Alibi V.28 No.47 • Nov 21-27, 2019 

Baked Goods

Tax Talk

Legislators eye recreational market

Baked Goods logo
Rob M.

As we roll toward the inevitable legalization of cannabis in New Mexico, state legislators have begun to get into the nitty gritty of how to regulate the market. Last week, a group of lawmakers met in Santa Fe to discuss the economics of legalizing recreational marijuana and how to protect the medical cannabis industry from perceived threats.

University of New Mexico economics Professor Sarah Stith cautioned the lawmakers against over-taxation of recreational marijuana. “You can’t push that tax too high or it’s just going to go on the black market,” she told them. She also warned that the state would need to keep prices low to remain competitive with the Colorado market.

Gov. Michelle Lujan Grisham's legalization work group recommended limiting taxes on recreational cannabis to around 17 percent and licensing producers for $500 a month with additional per-plant fees. Under the group's plan, medical cannabis will become tax-free and sold separately at all dispensaries. The group's leader, Albuquerque City Councilor Pat Davis, said the state can expect to see more than $50 million in tax revenue within a year of recreational cannabis legalization and at least $94 million once the market stabilizes in five years.

Rep. Javier Martinez, of Albuquerque, is reportedly leading efforts to draft a legalization bill ahead of the 2020 legislative session. Lujan Grisham—who seemed leery of marijuana legalization during her run for office—has seemingly switched gears over the last year. She has repeatedly shown public support for comprehensive legalization legislation.

More Nonresidents Sign Up

Well it seems as though nonresident medical cannabis patients are a reality in New Mexico—for now, at least. According to the Albuquerque Journal, to date, 130 out-of-state patients have been accepted into the New Mexico Medical Cannabis Program. Most of them are from Texas.

Last month, a judge ordered the New Mexico Department of Health to begin issuing cards to qualified out-of-state patients after a months-long back-and-forth between the DOH and Ultra Health CEO Duke Rodriguez' legal team. Rodriguez and two other plaintiffs demanded that patients from other states be allowed to participate in New Mexico's medical cannabis program after a wording change in the medical expansion bill redefined a patient as a “person” and not a “resident of New Mexico.”

Since then, the DOH has reportedly issued 130 cards to out-of-state residents. Of those patients, 119 are from Texas. The rest are from Colorado, Arizona, Montana, Illinois and Kansas and one patient is a Mexican national. It's unclear if any of them have actually participated in the program yet.

Gov. Michelle Lujan Grisham’s office and the DOH are appealing the ruling, however. If the ruling is overturned, the state could seek to rescind all cards issued to nonresidents.

CBD Companies Warned by Feds

The US Food and Drug Administration sent letters to two more companies last month, warning them to stop making unsubstantiated medical claims about their CBD products.

The CBD market is still in an odd place, legally speaking. Since the president signed the 2018 Farm Bill, products containing CBD derived from hemp are legal as long as their meant for topical use only. Over-the-counter consumables—like edibles and oral sprays—are currently banned, because CBD is the active ingredient in Epidiolex, a pharmaceutical used to treat rare forms of epilepsy. The law says that any compound used as an active ingredient in any pharmaceutical can't be sold over-the-counter—for good reason. The FDA said it wouldn't be hounding any CBD companies until regulations are in place, but they did say they'd go after anyone making unsubstantiated medical claims about their products.

Naples Daily News reports that in September, the FDA and the Federal Trade Commission sent a joint letter to Alternative Laboratories, of Naples, Fla., that stated that the company had illegally labeled CBD oil as a dietary supplement. In October, the agencies issued a similar letter to Rooted Apothecary LLC, also of Naples, accusing the company of illegally selling unapproved CBD products that claim to cure a number of illnesses. They were even accused of marketing CBD products for babies. The letter warned that the company was violating the Federal Trade Commission Act.

Five other warning letters alleging violations related to the sale of CBD have been sent to companies since the beginning of this year.

Poll: Legalization Support Increased in 2019

A new Pew Research Center poll found that support for marijuana legalization rose again among US voters over the last year.

The survey analyzed phone interviews conducted with around 9,900 adults between September 3 and 15. According to the results, nearly 67 percent of Americans support legalization, a five percentage point increase over 2018. On top of that astonishing number, 91 percent say marijuana should be legal either for medical and recreational use or that it should be legal just for medical use. Only 8 percent said they wanted to keep marijuana illegal in all circumstances.

The majority of Millennials, Generation Xers and Boomers felt it should be legalized, while the “Silent Generation” (those born between 1928 and 1945, according to the survey) were the least supportive. Democrats and Democratic-leaning independents showed more support (78 percent) for legalization than Republicans and Republican-leaning independents (55 percent).

This is a crazy turn from just a decade ago, when cannabis was still thought of as “the devil's lettuce,” and no respectable American would ever approve of its use. Count yourselves lucky.

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