A bill that would legalize marijuana in New Mexico suffered a major procedural defeat in a key Senate panel on Wednesday
About two weeks after the body’s Public Affairs Committee advanced the legislation, the Judiciary Committee decided to table it in a 6-4 vote.
With just over a week left before the current short legislative session ends, the bill now appears all but dead.
If approved, the legalization proposal would allow adults 21 and older to possess and purchase cannabis from licensed retailers. It also contains social justice provisions such as automatic expungements for prior cannabis possession convictions and funding for community reinvestment. Home cultivation would not allowed. However, the bill does propose decriminalizing the cultivation of up to three plants and six seedlings, making the offense punishable by a $50 fine without the threat of jail time.
Senate Bill 115, the Cannabis Regulation Act, tabled in Senate Judiciary Committee meeting
— NM Senate Democrats (@NMSenateDems) February 13, 2020
“If we pass this bill we will have a mechanism very similar to what we use for other substances that are considered potentially dangerous: tobacco and alcohol” Sen. Gerald Ortiz y Pino (D), the bill’s lead sponsor, told the committee prior to the vote to table.
“Does the state of New Mexico want to leave it totally unregulated the way we have now?” he asked members.
But Sen. Joseph Cervantes (D), the committee chairman, spoke against the measure at length. He raised concerns with provisions around labor union influence on the marijuana industry and directing the state to subsidize medical cannabis purchases for low-income patients. He also took issue with the specifics of language allowing people with past drug convictions to obtain licenses.
Before the vote to table, Cervantes repeatedly said he thought the bill was poorly constructed and not ready for consideration, going so far at one point as to tell Ortiz y Pino that he didn’t think the senator knew what was in his own legislation.
While the panel could technically bring a revised version up at its next meeting on Friday, Ortiz y Pino seemed to concede that such a move is unlikely and instead suggested legislative leaders could focus on crafting a new proposal between the end of the current session and the start of the next one.
Even if the bill were to pass the Judiciary panel this week it would still have to then move through the Senate Finance Committee before heading to the floor, after which point it would also need to pass in the House by February 20.
The bill has been a top 2020 legislative goal for for Gov. Michelle Lujan Grisham (D).
The governor included legalization in an agenda she sent lawmakers last month for the short 30-day session and also discussed the need to establish a well-regulated and equitable cannabis market in her State of the State address.
“Legalized recreational cannabis in New Mexico is inevitable,” Lujan Grisham said in a statement following the bill being tabled. “The people of New Mexico have said they want it. A diversified state economy demands it. Poll after poll has demonstrated that New Mexicans want a 21st century economy and want cannabis to be part of it: New Mexicans want more chances to stay here and build a career here; we want justice for those convicted of low-level, harmless cannabis-related offenses; we want an industry with firm and clear regulations that will keep our roads and places of business and children safe.”
My statement on last night's disappointing committee vote to table Senate Bill 115, legislation that would have legalized recreational adult-use cannabis in New Mexico:#NMgov #NMleg #SB115 https://t.co/KKnfOHqk80 pic.twitter.com/EVYYzo9b2M
— Michelle Lujan Grisham (@GovMLG) February 13, 2020
The Republican Party of New Mexico expressed skepticism about Lujan Grisham’s legalization plan in a tweet earlier during the committee’s Wednesday hearing.
“The governor has touted this bill as a means to raise revenue and jolt the New Mexico economy,” the post said. “Not true.”
The Senate Judiciary Committee is set to hear SB115, the Cannabis Regulation Act, which would legalize recreational marijuana. The governor has touted this bill as a means to raise revenue and jolt the New Mexico economy. Not true. It's unclear what the economic impact…
— New Mexico GOP (@NewMexicoGOP) February 12, 2020
In 2019, the state House of Representatives passed a bill to legalize marijuana and let state-run stores control most sales. The proposal later advanced through one Senate committee but did not receive a floor vote in the chamber. Lujan Grisham did sign a more limited bill to simply decriminalize marijuana possession that lawmakers approved, however.
After legalization failed to advance last year, the governor convened a working group to study the issue and make recommendations.
The panel held a series of hearings and released a report in October that said any legalization bill should include automatic expungements of past records and provisions to ensure equity in the industry for communities targeted by the war on drugs. It also said that home cultivation of marijuana by consumers should either be prohibited or licensed by the state.
In December, the governor’s working group released a poll showing overwhelming public support for cannabis legalization.
”I am disappointed but not deterred by tonight’s committee motion,” the governor said after the Judiciary Committee vote. “The door remains open. We will keep working to get it done. And ultimately we will deliver thousands of careers for New Mexicans in a new and clean and exciting industry, a key new component of a diversifying economy. We will deliver justice to the victims of an overzealous war on low-level drugs. We will protect our medical cannabis program and the New Mexico patients who rely on it for their medicine. I will keep working hard every single day to enact and serve the will of New Mexicans – on this and every other issue.”
A separate piece of cannabis legislation that would block out-of-state residents from registering for New Mexico’s medical cannabis program was approved by the Senate panel on Wednesday.
Photo courtesy of Mike Latimer.
GOP Senator Presses Treasury Secretary On Tax Credits For Marijuana Businesses
A Republican senator recently pressed the head of the Treasury Department on whether marijuana businesses qualify for a federal tax benefit.
During a Senate Finance Committee hearing on Wednesday, Treasury Secretary Steven Mnuchin was asked about the “opportunity zone” tax credit, which is meant to encourage investments in “distressed,” low-income communities through benefits such as deferrals on capital gains taxes.
Sen. James Lankford (R-OK), whose state’s voters approved a medical marijuana ballot measure in 2018, told Mnuchin that businesses that derive more than five percent of their profits from things like alcohol sales are ineligible for the tax credit, but there’s “not a definition dealing with cannabis businesses.”
“Are they within that five percent amount or are they not at all because there’s a federal prohibition on cannabis sales?” the senator asked.
“I’m going to have to get back to you on the specifics,” Mnuchin replied.
“That’d be helpful to get clarity because there are cannabis businesses across the country that, if they fall in opportunity zones, they’ll need clarification on that,” Lankford said. “When you and I have spoken about it before—it’s difficult to give a federal tax benefit to something that’s against federal law.”
Lankford, who opposes legalization and appeared in a TV ad against his state’s medical cannabis ballot measure, has raised this issue with the Treasury secretary during at least two prior hearings. When he questioned whether cannabis businesses qualify for the program last year, he clarified that he personally does not believe they should.
While Mnuchin’s department has yet to issue guidance on the issue, he said in response to the earlier questioning that his understanding is that “it is not the intent of the opportunity zones that if there is this conflict [between state and federal marijuana laws] that has not been cleared that, for now, we should not have those businesses in the opportunity zones.”
Mnuchin has also been vocal about the need for Congress to address the lack of financial resources available to state-legal marijuana businesses. Because so many of these companies are forced to operate on a largely cash-only basis, he said the Internal Revenue Service has had to build “cash rooms” to store their tax deposits.
“There is not a Treasury solution to this. There is not a regulator solution to this,” he said during one hearing. “If this is something that Congress wants to look at on a bipartisan basis, I’d encourage you to do this. This is something where there is a conflict between federal and state law that we and the regulators have no way of dealing with.”
Last week’s Finance Committee hearing was centered around President Trump’s Fiscal Year 2021 budget request, which separately includes a provision calling for the elimination of an appropriations rider that prohibits the Justice Department from using its fund to interfere in the implementation of medical cannabis laws as well as a continued block on Washington, D.C. spending its own local tax dollars to legalize marijuana sales.
Photo courtesy of C-SPAN.
American Bar Association Wants Protections For Marijuana Banking And Lawyers Working With Cannabis Clients
The American Bar Association (ABA) approved two marijuana-related resolutions during its midyear meeting on Monday.
The group’s House of Delegates voted in favor of proposals endorsing pending federal legislation to protect banks that service cannabis businesses and calling for a clarification of rules to ensure that lawyers will not be penalized for representing clients in cases concerning state-legal marijuana activity.
Under the banking resolution, ABA “urges Congress to enact legislation to clarify and ensure that it shall not constitute a federal crime for banking and financial institutions to provide services to businesses and individuals, including attorneys, who receive compensation from the sale of state-legalized cannabis or who provide services to cannabis-related legitimate business acting in accordance with state, territorial, and tribal laws.”
HOD Res 103D: Adopted. Urges enactment of laws to ensure that it shall not constitute a federal crime for banks and financial institutions to provide cannabis-related services. #ABAMidyear
— American Bar Association (@ABAesq) February 17, 2020
ABA added that “such legislation should clarify that the proceeds from a transaction involving activities of a legitimate cannabis-related business or service provider shall not be considered proceeds from an unlawful activity solely because the transaction involves proceeds from a legitimate cannabis-related business or service provider, or because the transaction involves proceeds from legitimate cannabis-related activities.”
A bill that would accomplish this goal was approved by the House of Representatives last year, but it’s currently stalled in the Senate, where it awaits action in the Banking Committee. That panel’s chair, Sen. Mike Crapo (R-ID) is under pressure from industry stakeholders to advance the legislation, but he’s also heard from anti-legalization lawmakers who’ve thanked him for delaying the bill.
“Passage of the [Secure and Fair Enforcement] Banking Act or similar legislation will provide security for lawyers and firms acting to advise companies in the industry against having their accounts closed or deposits seized,” a report attached to the ABA resolution states. “This will also foster the rule of law by ensuring that those working in the state-legalized legitimate cannabis industry can seek counsel and help prevent money laundering and other crimes associated with off-the-books cash transactions.”
“Currently, the threat of criminal prosecution prevents most depository institutions from banking clients, including lawyers, who are in the stream of commerce of state-legalized marijuana. This Resolution is necessary to clarify that such provision of legal and other services in compliance with state law should not constitute unlawful activity pursuant to federal law.”
The second marijuana-related resolution ABA adopted on Monday asks Congress to allow attorneys to serve clients in cannabis cases without facing federal punishment.
Text of the measure states that the association “urges Congress to enact legislation to clarify and explicitly ensure that it does not constitute a violation of federal law for lawyers, acting in accord with state, territorial, and tribal ethical rules on lawyers’ professional conduct, to provide legal advice and services to clients regarding matters involving marijuana-related activities that are in compliance with state, territorial, and tribal law.”
HOD Res 103B: Adopted as revised. Urges enactment of laws to ensure lawyers can provide legal advice and services for clients' legal marijuana-related activities. #ABAMidyear
— American Bar Association (@ABAesq) February 17, 2020
Such a change would provide needed clarity for lawyers as more states legalize cannabis for adult use. ABA’s own rules of conduct have been a source of conflict for attorneys, as it stipulates that they “shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent.” Federal law continues to regard marijuana as an illegal, strictly controlled substance.
An ABA report released last year made the case that there’s flexibility within that rule, however, as “it is unreasonable to prohibit a lawyer from providing advice and counsel to clients and to assist clients regarding activities permitted by relevant state or local law, including laws that allow the production, distribution, sale, and use of marijuana for medical or recreational purposes so long as the lawyer also advises the client that some such activities may violate existing federal law.”
A new report attached to the resolution states that “statutory guidance is needed that explicitly ensures that attorneys who adhere to their state ethics rules do not risk federal criminal prosecution simply for providing legal counsel to clients operating marijuana businesses in compliance with their state law.”
“This Resolution accomplishes this elegantly by harmonizing federal criminal liability with States’ ethical rules regarding the provision of advice and legal services relating to marijuana business. If a state has legalized some form of marijuana activity and explicitly permitted lawyers to provide advice and legal services relating to such state-authorized marijuana activity, such provision of advice and legal services shall not be unlawful under the Controlled Substances Act or any other federal law.”
Last year, ABA adopted another cannabis resolution—arguing that states should be allowed to set their own marijuana policies.
Border Patrol Union Head Admits Legalizing Marijuana Forces Cartels Out Of The Market
The head of the labor union that represents U.S. Border Patrol agents acknowledged on Friday that states that legalize marijuana are disrupting cartel activity.
While National Border Patrol Council President Brandon Judd was attempting to downplay the impact of legalization, he seemed to inadvertently make a case for the regulation all illicit drugs by arguing that cartels move away from smuggling cannabis and on to other substances when states legalize.
Judd made the remarks during an appearance on C-SPAN’s Washington Journal, where a caller said that “the states that have legalized marijuana have done more damage to the cartels than the [Drug Enforcement Administration] could ever think about doing.”
“As far as drugs go, all we do is we enforce the laws. We don’t determine what those laws are,” Judd, who is scheduled to meet with President Trump on Friday, replied. “If Congress determines that marijuana is going to be legal, then we’re not going to seize marijuana.”
“But what I will tell you is when he points out that certain states have legalized marijuana, all the cartels do is they just transition to another drug that creates more profit,” he said. “Even if you legalize marijuana, it doesn’t mean that drugs are going to stop. They’re just going to go and start smuggling the opioids, the fentanyl.”
One potential solution that Judd didn’t raise would be to legalize those other drugs to continue to remove the profit motive for cartels. Former presidential candidate Andrew Yang made a similar argument in December.
Federal data on Border Patrol drug seizures seems to substantiate the idea that cannabis legalization at the state level has reduced demand for the product from the illicit market. According to a 2018 report from the Cato Institute, these substantial declines are attributable to state-level cannabis reform efforts, which “has significantly undercut marijuana smuggling.”
Additionally, legalization seems to be helping to reduce federal marijuana trafficking prosecutions, with reports showing decreases of such cases year over year since states regulated markets have come online.
In his annual report last year, Supreme Court Chief Justice John Roberts also noted reduced federal marijuana prosecutions—another indication that the market for illegally sourced marijuana is drying up as more adults consumers are able to buy the product in legal stores.