New Mexico’s bill to legalize adult-use marijuana, signed into law by Gov. Michelle Lujan Grisham in April, has now taken effect. The move made New Mexico the 17th state to pass the reform and the fifth to do so through the legislature. Here’s a rundown of what the new law entails.

New Mexico’s Cannabis Regulation Act, introduced to the legislature as HB 2, makes it legal for adults 21 and older to possess, buy, use and gift up to two ounces of marijuana flower, 16 grams of concentrates and 800 milligrams of edibles to other adults, with no possession limits at private residences if it’s stored away in a locked container out of public sight. Home cultivation of up to 12 plants per household (with only 6 mature at one time) is also permitted, as is making edibles and other marijuana extracts (although with restrictions on the extraction methods used). The legislation further allows for on-site marijuana consumption lounges.

Smoking marijuana in public will remain prohibited and punishable by a $50 fine, while public possession of more than two ounces but less than eight carries the threat of up to a year in jail. Possession of more than eight ounces of marijuana in public will still be considered a felony offense.

To regulate the new legal marijuana industry, New Mexico will establish a Cannabis Control Division (CCD) under the auspices of the state Regulation and Licensing Department, which will be responsible for drawing up rules and issuing cannabis business licenses. Authority over New Mexico’s medical marijuana program will be transferred to the CCD from the Department of Health, except for managing patient data. There will be 10 license types available for marijuana businesses, including couriers, marijuana consumption sites, cultivators, manufacturers, retailers, vertically integrated operators, microbusinesses and integrated microbusinesses. The industry’s rules must be readied by the end of this year with retail sales due to launch no later than April 1, 2022.

Local jurisdictions may limit the density of cannabis retailers within a given area but are not permitted to outright prohibit a licensee from operating, nor prevent distributors transporting marijuana through their locality to another destination.

Under the Cannabis Regulation Act, the CCD must issue licenses according to social equity requirements that seek to redress the harms caused to marginalized individuals and communities by marijuana prohibition. The CCD will also give licensing priority to economically-distressed farmers and individuals from rural communities that may be negatively impacted by forthcoming commercial cannabis cultivation.

The state’s excise tax on retail cannabis sales will initially be set at 12 percent and rise to a maximum of 18 percent by July 1, 2030, at an increase of one percent per year. A third of this money will go to the municipality where the sales took place and another third to the county coffers where that municipality is located. The remainder isn’t explicitly accounted for yet but future budget bills will include cannabis funds redistribution for investment in communities most harmed by the war on drugs.

The Cannabis Regulation Act is complemented by a separate companion bill – SB 2 – passed by the legislature and signed into law that allows for automatic expungement of criminal records for low-level marijuana offenses that are now legal.

With the contours of New Mexico’s legal cannabis industry taking shape, lawmakers are hopeful it will provide a much needed boost to the state’s economy following the downturn of the past year. Financial analysts anticipate annual excise sales tax revenues for cannabis in New Mexico to stabilize at around $70 million within five years, alongside the creation of 12,000 new jobs equating to more than $500 million in additional income for workers.

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