If state lawmakers want to legalize the recreational use of cannabis by next year, they’ll have to move fast and make it simple, two experts on the issue told state legislators Tuesday.
First, they have to ensure there’s enough product to meet demand almost immediately.
Then, they have to set a limit on how much cannabis each customer can buy every day.
Finally, they’ll have to figure out the tax to levy on sales, perhaps as much as 15 percent to 20 percent.
Timing will be everything, Duke Rodriguez, CEO and President of Ultra Health Inc., the state’s largest producer of medical cannabis, said to members of the Revenue Stabilization and Tax Policy Committee.
Gov. Michelle Lujan Grisham and many state Democrats have said legalizing cannabis can help diversify New Mexico’s economy and boost revenue by as much as $600 million per year. That’s no small matter as the state deals with what’s likely to be a massive revenue shortfall in the 2022 budget after the COVID-19 pandemic and a bust cycle in the state’s oil and gas industry leveled the state’s economy.
Legalization could lead to the creation of up to 15,000 jobs in the cannabis industry, Rodriguez said, citing an economic analysis of the issue conducted by financial consultant Kelly O’Donnell.
But the prospects for legalization in the 2021 legislative session remain unclear. The question has become somewhat contentious during past legislative sessions, with enough Democratic lawmakers joining with Republicans to stop the initiative from going forward.
During the regular 2020 legislative session, the House of Representatives narrowly approved a bill legalizing cannabis, 36-34. But the bill died in a Senate committee, stopped in part by opposition from both Democrats and Republicans.
Lujan Grisham is not giving up on the idea, her spokesman, Tripp Stelnicki, said Tuesday.
“The governor’s position on the importance of recreational cannabis as an economic game-changer for our state hasn’t changed,” he wrote in an email. “If there’s an opportunity here for our administration to deliver hundreds of millions in new revenue to New Mexico and invest in tens of thousands of new jobs — and there is — we’re going to pursue it.”
Earlier in the day, Rep. Andrea Romero, D-Santa Fe, said she is working with Rep. Javier Martinez, D-Albuquerque, to shape a bill legalizing cannabis for the 60-day legislative session, which begins in mid-January.
Romero said she thinks the initiative will have a “greater” chance of success for two reasons. First, she said, lawmakers realize the need to find more revenue streams as oil and gas struggles. She added the potential for progressive Democrats, more likely to support a bill than some longtime conservative members of the party who were swept aside in the June primary, could be a factor.
“It’s going to be a huge topic of discussion during the session in terms of bringing in new revenue,” Romero said.
Rodriguez and Richard Anklan, president of the New Mexico Tax Research Institute, brought up other potential benefits for legalizing cannabis, including the likelihood the black market for the drug will decrease and the opportunity for struggling farmers to switch out crop production.
During Tuesday’s hearing, Republican lawmakers brought up a number of other concerns and questions. Some, like Sen. Gay Kernan, R-Hobbs, wanted to know how suddenly increasing the state’s cannabis industry would affect water use and water rights. Rodriguez said cannabis producers must obtain water rights to back their efforts.
Others, like Rep. Rod Montoya, R-Farmington, said legalizing cannabis won’t necessarily stop people from the northwest part of the state from driving to Colorado if the product is cheaper, thus depriving New Mexico of that revenue.
Rep. James Strickler, R-Farmington, said the reports Rodriguez and Anklan presented were “one-sided,” mostly emphasizing the positive values of legalizing cannabis without going into detail about the potential problems, including addiction, vehicular deaths and underage use.
“I think we need to look at the negative impacts. We know they are definitely out there,” he said.
Conversely, Sen. Peter Wirth, D-Santa Fe, said more needs to be done to examine the other positive benefits of legalizing cannabis, such as its economic impact on the tourism, hospitality and restaurant industries.
Given the state’s economic problems, he said “it seems to me that this is the time to take this step.”
But Wirth added: “We have to do it right.”
Martinez, who chairs the committee, ended the discussion by noting any cannabis legalization action would have to include criminal justice changes, such as clearing the records of those who have been penalized for possession or use.
“We can’t legalize for the sake of legalizing without making a commitment to righting the wrongs of the past,” he said.