New Mexico Legislature Passes Adult-Use Cannabis Bill, Which Now Awaits Gov. Lujan Grisham’s Signature

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This is a developing story. It has been updated to reflect the Senate’s amended passage of House Bill 2 at 8:30 p.m. Mountain Time March 31.

The New Mexico Legislature worked overtime, but adult-use cannabis legalization is now steered toward Democrat Gov. Michelle Lujan Grisham’s desk after the House and Senate voted to pass legislation during a special session March 31.

The lower chamber cleared the three-time amended adult-use bill, 38-32, Wednesday afternoon, while the upper chamber added one more amendment before passing the bill, 22-15, Wednesday night on the Senate floor, where the bill previously stalled during the legislature’s 60-day regular session that concluded March 20, which sparked Lujan Grisham’s call for the special session.

The House reconvened shortly after the Senate’s passage to approve the upper chamber’s amendment to the bill, officially sending it to Lujan Grisham for signing—with her ink, New Mexico will become the 18th state to legalize adult-use cannabis.

One key amendment adopted in special session House Bill 2, which was a continuation of H.B. 12, the Cannabis Regulation Act that the body passed Feb. 26, includes raising the excise tax on cannabis products from 12% to 18% over the course of six years, beginning in 2024, according to chief sponsor Rep. Javier Martinez (D). Under the bill, roughly 4% of the excise tax would be distributed back to the local communities where the cannabis is sold, whether it’s a city or county municipality, Martinez said on the floor Wednesday.

The House Tax Committee approved the amended excise tax portion of the bill during the first day of the special session on March 30.

“As we embark on building a brand-new industry and we get to set the rules of the game for how this industry will play out … this is a good opportunity to actually raise revenue,” Martinez said. “If we’re going to do this, we might as well get the most we can get without overdoing it to the point where we are maybe undercutting our efforts to get rid of the illicit markets. So, that’s the number we settled on—18% excise tax.”

According to Martinez, economic projections indicate that adult-use legalization would create more than 11,000 jobs and generate $28.6 million in tax revenue in the first year of implementing a program, which H.B. 2 aims to activate no later than April 1, 2022.

Another amendment to H.B. 2 directs 100% of revenue distributions to the state’s general fund, Martinez said on floor.  

“We heard from members of both parties; we heard from members of both chambers that earmarking dollars at this stage of the game, when the framework isn’t even legalized, when revenue isn’t even coming in yet, was not a good idea,” he said. “And, so, we’ve conceded that point. We removed all specialty funds that we had created under the legislation. That’s not to say those funds will not come back.”

Martinez said he’s committed to ensuring those funds are established through legislation in the next regular session, particularly a rural equity fund that provides rural communities that would want to join the industry access to capital and business development support mechanisms. 

Meanwhile, several main proposals of the adult-use bill remained intact, such as allowing adults 21 and older to possess no more than 2 ounces of cannabis, 16 grams of cannabis extract or 800 milligrams of edible cannabis. Adults will be allowed to grow up to six immature plants and six matures plants per household for personal use. The bill also creates 10 license types, ranging from the needs of large-scale vertically integrated companies to small-scale microbusinesses.

Additional foundational principles of the bill include protecting and enhancing New Mexico’s medical cannabis program as well as ensuring social justice when it comes to providing reinvestments toward communities disproportionately affected by prohibition, Martinez said.

During the first day of the special session in the upper chamber, the Senate Judiciary Committee added 11 amendments to an accompanying Senate Bill 2, an expungement measure for certain low-level cannabis arrests and convictions. The next day, on Wednesday, S.B. 2 passed full-body votes in the Senate, 23-13, and the House, 41-28.

According to S.B. 2, those serving jail time for cannabis-related offenses would have their cases reviewed by corrections officials within 30 days following the effective date of the Democrat-sponsored bill. In addition, the bill states by April 1, 2022 the New Mexico Department of Public Safety shall review the public records in the state’s criminal history databases and identify all past convictions that are potentially eligible for recall, dismissal and expungement.

The legislature’s passage of the adult-use cannabis and cannabis expungement bills won’t be the end of cannabis regulation in New Mexico; it will only be the beginning, said Sen. Katy Duhigg (D), who sponsored S.B. 2.

“I know that there are going to be a lot of additional improvements in the future going forward,” she said Wednesday night on the Senate floor. “But what we have now in House Bill 2 is a solid framework to be able to make a change in our state that is a long time coming.”

Martinez, who has introduced legalization bills four times to House endorsements without final approval, said the adult-use bill passed on Wednesday has been “written, rewritten and amended.”

Nearly 75% of New Mexicans approve of cannabis legalization with provisions in place to ensure tax revenue is reinvested back into communities, including 94% of Democrats, 93% of Independents and 46% of Republicans, according to the Drug Policy Alliance.

Lujan Grisham has expressed support of adult-use cannabis legalization, saying it is one of the best moves to make in an effort to build a bona fide 21st century economy in New Mexico. She is expected to put pen to paper for H.B. 2 and S.B. 2 on April 1.  

“I am grateful to those legislative leaders and members who have expressed enthusiasm about returning to the people’s work so soon after a challenging 60-day session,” she said in a press release when she called the special session.

“The unique circumstances of the session, with public health safeguards in place, in my view prevented the measures on my call from crossing the finish line,” Lujan Grisham said. “While I applaud the legislature and staff for their incredible perseverance and productivity during the 60-day in the face of these challenges, we must and we will forge ahead and finish the job on these initiatives together for the good of the people and future of our great state.”

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