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SB 3 CANNABIS REGULATION ACT

Current Location: SCW
Referrals: SCW

[1] SCW-SCW

SB 3 PDF  |  SB 3 FIR


Scheduled on - Date:  Time:   Location:

3/30/2021 [1] - Sent to location Senate Committee of the Whole (SCW)
2/23/2021 [7]HTRC - Do Pass - Temporary Calendar House Temporary Calendar (HCAT)
2/11/2021 [3]HINT - Sent to location House Taxation and Revenue (HTRC)
2/10/2021 [3]SFC - Do Not Pass - Committee Substitute Do Pass Senate Calendar (SCal)
2/10/2021 [5]SCAL - Passed the Senate House Introduction (HINT)
2/01/2021 [3]STBTC - Do Pass Senate Finance (SFC)
Synopsis:

 Senate Bill 3 (SB 3) enacts the Cannabis Regulation Act, creates the Cannabis Control Division in the Regulation and Licensing Department, establishes duties for the Department of Environment and the New Mexico Department of Agriculture, creates the Cannabis Regulation Fund, enacts the Cannabis Tax Act, amends sections of the Lynn and Erin Compassionate Use Act, revises penalties, and declares an emergency.  
The Cannabis Regulation Act is a comprehensive proposal to legalize cannabis for people 21 years old and over.  There are no limits on the number of plants or licenses.  The bill allows for the possession, use, and purchase of up to 2 ounces of cannabis. Public smoking or consumption of cannabis is prohibited. The bill allows local jurisdictions to opt-out of allowing retail marijuana sales.  

Analysis:

 
Sections 1 through 3: Creates the Cannabis Control Division (CCD or Division) as a state agency in the Regulation and Licensing Department (RLD).   The CCD may employ personnel and hire consultants. By July 1, 2021, CCD, the board of regents of New Mexico State University (Board) and New Mexico Environment Department (NMED) must establish rules including license issuance, qualifications for licensure, security for establishments, requirements related to inspection, recordkeeping, product labeling and advertisement, rules to establish health and safety standards for cultivation/manufacture, standards for testing, product safety, and prohibited additives and ingredients.  
•	The CCD may license dispensaries or lounges.  
•	No state agency or entity can limit the number of plants a cannabis establishment may possess, cultivate or manufacture. 
•	No state agency or entity can limit the type or number of licenses issued pursuant to the Act and cannot limit the number of licensed premises operated by a licensee. 
•	Dispensaries within 300 feet of child-related locations, i.e., schools, childcare centers, parks, and libraires are prohibited.
•	CCD must issue a dispensary license at discount if the applicant agrees to accept cannabis items on consignment from a cannabis producer who grows 5,000 or less plants or if the applicant is a cooperative that allows for sale of cannabis items on consignment from a manufacturer who grows 5,000 or fewer plants.  

Section 4.  The Department of Health (DOH) must monitor scientific and medical information regarding cannabis.  The secretary of DOH must appoint a Public Health and Safety Advisory Committee that will provide annual reports on the health and safety issues.

Section 5.  The bill requires annual reporting by police and sheriff’s departments to the Department of Public Safety (DPS) regarding cannabis-related violations and demographic data. DPS will compile and publish the reports.

Section 6.  CCD will regulate and license dispensaries, lounges, with licenses being issued by October 1, 2021.  CCD also regulates and licenses those under the medical marijuana act (except for producers, manufacturers and testing labs).   The DOE regulates manufacturers and testing labs, and must begin issuing licenses for manufacturers and testing labs by October 1, 2021.  Those who have dual licenses can be given licenses no later than July 1, 2021.  New Mexico Department of Agriculture (NMDA) regulates and licenses cannabis producers, and must begin issuing licenses by July 15, 2021.  Those with a dual license can be issued a license by May 15, 2021 or 15 days after the effective date of this Act.  

CCD and DOE must begin issuing dual licenses (for manufacture and sale) to a person that has a medical cannabis producer license by July 1, 2021.  The producer must sell a minimum amount of products and meet quality standards. CCD must issue a dispensary license to a person who has a manufacturer/producer license or dual license.  CCD will license couriers (a person who transports cannabis directly to consumer) by July 1, 2021.  

Section 7.  CCD must establish reasonable licensing fees for dispensaries, lounges and activity related to medical cannabis.  CCD is allowed to determine license fees, but such fees must be scaled to reflect the size of the business.  Fees collected go to the Cannabis Regulation Fund.  The Board establishes licensing fees for cannabis cultivation.   DOE establishes licensing fees for manufacturing and testing labs.  

Section 8.  Licenses may be revoked or suspended in cases of fraud, felony convictions, or violations of the Act.

Section 9.  Allows local jurisdictions to limit the location of a cannabis establishment (300 feet away from child related places), and prohibit the operation of a cannabis establishment.  Local jurisdictions can’t prevent the transportation of cannabis that complies with the Act, prohibit the personal production of cannabis for personal use or prohibit the operation of a medical cannabis-only retail business. 

Section 10.  Licensees are afforded legal protections against forfeiture or other penalties for those who adhere to the Act.  

Section 11.  Only a courier may transport cannabis products.  The consumer must keep a copy of the courier receipt. 

Section 12.  Licensees must not employ persons younger than 21 or sell cannabis products to persons younger than 21 (except if allowed under the medical marijuana statutes). A violation for this can result in a fine up to $10,000 and revocation of license.  The bill provides a list of affirmative defenses.  A person who is 18 or older and intentionally traffics (sells, gives away or possesses with the intent to distribute) marijuana to a minor is guilty of a fourth-degree felony.  

Section 13.  The Act does not authorize the transportation, distribution of cannabis outside the state. 

Section 14.  Provides rules on labeling cannabis items, such as child-resistant packaging, must not appeal to children, list the ingredients and display warnings.  

Section 15.  Requires cannabis products to be properly packaged, prepared, stored and handled.  

Section 16. NMED must create rules to govern the licensing of a cannabis manufacturer and cannabis testing laboratory.  Different licenses are to be issued depending on the type of manufacturer/testing lab.  

Section 17.  NMED must develop rules regarding the testing of cannabis products and by July 1, 2021, rules regarding testing lab standards. 

Section 18.  The Director of the CCD will promulgate rules regarding restrictions of advertising and marketing of cannabis products.   

Section 19. Contracts related to licenses cannot be unenforceable on the basis that the conduct is prohibited by federal law.  
Section 20.  A person who has a state-issued professional license is not subject to discipline for services to a prospective or licensed cannabis establishment if the person reasonably believes the conduct complies with the Act.  This does not apply to an attorney licensed in the state.

Section 21.  Persons or licensees are protected from criminal or civil liability or disciplinary action by a licensing entity for conduct allowed under the Act.  Except under court order, local law enforcement agencies cannot cooperate with any federal agency in enforcing the Act if it complies with the Act or medical marijuana statutes. The supreme court is considered a licensing entity for purposes of this section (they regulate lawyers).  

Section 22.  Schools are prohibited from refusing to enroll or penalize a person for conduct allowed under the Act or medical marijuana statutes, unless it would cause the school to lose a monetary or licensing-related benefit under federal law or regulation.  A person may prohibit cannabis activity on their own private property.  A person can’t be denied custody of or visitation or parenting time with a child for conduct allowed under the Act unless the court determines that the person’s behavior is contrary to the best interests of the child.

Section 23. An employer may prohibit or take adverse action against an employee for the possession or use of intoxicating substances at work; implement a zero-tolerance policy regarding cannabis.  Employers can’t be required to commit an act that would cause them to violate federal law or would result in a loss of a federal contract or funding.  Workplaces must post signs of the risks of cannabis and possible disciplinary action.  

Sections 24 - 27.  The bill provides that an adult 21 years or older may possess, use, purchase up to 2 ounces of cannabis (or 16 grams of cannabis extracts) and give another adult up to 2 ounces of cannabis or cannabis paraphernalia.  Smoking cannabis or consuming cannabis items in public is not allowed; the penalty for this is a $50 civil fine.  A person under 18 who sells cannabis without a license or illegally possesses cannabis is subject to fines, educational programs and community service.  An adult who produces 6-12 cannabis plants without a license is guilty of a penalty assessment and subject to a $50 fine; producing more than 12 plants is a fourth-degree felony. 

Section 28.   Possessing or distributing cannabis within 300 feet of certain areas is a misdemeanor crime.   

Section 29.  A person aged 18-21 who possesses cannabis is subject to fines, classes, and community service.  A person under than 18 who possesses cannabis is also subject to fines, educational classes and community service.  Adults over age 21 cannot possess cannabis containing more than .3% tetrahydrocannabinol.   Adults possessing 1-16 ounces of cannabis or 8-128 grams of cannabis extracts is a civil penalty with fines; possessing more than this is a fourth-degree felony and the person must be sentenced to twelve months in prison.  

Section 30.  Volatile solvents are not allowed to manufacture cannabis extracts without a license.  A violation of this is a civil penalty.  

Section 31.  Requires the governor to enter into agreements with other jurisdictions for delivery of cannabis between New Mexico and other jurisdiction once federal law allows for this or the Department of Justice issues an opinion allowing this.  

Section 32.  CCD may enter into agreements with tribal governments relating to the use of cannabis. 
Section 33.  Allows for writs of mandamus to compel the CCD to perform its duties.

Section 34. Creates the Cannabis Regulation Fund, which is administered by CCD to support its duties established by the Act.

Section 35.  Those who performed acts permitted by the Act for the purpose of research under the Act are exempt from criminal and civil penalties.  

Section 36.  Creates the Road Safety Fund, which is administered by DPS for implementing best practices in law enforcement regarding impairment by cannabis use, and for the training and purchasing of roadside cannabis impairment tests.

Section 37.  Amends Section 9-16-4 NMSA 1978 by including the CCD within the Regulation and Licensing Department. 

Sections 38-48.  Enacts the Cannabis Tax Act and imposes a 4% cannabis excise tax.  Imposes a municipal excise tax of 2% and a 2% county cannabis tax.  Wholesale cannabis producers and medical marijuana are exempt from the taxes.  The distribution of the Cannabis Excise Tax: Local DWI Grant Fund: 6%, Road Safety Fund: 2%.  

Section 49-50.  Amends the definition of “base income” so that for those who conduct lawful business in the state, subtracting an amount eligible for a federal deduction but is disallowed by Section 280E of the Internal Revenue Code.

Sections 51-52. Amends Section 7-9-13 NMSA 1978 by exempting cannabis wholesale producers from gross receipts tax.  Allows receipts from the sale of medical cannabis to be deducted from gross receipts.  

Section 53.  Requires the local DWI grant program to implement best practices in law enforcement agencies regarding impairment by the use of cannabis products.

Section 54.  Amends the Lynn and Erin Compassionate Use Act by removing certain definitions (cannabis consumption area, cannabis courier, cannabis establishment, manufacturer, producer, cannabis testing facility, license, personal production license) and adding definitions (cannabis extract and cannabis flowers, division, dry weight basis).  Amends the definition of “qualified patient” to allow a diagnosis via telemedicine without being examined in person first (there might be a typo on page 97: line 6 is not struck-through).  Changes the definition of “reciprocal participant” as a person who is not a resident of NM and who has proof of a medical cannabis program of another state or Indian territory.  

Sections 55-56.  Allows a qualified patient or primary caregiver to transfer to another 16 grams of cannabis extract and 800 mg of edible cannabis. Removes provisions regarding those with a personal production license or other licenses.  

Section 57-58.  Replaces the DOH with the CCD in administering licensure for medical cannabis.  Requires that by January 1, 2022, the Secretary of DOH must adopt rules relating to medical cannabis program reciprocity.  

Sections 59- 65.  Amends numerous sections of law to comport with the changes created by the Act, such as eliminating references to marijuana and hashish as a controlled substance in the criminal code (possession or distribution of synthetic cannabinoids is still a crime) and possession of drug paraphernalia.  

Section 66.  Removes drug paraphernalia as being subject to forfeiture under the Forfeiture Act.  

Section 67.  Enacts a new section of law requiring the NMDA to execute the provisions delegated to it for the cultivation of cannabis and to administer and enforce related rules.  By May 15, 2021 the board of regents at NMSU, in consultation with CCD and NMDA, must develop rules regarding the use of pesticides in cultivating cannabis, establishing environmental protections for licensees, and provide protocols to ensure compliance with laws governing environmental impacts, natural resource protection, water quality, water supply, hazardous materials, pesticide use and wastewater discharge.

Section 68.  Requires all state agencies to cooperate with CCD in carrying out the Act.

Section 69.  Transfers functions and contractual obligations of DOH’s medical cannabis program to the RLD.  

Section 70.  Repeals Sections 9-7-17.1 (Medical Cannabis Fund) and 30-31-25.1 (possession, delivery or manufacture of drug paraphernalia).  

Section 71.  The effective dates of Sections 59 through 66 (amending the criminal code to remove marijuana) is 90 days after the effective date of the Act. 

Section 72:  This bill contains an emergency clause, to take effect immediately.  

Amendments:

Current Law: