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Officials mull local impacts of cannabis law

In this March 30 file photo, a Christian group prays outside the state capitol building in Santa Fe. Lawmakers met in a special session in March to revisit marijuana legalization after deadlocking on the issue during their regular session. (AP Photo)

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Governor last week signed bill legalizing recreational cannabis in NM

City officials are looking at what changes will have to be made to existing city ordinances and zoning rules in response to passage of legislation legalizing recreational cannabis in New Mexico.

No action was taken on the item at the April 13 meeting of the Roswell City Council’s Public Safety Committee, but Mike Matthews, the city’s public safety director, said officials are combing through the 175-page bill.

“We are trying to review that so we know what to expect, what work we need to do to be prepared for this,” Matthews said to the committee.

The discussion came a day after New Mexico Gov. Michelle Lujan Grisham signed House Bill 2 (HB 2), which legalizes recreational use and possession of cannabis. It also sets up a framework to regulate the industry.

Lujan Grisham made the legalization a top priority. In March, she called a special legislative session to pass a legalization bill after the legislature failed to do so in their regular 60-day session.

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Parker Patterson, attorney for the city of Roswell, said the city will need to consider repealing existing city ordinances that outlaw cannabis possession.

Come July, a person in New Mexico age 21 or older will be able to legally have on their person at one time up to two ounces of cannabis, 16 ounces of cannabis extract or 800 milligrams of edible cannabis goods. They can have an amount in excess of that if it is stored in a private residence, or grow their own.

That contradicts an existing city ordinance which prohibits a person from legally possessing cannabis “unless it was obtained pursuant to a valid prescription or order of a practitioner while acting in the course of his professional practice or except as otherwise authorized by law.”

Patterson added that while sales will not be legal this year, starting in July people will be able to come to New Mexico with cannabis purchased in neighboring states where it is already legal, such as Colorado, or grow it in a private residence.

“So we are going to have to look at repealing that portion of our ordinance most likely because even if we don’t, it would be preempted by state law and become unenforceable,” Patterson said.

Much of how the city can regulate cannabis establishments, Matthews said, will be determined by what rules the state puts in place for cannabis storage as well as public safety.

In accordance with HB 2, the state must, by Sept. 1, establish a Cannabis Regulation Advisory Committee to come up with guidelines.

Patterson noted HB 2 expressly prohibits city and county governments from preventing cannabis businesses from operating within their jurisdictions.

Communities though can enact regulations, such as where those businesses can be located, how many can be in a given area, and the hours during which they can be open.

“So we can’t effectively prohibit it, but again, we can put in place reasonable time, place and manner regulations,” Parker said.

He added the city will have some authority to regulate establishments, such as lounges where cannabis is used, under clean air and smoke free ordinances.

Jurisdictions can also ban cannabis businesses from being within 300 feet of a school.

Though the state will not be able to issue licenses for cannabis businesses until next year, Kevin Maevers, director of the city’s Community Development Department, said he is already hearing lots of interest from those looking to set up businesses in Roswell.

“We have already had multiple inquiries about ‘where can I put my cannabis business?,’” Maevers said.

Before any of that can happen, he said the city will have to write new zoning rules that involve more than just dispensaries.

Such rules will need to be formulated for potential licensed cannabis consumption areas, couriers, manufacturers, producer microbusinesses, producers, research and testing laboratories, facilities for cannabis education and training programs and vertically-integrated cannabis establishments.

“Those are all legal. We cannot outlaw them. We have to provide a mechanism from which these may operate under very specific circumstances,” Maevers said.

Jeanine Corn Best, chair of the committee, asked if it will be possible for the city to require cannabis businesses to get an annual permit at a cost of $75 in order to operate within the city, something that could allow the city to make some money off the legalization law.

Maevers said the city should look at what permitting fee they want to charge, but a figure like the one suggested by Corn Best would not offset the increased cost of the work his department and code enforcement will be saddled with.

“We won’t even be able to cover the cost of the person inputting the data into the system for $75,” he said.

HB 2 does charge excise tax on all products sold. From FY 2022 to 2025 the rate will be 12% and escalate by 1% each year until 2031, when it reaches and remains at 18%.

Patterson said under the law, a portion of the money from that excise tax will be directed annually back towards city and county governments, much like is now done with the state’s Gross Receipts Tax.

A press release issued by New Mexico House Democrats following passage of HB 2 stated that in the first year alone, cannabis sales are expected to generate $28.6 million in revenue.

Maevers said he thinks the state revenue projections from legalization of recreational cannabis are overly optimistic, given the high rate of the excise tax, the fact that HB 2 exempts medical cannabis from the tax and a lack of measures to prevent sales of cannabis produced by unlicensed growers.

“And without an appropriate tracking program, that is going to keep prices down and we are never going to see the level of anticipated revenue,” Maevers said.

Breaking news reporter Alex Ross can be reached at 575-622-7710, ext. 301, or breakingnews@rdrnews.com.

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