pandemic, entrepreneurs will benefit from this great opportunity to create lucrative new enterprises, the state and local governments will benefit from the added revenue and, importantly, workers will benefit from the chance to land new types of jobs and build careers,” said New Mexico Governor Lujan Grisham.
The state has already licensed over 500 different cannabis-related businesses, including farms, greenhouses, manufacturing facilities, cannabis consumption lounges, and dispensaries. 225 of those licenses are for retail outlets.
Some licenses also went to testing laboratories. Those will be responsible for making sure the products being sold – be it flower, extract, or edibles – are all free of contaminants and accurately labeled as to their potency.
Last May, Bright Green Corp invested $300 million a state-of-the-art cannabis manufacturing and research facility.
“Bright Green will deliver consistent, pure, high quality organic cannabis and cannabis extracts that will provide safe inventory for cannabis researchers around the nation,” promised Bright Green Corporation Chief Executive Ed Robinson.
Before sales even start-up, there have already been questions about whether supply will be able to keep up with demand.
“Just like any new product release or a new restaurant opening, there will always be some lines and shortages of some products,” said Kristen Thomson with the Cannabis Control Division. “I cannot imagine a scenario — nor do we anticipate — a store selling completely out, unless they were only supplying one product.”
Economists say job creation and sales tax revenue from legal recreational cannabis could be a huge plus for New Mexico, but preparation will be key to a smooth transition.
Medical marijuana was legalized a decade and a half prior in New Mexico. Some supplies will be reserved to ensure those patients don’t struggle with access to marijuana because of any rush in the recreational market. There are also measures in place to allow the Cannabis Control Division to incentivize increased production of cannabis plants to remedy a shortage for medical patients.
The War on Drugs
New Mexico’s Cannabis Regulation Act also puts into place a few different social equity policies.
Firstly, SB2 provides for automatic expungement of marijuana-related convictions that are no longer considered crimes. That’s already resulted in 155,000 dismissals or expungements. In some cases, prison terms may be shortened.
Plus, law enforcement officers can no longer use the supposed smell of marijuana as probable cause to search a vehicle or other private property, which has historically been used to target people of color, particularly Black people, at much higher rates than White people.
The law mandates that rules from the industry must include, “procedures that promote and encourage full participation in the cannabis industry governed by the Cannabis Regulation Act by representatives of communities that have been disproportionately harmed by rates of arrest through the enforcement of cannabis prohibitions, rural communities likely to be impacted by cannabis production and agricultural producers from economically disadvantaged communities.”
The New Mexico Finance Authority is giving out a credit line of up to $5 million for micro-businesses in the cannabis industry. The average loan size is about $100,000.
In 1831, the Supreme Court of the United States ruled Native Americans are not subject to state law, though they must still answer to the federal government.
“The Congress shall have power to … regulate commerce with foreign nations, and among the several states, and with the Indian tribes,” the ruling states.
Because marijuana is an illegal Schedule 1 drug in the eyes of the federal government, that called into question whether tribal communities would be able to participate in the cannabis industry if the state where their land lies legalizes marijuana.
In New Mexico, state cannabis regulators have an agreement that allows for “cooperative oversight” of cannabis production and sales. So far, that agreement applies to the Picuris and Pojoaque pueblos, though there are 21 more federally recognized tribes in the state.
“The economic opportunities provided by the recreational and medical cannabis industries are truly game-changing, and sovereign tribal nations should benefit alongside the state,” said Governor Lujan Grisham in a statement. “With these agreements, the Pueblo of Pojoaque and the Pueblo of Picuris will benefit from this exciting new industry, which is projected to bring $300 million in sales annually and create 11,000 jobs in New Mexico.”
The Governors of both the Picuris and Pojoaque tribes have expressed satisfaction with the agreement, calling it an exciting new opportunity and a framework for ongoing collaboration.
Tribes in Nevada and Washington have also gotten into the cannabis business. However, Governor Grisham says New Mexico’s agreements with its pueblos are unique.
“These agreements not only formalize pro-tribal policies, such as a state duty to consult and incorporate tribal concepts and policies related to cannabis, but also are the only IGAs in the nation that provide for ongoing meetings and consultations between state and tribe,” the Governor’s news release continued.