Legislative Update: 2021 Special Session Update

04/06/2021

Governor Grisham called the New Mexico Legislature into a special session on March 30, 2021 to take up a pair of economic and job creation issues that were left unfinished in the recent 60-day session: legalizing adult-use cannabis and expanding the Local Economic Development Act (“LEDA”). Bills signed by the Governor become effective June 18, 2021 unless the legislation is a general appropriations bill, a bill carrying an emergency clause, or if the bill has another specified effective date. All legislation not acted upon by the Governor by April 9 is pocket vetoed.

SECTIONS

Cannabis

Economic Development

CONTRIBUTING LAWYERS*

Noe Astorga-Corral

Anne P. Browne

Suzanne W. Bruckner

Tina Muscarella Gooch

Wade L. Jackson

*Amanda E. Cvinar, a law clerk with Sutin, Thayer & Browne, is also a contributing author.

 

CANNABIS

After a two-day special legislative session, the bill that would legalize recreational marijuana has passed both houses of New Mexico’s legislature. That bill and other relevant bills include:

The Cannabis Regulation Act - HB2 – Signed by Governor 4-12-21

HB2, which is very similar to HB12 introduced during the 2021 Regular Session, will legalize recreational marijuana. The bill enacts the Cannabis Regulation Act (“CRA”), a comprehensive plan for regulation and licensing of commercial cannabis production and distribution and sale and consumption of cannabis by people age 21 or older. Specifically, the CRA decriminalizes the possession, use, production, transportation, and sale of commercial cannabis for adults and for non-medical purposes. Under the CRA, adults age 21 or older could purchase, possess, and transport no more than two ounces of cannabis flowers and 16 grams of extract.

HB2 also establishes the Cannabis Control Division (“CCD”), which is charged with regulating, administering, and collecting fees in connection with commercial cannabis activity and licensing, the medical cannabis program, and cannabis education and training programs.

HB2 also imposes some relevant deadlines on the CCD. By September 1, 2021, for example, CCD must create the Cannabis Regulatory Advisory Committee (“CRAC”) to advise it on rules and best practices, including practices that promote diversity in licensing and employment and protect public safety.

Under HB2 the CCD must also:

  • Promulgate rules for licensing and regulating commercial cannabis activities no later than January 1, 2022;
  • Accept and begin processing license applications for cannabis producers, cannabis producer microbusinesses, and licensed cannabis producers under the Lynn and Erin Compassionate Use Act no later than September 1, 2021;
  • Accept and begin processing license applications for all license types no later than January 1, 2022; and,
  • Allow commercial cannabis retail sales no later than April 1, 2022.

Notably, HB2 also amends the Criminal Record Expungement Act by providing for the automatic expungement of public records relating to cannabis-related offenses that will no longer be a crime on the effective date of the Cannabis Regulation Act, or would have resulted in a lesser offense. Automatic expungement shall occur two years after the arrest or conviction. However, HB2 will still allow employers to regulate their employees’ drug use, such as by implementing a zero-tolerance policy that permits the discipline or termination of an employee on the basis of a positive drug test for cannabis.

HB2 will now go to Governor Grisham for her signature. The Governor signed HB2 into law on April 12, 2021. Recreational marijuana sales are expected to begin sometime in April 2022.

Expungement of Certain Criminal Records - SB2 – Signed by Governor 4-12-21

SB2, related to HB2, amends the Criminal Offender Employment Act to prohibit the use or dissemination of certain criminal records in applications for public employment and licenses. The criminal records that are protected include convictions that have been sealed, dismissed, expunged, or pardoned; juvenile adjudications; and convictions for crimes not related for the position being sought and not consistent with business necessity.

In addition, SB2 no longer allows misdemeanor convictions involving moral turpitude to be used as a basis for denying, revoking, or suspending public employment or a license to engage in a trade, business, or a profession. The bill also no longer allows an agency to deny public employment or a professional license for convictions that do not relate to a particular employment position.

By January 1, 2022, the New Mexico Department of Public Safety must identify past convictions eligible for dismissal and expungement and notify the Corrections Department, prosecutors, and the Public Defender Department of eligible cases. The Governor signed SB2 into law on April 12, 2021.

 

ECONOMIC DEVELOPMENT

LEDA Changes - SB1 – Signed by Governor 4-7-21

SB1 expands the Local Economic Development Act (“LEDA”) to allow a permanent mechanism for tax revenue sharing for certain new large LEDA projects. The bill allows 50% of some state and local gross receipts tax (“GRT”) and compensating revenue from large LEDA projects (over $350 million in construction and infrastructure costs) to be placed into the LEDA fund to help with recruitment of those large projects. Only costs associated with new construction of the project will be subject to this provision, and Economic Development Department (“EDD”) and all local governments affected must agree to the revenue sharing. The bill also provides additional reporting requirements for EDD for these projects and requires claw back of funds if the company does not reach the $350 million minimum by the end of the 10-year period. This claw back can be proportional just as with the existing claw back provision. SB1 passed in the Senate on March 30 and the House on the following day. It was signed into law by the Governor April 7, 2021. SB1 became effective immediately due to an emergency clause included in the bill.