Cannabis News

ES: Going back to those 15 state and federal exams, could you elaborate on what that looks like? And do those exams differ from state to state in any substantial way?

AM: Typically, a financial institution will be on a 12-month to 18-month exam schedule, and when we started our program, it was a lot of education for us and the regulators. It was a lot of discussion of what cannabis banking looks like. Not a lot of our regulators had experience in financial institutions that banked cannabis. The exams were very collaborative in us trying to figure out the safest way to bank this and to not make it impossible for the cannabis industry to bank—but also to ensure safety and soundness for our institution and for the financial system as a whole. It was a lot of back and forth, collaborative efforts that actually prompted us to develop our own compliance software in-house that we, from all of the feedback that we were getting from regulators, were able to streamline and male as easy as possible.

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.”

The New Mexico Legislature is working overtime, but adult-use cannabis legalization is now closer to reaching Gov. Michelle Lujan Grisham’s desk after the House passed an amended bill and the Senate took up an expungement measure during a special session March 31.

The lower chamber cleared the adult-use bill, 38-32, while the expungement measure for certain low-level cannabis convictions drew a 23-13 vote in the Senate, where the overall 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.

One key amendment adopted in 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. Under the bill, roughly 4% of the excise 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 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 upcoming 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 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 accompanying S.B. 2, the expungement measure that, as previously stated, passed the full body vote earlier in the day March 31.  

Both legislative bodies are scheduled to reconvene later in the day Wednesday, in an effort to continue working toward sending the adult-use legislation to Lujan Grisham’s desk.

“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.”

On March 31, 2021, New York Governor Andrew Cuomo signed The Marijuana Revenue and Taxation Act (MRTA) into law, legalizing adult use, home cultivation and possession of cannabis for adults over 21 immediately. Upon signing the bill this morning, previous cannabis-related convictions are automatically expunged, according to the Governor.

The bill establishes the Office of Cannabis Management, which will launch and manage the regulatory system for the commercial cannabis market in New York.

According to Steve Schain, senior attorney at Hoban Law Group, the Office of Cannabis Management will have a five-member board that will oversee not just the adult use cannabis market, but also medical cannabis as well as the state’s hemp market. For the medical market, the new legislation provides for more patient caregivers, home cultivation and an expanded list of qualifying conditions.

Troy Smit, deputy director of the New York NORML chapter, says the bill might not be perfect, but it’s a massive win for the cannabis community. “It’s taken a great amount of work and perseverance by activists, patients, and consumers, to go from being the cannabis arrest capital of the world, to lead the world with a legalized market dedicated to equity, diversity, and inclusion,” says Smith. “This might not be the perfect piece of legislation, but today, cannabis consumers can hold their heads high and smell the flowers.”

The MRTA sets up a two-tier licensing structure that separates growing and processing licenses from dispensary licenses. The bill includes a social equity aspect that requires 50% of the licenses to be awarded to, “minority or women-owned business enterprise, service-disabled veterans or distressed farmers,” says Schain.

Melissa Moore, New York State director of the Drug Policy Alliance, says she’s proud of the social equity plan the bill puts in place. “Let’s be clear — the Marijuana Regulation and Taxation Act is an outright victory for the communities hit hardest by the failed war on drugs,” says Moore. “By placing community reinvestment, social equity, and justice front and center, this law is the new gold standard for reform efforts nationwide. Today we celebrate, tomorrow we work hard to make sure this law is implemented fairly and justly for all New Yorkers.”

Schain says the new tax structure in the bill shifts to the retail level, with a 9% excise tax and 4%-of-the-retail-price local excise tax (split 25%/75% between the respective counties and municipalities). Revenue from cannabis taxes will enter a fund where 40% will go to education, 40% to community grants reinvestment fund and 20% to drug treatment and public education fund.

It appears that businesses already established in New York’s medical market get a head start on the new adult use market, while other businesses enter the license application process, according to Schain. “Although the existing Medical Marijuana licensees should be able to immediately to sell Adult-Use Cannabis, it will take up to two years for the New York’s Adult Use Program to launch and open sales to the public,” says Schain.

New York’s S.B. S854 would provide the regulatory framework for adult-use cannabis, construct a licensing and taxation system for adult-use sales, create a social and economic equity program to assist individuals unfairly targeted and impacted by cannabis enforcement and expand the state’s existing medical cannabis and hemp programs, as noted in a press release on the New York state government website.